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On payments of insured amount of compulsory insurance against civil liability of holders of vehicles for non-pecuniary damage

Case No. 36/2006-8/2009-49/2009

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF PARAGRAPH 1 OF ARTICLE 11 OF THE REPUBLIC OF LITHUANIA LAW ON COMPULSORY INSURANCE AGAINST CIVIL LIABILITY OF HOLDERS OF VEHICLES (WORDING OF 5 MARCH 2004) WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

3 February 2010
Vilnius

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court Armanas Abramavičius, Toma Birmontienė, Pranas Kuconis, Kęstutis Lapinskas, Zenonas Namavičius, Ramutė Ruškytė, Egidijus Šileikis, Algirdas Taminskas, and Romualdas Kęstutis Urbaitis,

with the secretary of the hearing—Daiva Pitrėnaitė,

in the presence of the representative of the Seimas of the Republic of Lithuania, the petitioner, who was Saulius Bucevičius, a Member of the Seimas,

pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, in its public hearing on 7 January 2010 heard constitutional justice case No. 36/2006-8/2009-49/2009 subsequent to:

1) the petition of the Vilnius Regional Court, the petitioner, requesting to investigate whether Paragraph 1 of Article 11 of the Republic of Lithuania Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law (petition No. 1B-37/2006);

2) the petition of the Marijampolė District Local Court, the petitioner, requesting to investigate whether Paragraph 1 of Article 11 of the Republic of Lithuania Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law (petition No. 1B-7/2009);

3) the petition of the Telšiai District Local Court, the petitioner, requesting to investigate whether Paragraph 1 of Article 11 of the Republic of Lithuania Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law (petition No. 1B-62/2009);

By the Constitutional Court Decision “On joining petitions into one case” of 22 December 2009 the petitions of the petitioners were joined into one case and it was given reference No. 36/2006-8/2009-49/2009.

The Constitutional Court

has established:

I

1. The Vilnius Regional Court, the petitioner, was investigating a civil case. By its ruling the court suspended the investigation of the case and applied to the Constitutional Court with the petition requesting to investigate as to whether Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004, hereinafter referred to as the Law), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property, to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law (petition No. 1B-37/2006).

2. The Marijampolė District Local Court, the petitioner, was investigating a civil case. By its ruling the court suspended the investigation of the case and applied to the Constitutional Court with the petition requesting to investigate as to whether Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property, to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law (petition No. 1B-7/2009);

3. The Telšiai District Local Court, the petitioner, was investigating a civil case. By its ruling the court suspended the investigation of the case and applied to the Constitutional Court with the petition requesting to investigate as to whether Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property, to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law (petition No. 1B-62/2009).

II

1. The petition of the Vilnius Regional Court, the petitioner, is substantiated by the following arguments.

1.1. By the provision of Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles, which sets the limit of the insurance amount for causing a non-pecuniary damage to be 500 euros, the rights and interests of the injured persons are defended by the law less than those of insurance companies. The injured person, who receives no actual damage recovery, is discriminated. The law does not provide proper protection to a person, who has insured his civil liability, either. For this reason the situation of the insurance companies is exceptional in comparison not only to the victims of the insured event, but to the insurance payers, too. Such legal regulation is in conflict with Paragraph 1 of Article 29 of the Constitution.

1.2. Having entrenched in the law the maximum limit of non-pecuniary damage recovery, the insurer is granted a possibility to avoid recovery of non-pecuniary damage, which was caused to the person. The limitation of recovery of non-pecuniary damage does not meet the expectations of not only the victims, but the insured persons as well, because by concluding a contract on compulsory insurance against civil liability a person reasonably expects that the damage caused by him shall be recovered by the insurer. For this reason, setting the maximum insurance compensation (amounting to 500 euros) in the event of causing non-pecuniary damage is in conflict with the constitutional principle of a state under the rule of law.

2. The petition of the Marijampolė District Local Court is based on virtually the same arguments as the petition of the Vilnius Regional Court.

3. The petition of the Telšiai District Local Court is based on virtually the same arguments as the petition of the Vilnius Regional Court.

III

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from the representative of the Seimas, the party concerned, who was Saulius Bucevičius, a Member of the Seimas, and the former representative of the Seimas, the party concerned, who was Raimundas Palaitis, a Member of the Seimas (according to Ordinance No. PP-77 R of the Speaker of the Seimas of 23 December 2009, R. Palaitis lost the power to represent the Seimas in this constitutional justice case), in which it is maintained that the disputed legal regulation is not in conflict with the Constitution.

1. The position of the former representative of the Seimas, the party concerned, who was R. Palaitis, is based on the following arguments.

1.1. A contract of insurance against civil liability is aimed at reducing a negative impact of the damage to be recovered upon the material situation of the person who is liable for the damage and at protecting the property interests of the victim. The insurer and the insurance payer are two parties to the contract, who have individual rights and duties. The principle of freedom of contract means that the parties enjoy the right to set contractual conditions, as well as their mutual rights and obligations. However, the freedom of contract is not absolute—certain limits may be established by imperative norms of the law. In the event of compulsory insurance, the freedom of contract is limited, because the duty to conclude the contract on insurance is established by the law. Such obligation is usually established by the law in order to protect the legitimate interests of the third persons, to whom damage is caused by the actions of the insurance payers, rather than those of insurance payers, i.e. such obligation is established on the grounds of the public interest. Under the law it is not only the holders of vehicles, but also notaries, bailiffs and health care institutions, who have the obligation to insure their civil liability.

1.2. The legal relations of insurance originate between the insurer and the insurance payer on the basis of an insurance contract rather than a delict. The insurer himself (only due to his legal status) has no duty to compensate all damage suffered by the insurance payer. The insurance company usually accepts limited liability, i.e. it compensates damage without exceeding the insurance amount. In case the insurance sum fails to compensate the full amount of damage, the victim may claim damage from the person, who caused it, on general grounds (Paragraph 2 of Article 6.254 of the Civil Code of the Republic of Lithuania). The provisions of the law that limit the amounts of non-pecuniary damage to be paid by the insurer do not replace the common rights of the victim to receive full compensation for damages as entrenched in Article 30 of the Constitution and the Civil Code, because the principles of independent damage recovery are not consolidated in the course of setting the compulsory insurance, it only provides what liability on behalf of the person who caused damages must be accepted by the insurance company which insured his liability. The insurance company and the person who caused damage are liable as solidary debtors. However, the liability of the insurance company is limited, whereas the liability of the insured person—unlimited.

1.3. When setting the amounts of the sums of compulsory insurance against civil liability of holders of vehicles one strives for two objectives: to provide maximum insurance of the persons who suffered during a road accident and to create preconditions for fair competition of insurance companies. When setting the amounts of insurance sums one should take account not only of the interests of the victims, but also the interests of insurance payers and those of insurers, which are often opposite ones. The victim will always have an interest that the insurance compensation fully covers the pecuniary and non-pecuniary damage suffered by him during a road accident. The insurance payer has an interest in not only the recovery of damage caused by him, but also in paying the least insurance contributions possible. The insurance company has an interest in profitable economic and commercial activity, which depends very much upon the ratio of insurance contributions and compensations. In case the legislator establishes the legal regulation which makes economic and commercial activity of insurance companies non-profitable, the system of insurance would not be efficient and useful to society. Only in the event of proper balance of interests of all listed persons one may expect that efficient system of compulsory insurance to be created.

1.4. The most important task of compulsory insurance against civil liability of holders of vehicles is to compensate to the victim the damage which could be objectively assessed, i.e. damage to property and a person. Non-pecuniary damage may not be assessed objectively, because usually the assessment of such damage is determined by a variety of subjective factors. Non-pecuniary damage is spiritual harm, which may be assessed and compensated only conditionally. The very essence of non-pecuniary damage determines that one may not precisely define it and find an undisputable monetary equivalent or restore the previous condition of the victim by paying a material compensation. While striving for full recovery of damages, the victim may also apply to court with the claim for outstanding sum of damages from the guilty person and the court, when establishing an additional sum to be adjudged, will take into account the insurance compensation that was received from the insurance company and the material status of the person who caused the damage.

1.5. The legal acts of the European Union, which regulate insurance against civil liability of holders of vehicles, clearly define only two types of damages to be recovered and respective sums of insurance: the sum of insurance for damage to property and the sum of insurance for damage to a person, whereas issues of recovery of non-pecuniary (moral) damage are not regulated by the European Union directives at all.

1.6. The former representative of the Seimas, the party concerned, concludes that the law establishes the minimum sums to be recovered by insurance and that, in itself, the establishment of such sums in the law does not violate the legitimate interests of the insurance payers, the victims and the insurers, as well as the Constitution. The minimum sum of compulsory insurance is established for the benefit of the insurance payers and the third persons who suffered the damage. This limits the rights of the parties to an insurance contract but is justifiable by the public interest, if the principle of proportionality is followed.

2. The position of the representative of the Seimas, the party concerned, who was S. Bucevičius, is based on the following arguments.

2.1. The insurance against civil liability of holders of vehicles is one of insurance types. Pursuant to the Republic of Lithuania Law on Insurance it is an economic-commercial activity, whereby, on the basis of insurance contract and for the insurance contribution one person accepts the risk of damages of another person or in any other way attempts to protect material interests of the latter. A contract of insurance against civil liability is aimed at reducing a negative impact of the damage that is to be recovered upon the material situation of the person who is liable for the damage and at protecting material interests of the victim.

2.2. The rights and obligations of both the insurance payer and the insurer are established by the laws and the insurance contract. The insurer himself does not have the duty to fully recover the damage caused by the insurance payer, he undertakes only limited liability in compensating the damage which does not exceed the sum that is indicated in the insurance contract. In case the insurance compensation does not cover the full amount of the inflicted damage, the victim may claim it, on common grounds, from the person, who cased damage.

2.3. Insurance relations are usually contractual relations that are subject to the principle of freedom of contract. However, the freedom of contract is not absolute—certain limits may be established by imperative norms of the law. In the event of compulsory insurance, the freedom of contract is limited, because the duty to conclude the contract on insurance is established by the law. Such obligation is usually established by the law in order to protect the legitimate interests of the third persons, to whom damage is caused by the actions of the insurance payers, rather than those of insurance payers, i.e. such obligation is established on the grounds of the public interest. Freedom of the parties to the insurance against civil liability is limited by the sums of insurance that are established in the law. The establishment of such limitation is permitted by the provision entrenched in Article 46 of the Constitution whereby the state shall regulate economic activity so that it serves the general welfare of the Nation. When setting the sums of insurance one strives for two objectives: to provide maximum insurance of the persons who suffered during a road accident and to create preconditions for fair competition of insurance companies.

2.4. The interests of insurance payers and those of the insurers are often opposite ones. The insurance payer has an interest in not only the recovery of damage caused by him, but also in paying the least insurance contributions possible. The insurance company is interested in profitable economic and commercial activity, which depends upon the ratio of insurance contributions and compensations. Having established especially high sums of insurance, the sum of insurance contribution paid by the insurance payer would increase as well. This would not necessarily guarantee cost-effectiveness of the insurance company. Alongside, the number of holders of vehicles, who are not able to insure their civil liability for even the minimum sum, would increase. In such a case the system of insurance would become inefficient and would not be beneficial to the society.

2.5. The petitioners state that the maximum amounts of the sums paid by the insurance company are entrenched in the law, however, the law does not indicate that the insurer and the insurance payer may not agree on bigger sums of insurance.

2.6. Having established the minimum sums of insurance in the law, one does not violate the legitimate interests of the insurance payers, the victims and the insurers, as well as the Constitution.

IV

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from Petras Baguška, the Minister of Justice of the Republic of Lithuania, Rimantas Šadžius, the Minister of Finance of the Republic of Lithuania, Mindaugas Šalčius, the Chairman of the Insurance Supervisory Commission of the Republic of Lithuania, and Deividas Kriaučiūnas, the Director General of the European Law Department under the Ministry of Justice.

V

1. At the Constitutional Court hearing, the representative of the Seimas, the party concerned, who was S. Bucevičius, virtually reiterated the arguments set forth in his written explanations and answered to the raised questions.

2. At the Constitutional Court hearing, Mindaugas Šalčius, the Chairman of the Insurance Supervisory Commission, and Vilija Petronienė, the Head of the Legal Department of this Commission, took the stand and answered the raised questions.

The specialists explained that the necessity to limit the liability of the insurer originates from the specifics of the contract of compulsory insurance against civil liability of holders of vehicles, as an agreement on transfer of risk. For an insurance contribution, the insurer takes from the insurance payer a risk of losses, and sets the limits of obligations and the size of risk that he undertakes, in order to become able to assess his own financial abilities and to form respective technical put-offs for insurance, while striving to properly perform his obligations to pay insurance compensations. The contributions of compulsory insurance against civil liability of holders of vehicles are calculated upon consideration of the average insurance compensations for the damage caused to the person during a road accident.

Non-pecuniary damage is usually attributed to the category of the risk that is not insured at all. In majority of cases it is assessed on the grounds of subjective criteria—this is the reason why the problem of assessment of this risk comes into being. From the economic point of view, in case of unlimited insurers’ liability for non-pecuniary damages, the insurance contributions would increase and insurers’ ability to undertake the insurance risk would decrease or they would even refuse to undertake any such risk. From the social point of view, the problem of responsibility of the insurance payers would arise, because the insurance payer, who transferred all the insurance risk related with certain events for an insurance contribution, could start acting less responsibly.

The Constitutional Court

holds that:

I

1. The petitioners, who were the Vilnius Regional Court, the Marijampolė District Local Court and the Telšiai District Local Court, request to investigate whether Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004), which establishes that the sum insured under compulsory insurance against civil liability of holders of vehicles in a single road accident, irrespective of the number of injured third parties, shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property to the extent that, according to the petitioner, the maximum size amounting to 500 euros is set for non-pecuniary damage, is not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

2. It is clear from the arguments of the petitions of the petitioners that the Constitutional Court is requested to investigate whether Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

II

1. On 14 June 2001, the Seimas of the Republic of Lithuania adopted the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, which, with certain exceptions, came into force on 30 June 2001.

From the travaux préparatoires of this law it is clear that one of the objectives of adoption of this law was granting more guarantees to the victim of a road accident so that the damage suffered by him become recovered more expeditiously.

1.1. Paragraph 1 of Article 1 “The Objective and Purpose of the Law” of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles indicates that the objective of this Law is “establishing the procedure of compulsory insurance against civil liability in respect of owners and holders of vehicles”, whereas Paragraph 2 provides that “the law establishes the procedure of compensation for damage to a person and/or property, which was caused to the third persons during a road accident or which originated as the result of a road accident (hereinafter referred to as the damage caused during the road accident) <...>”.

1.2. It was inter alia established in this law that:

– “the driver of the vehicle, who participates in the road traffic, must insure with the compulsory insurance of owners and holders of vehicles against his civil liability or be insured with this insurance, and must have a valid insurance certificate (policy) which attests the existence of an insurance contract” (Paragraph 2 of Article 4);

– “‘Insurer’ means an insurance company, which holds permission to engage in compulsory insurance against civil liability of owners and holders of vehicles, which was issued by the Board of the State Insurance Supervisory Service under the Ministry of Finance and which is a member of the Bureau, and which has concluded a contract of insurance against civil liability of owners and holders of vehicles with the insurance payer (hereinafter referred to as the insurance contract)” (Paragraph 1 of Article 2);

– “‘Insurance object’ means civil liability of owners and holders of vehicles for damage caused during a road accident. By the insurance contract one insures the civil liability of the insurance payer and every person who legitimately holds the motor vehicle, which may originate in the course of holding the motor vehicle as is indicated in the insurance certificate (policy) of compulsory insurance of owner and holders of vehicles against civil liability (hereinafter referred to as the insurance certificate (policy))” (Paragraph 1 of Article 3);

– “An insurance company, which holds permission to engage in compulsory insurance of owners and holders of vehicles against civil liability and which is a member of the Bureau, must conclude insurance contracts with the owners or legitimate holders of vehicles, who have submitted applications and all documents that are necessary in order to conclude such contracts. A refusal by the insurer to conclude an insurance contract may be contested in court” (Article 12);

– “‘The Bureau’ means an association established by funds of insurance companies, which hold permission to engage in compulsory insurance of owners and holders of vehicles against civil liability, and holding the rights of a legal entity, accounts in banks, a seal with its name and performing the functions that are defined in this law <…>” (Paragraph 1 of Article 23).

1.3. Thus, by this law the institute of compulsory insurance of owners and holders of vehicles against civil liability was consolidated, i.e. the obligation of insurance of owners and holders of vehicles against civil liability was established to all owners and holders of vehicles. Civil liability had to be insured by concluding an insurance contract. Compulsory insurance of owners and holders of vehicles against civil liability was implemented through insurers—insurance companies. The insurance companies, which held permission to engage in compulsory insurance of owners and holders of vehicles against civil liability, were obligated to conclude contracts of compulsory insurance of owners and holders of vehicles against civil liability with the owners or legitimate holders of vehicles, who submitted applications and all documents that were necessary in order to conclude such contracts.

2. Paragraph 1 of Article 13 “Amounts of Insurance Sums and Insurance Contributions” of this Law (wording of 14 June 2001) prescribed: “Compulsory insurance of owners and holders of vehicles against civil liability shall be 30,000 litas for personal injury and 30,000 litas for damage to property.”

Article 19 “Requirement to Compensate Damage” of this Law (wording of 14 June 2001) inter alia prescribed: “In the event that the insurer or the Bureau does not compensate the full amount of damage caused during a road accident due to the fact that the damage exceeds the sums of insurance, the person who suffered the damage in the road accident has the right to apply to the guilty person for the compensation for the outstanding part of the damage.”

Article 20 “Compensation of Damage” of the aforementioned Law (wording of 14 June 2001) inter alia prescribed:

Damage caused during a road accident shall be recovered by the insurer who has insured the civil liability of the person who is liable for the damage inflicted during the road accident <…>.

The Bureau shall pay insurance compensations to the persons who suffered damage during the road accident if the driver of the vehicle, who is liable for the damage caused during the road accident:

1) has not insured himself or was not insured by the compulsory insurance of owners or holders of vehicles against civil liability established in this law;

2) has caused the damage in the course of holding the vehicle without a contract on use or rent, or in the course of holding the vehicle without any other legitimate grounds;

3) has caused damage on intention;

4) has caused damage to the person’s health or/and has caused damage by killing a person and is unknown;

5) has caused damage by a vehicle that was captured (stolen) or appropriated or taken in any other illegal means.

The Bureau pays insurance compensations also in the events when a member of the Bureau becomes insolvent and the insolvency is attested by the State Insurance Supervisory Service under the Ministry of Finance.

The insurer or the Bureau compensates to the person, who suffered damage during the road accident, only the damage which was caused during the road accident, which is proven by evidence and which does not exceed the sums of insurance established in Article 13 of this law, and has the right to reject unreasoned claims on compensation for damage caused during the road accident.”

Thus, the maximum amounts for the damage that was caused during one road accident to property (30,000 litas) and to a person (30,000 litas) to be compensated by the insurer were entrenched in the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 5 March 2004). The insurance sum to be paid as compensation for non-pecuniary damage that was caused to the person was not established in the law. In the law the duty to pay compensation was imposed on two persons—the insurer who undertook the obligation under the contract to the extent established in the contract and legal acts, and the guilty person, if the insurance compensation was not sufficient to recover the damage in full.

It needs to be noted that such regulation, as entrenched in Paragraph 1 of Article 13 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001), when one establishes the sum of the compulsory insurance against civil liability, means that in case of the insured event the compensation paid by the insurer may not exceed the sum of insurance that is indicated in the law.

3. On 25 March 2003, the Seimas adopted the Republic of Lithuania Law on Amending and Supplementing Articles 10, 14, 15 and 18 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, which came into force on 9 April 2003.

By this law Article 13 (wording of 14 June 2001) of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, which entrenched the sums of compulsory insurance against civil liability for damage that was caused during a road accident to person and property, was not amended and/or supplemented.

4. On 5 March 2004, the Seimas adopted the Republic of Lithuania Law on Supplementing Article 13 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, which came into force on 13 March 2004.

Article 1 of this law, whereby one supplemented Paragraph 1 (wording of 14 June 2001) of Article 13 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, prescribed:

In Paragraph 1 of Article 13, after the numbers and words ‘30,000 litas to property’ to include numbers and words ‘or 500,000 euros for personal injury and 100,000 euros for damage to property’ and to set forth this paragraph as follows:

1. The compulsory insurance of owners and holders of vehicles against civil liability shall be 30,000 litas for personal injury and 30,000 litas for damage to property or 500,000 euros for personal injury and 100,000 euros for damage to property.’”

It is clear from the travaux préparatoires of this law that the law was supplemented in order to create possibilities to the owners and holders of vehicles in the course of getting insurance against civil liability to choose also bigger sums of insurance, which are indicated in the law in euros (500,000 euros for personal injury and 100,000 euros for damage to property).

5. On the same day, which was 5 March 2004, the Seimas adopted the Republic of Lithuania Law on Amending the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, by Article 1 of which it set forth the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles in a new wording and changed its title—the law got a new title, which was the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles.

Pursuant to Article 1 of the Republic of Lithuania Law on Amending the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles, the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004) came into force (with certain exceptions) on 1 May 2004.

5.1. Having set forth the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles in the new wording, inter alia the numbering of its articles was changed.

5.2. Paragraph 1 of Article 4 “Obligation to Conclude an Insurance Contract” of the Law (wording of 5 March 2004) prescribed:

Vehicles used in the territory of the Republic of Lithuania must be covered by compulsory insurance against civil liability in respect of the use of vehicles. A motor vehicle normally based in the territory of the Republic of Lithuania must be covered by compulsory insurance against civil liability in respect of the use of vehicles as long as the vehicle is registered.”

Paragraph 2 of Article 4 of the Law (wording of 5 March 2004) inter alia prescribed: “Responsibility for concluding an insurance contract <…> shall fall on the owner of motor vehicle <…>”

Having compared the legal regulation established in Article 4 of the Law (wording of 5 March 2004) with the legal regulation established in Article 4 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001), it is clear that it virtually remained intact—an imperative duty of holders of vehicles to conclude a contract of compulsory insurance against civil liability remained explicitly entrenched in the Law.

5.3. Paragraph 6 of Article 2 of the Law (wording of 5 March 2004) prescribed: “‘Insurer’ means a person (an insurance undertaking of the Republic of Lithuania, an insurance undertaking of another Member State of the European Union or a branch of a foreign insurance undertaking established in the Republic of Lithuania) which conducts, in accordance with the procedure established in legal acts, the business of compulsory insurance against civil liability in respect of the use of vehicles in the Republic of Lithuania and which is a member of the Bureau.”

Having compared the legal regulation established in Paragraph 6 of Article 2 of the Law (wording of 5 March 2004) with the legal regulation established in Paragraph 1 of Article 2 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the concept of the insurer who is engaged in compulsory insurance against civil liability of holders of vehicles was expanded—insurance undertakings of other Member States of the European Union were indicated as well.

Paragraph 2 of Article 6 of the Law (wording of 5 March 2004) inter alia prescribed:

The insurer must conclude insurance contracts with persons <…> who have submitted applications in person or through their representatives and have presented all the required information and documentation necessary for the conclusion of a contract. A refusal by the insurer to conclude an insurance contract may be contested in court.”

Having compared the legal regulation established in Paragraph 2 of Article 6 of the Law (wording of 5 March 2004) with the legal regulation established in Article 12 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001), it is clear that it virtually remained intact—the obligation of insurance companies to conclude contracts on compulsory insurance against civil liability of holders of vehicles with the persons who have submitted applications and have presented all the required information and documentation necessary for the conclusion of a contract.

5.4. Paragraph 1 of Article 24 of the Law (wording of 5 March 2004) prescribed: “‘Bureau’ means an association of insurers who are permitted to engage in compulsory insurance against civil liability of holders of vehicles in the Republic of Lithuania, which was established in view of the Recommendation No. 5 adopted by the Sub-Committee on Road Transport of the Inland Transport Committee of the Economic Commission for Europe of the United Nations on 25 January 1949 and which performs the functions established in this law.”

Having compared the legal regulation established in Paragraph 1 of Article 24 of the Law (wording of 5 March 2004) with the legal regulation established in Paragraph 1 of Article 23 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the former virtually remained intact.

5.5. Article 11 of the Law (wording of 5 March 2004), Paragraph 1 of which to the respective extent is disputed by the petitioners, prescribed:

1. The sum insured under compulsory insurance against civil liability in respect of the use of vehicles shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property in a single road accident, whatever the number of injured third parties.

2. A single road accident means an accident which occurred for same reason, even if more than one injured third party may pursue claims in respect of such a road accident.

3. The insurer shall pay compensation for the damage caused in another Member State of the European Union based on the sums insured in accordance with the legal acts of the Member State concerned or the sums insured as specified in Paragraph 1 of this Article, whichever are higher.

4. Amounts of insurance premiums shall be fixed by the insurer.

5. Should the insurance payer fail to pay the insurance premium in due time, the insurer shall have the right to charge late-payment interest of 0.04 percent on the overdue amount for each delayed day, unless otherwise provided in the insurance contract.

6. The insurer may not refuse to pay compensation in respect of an insured event which occurred in the period for which the insurance payer failed to pay the insurance premium within the time limit set in the insurance contract or in the period for which the insurance payer was released from the obligation to pay insurance premiums.

7. If the insurance payer failed to pay, within the time-limit set in the insurance contract, the insurance premium for the insurance coverage provided under the insurance contract and if the vehicle covered by that insurance contract caused damage during the said period or the damage was caused during the period for which the insurance payer was released from the obligation to pay insurance premiums, the insurer shall be entitled to claim reimbursement from the insurance payer for the amounts paid by the insurer to the insurance payer by way of compensation for damage.“

Having compared the legal regulation established in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) with the legal regulation established in Paragraph 1 of Article 13 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the former changed only to the extent that it became explicitly established that the maximum sum of compulsory insurance against civil liability of holders of vehicles for one road accident is 500 euros for causing non-pecuniary damage to the person, which is indicated as a part of the established sum of compulsory insurance of 500,000 euros for the damage caused to the person.

5.6. Paragraph 2 of Article 13 of the Law (wording of 5 March 2004) prescribed: “In the event that the insurer or the Bureau does not compensate the full amount of damages caused during the road accident due to the fact that the damage exceeds the sums of insurance, the person who suffered damage in the road accident has the right to apply to the guilty person for the compensation for the outstanding part of the damage.”

Having compared the legal regulation established in Paragraph 2 of Article 13 of the Law (wording of 5 March 2004) with the legal regulation established in Article 19 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the legal regulation, which is set forth in these provisions, remained unchanged—it remained established in the Law that in the event that the sum of compulsory insurance against civil liability of holders of vehicles is not enough for the full recovery of damage that was caused during the road accident, the difference between the actual amount of damage and the insurance compensation is covered by the person who caused the damage or other person who is liable for the actions of the latter.

5.7. Paragraph 1 of Article 17 of the Law (wording of 5 March 2004) prescribed:

The Bureau shall pay compensation to third parties injured in road accidents occurring in the territory of the Republic of Lithuania in the cases where:

1) damage is caused by an identified liable person with an uninsured (identified) vehicle, provided that the user of vehicle incurs civil liability in respect of the damage;

2) an unidentified liable person causes personal injury and/or loss of life, provided that the damage is caused in circumstances proving the civil liability of the user of vehicle;

3) damage is caused by an identified liable person who, at the time when the damage is done, is covered by compulsory insurance against civil liability in respect of the use of vehicles, but the responsible insurer is the subject of bankruptcy proceedings.”

Having compared the legal regulation established in Paragraph 1 of Article 17 of the Law (wording of 5 March 2004) with the legal regulation established in Paragraphs 2 and 3 of Article 20 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the list of cases when the damage to the victim is compensated by the Bureau was expanded.

5.8. Paragraph 6 of Article 19 of the Law (wording of 5 March 2004) prescribed:

The amount payable by the insurer or the Bureau by way of compensation to the third party injured in a road accident shall not be higher than sufficient to cover the damage which was caused in the road accident and which is supported by evidence and shall not exceed the sums insured as specified in Article 11 of this Law; the insurer or the Bureau shall have the right to reject invalid claims for compensation for the damage caused in the road accident. At the request of the injured third party, the insurer or the Bureau shall remit the payable sum directly to the repair shop repairing the damaged property in question, which has been chosen by the injured third party. An insurer or the Bureau shall remit the payable sum to this repair shop not later than one working day after the damaged property was repaired and the payment order was presented.“

Having compared the legal regulation established in Paragraph 6 of Article 19 of the Law (wording of 5 March 2004) with the legal regulation established in Paragraph 4 of Article 20 of the Law on Compulsory Insurance Against Civil Liability of Owners and Holders of Vehicles (wording of 14 June 2001) it is clear that the essence of the legal regulation remained the same—the law consolidated the maximum sums of insurance for damage caused to property during the road accident (100,000 euros) and damage caused to the person (500,000 euros), inter alia non-pecuniary damage (500 euros).

6. The Law (wording of 5 March 2004) was adopted with a view to implementing inter alia the directives of the European Parliament and the Council that were related to insurance against civil liability of holders of motor vehicles. These directives were listed in the Annex “EU Legal Acts Implemented by the Law” to the Law. The following directives inter alia were implemented by the law:

Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability (so-called First Motor Insurance Directive);

Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (so-called Second Motor Insurance Directive);

Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (so-called Third Motor Insurance Directive);

Directive 2000/26/EC of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Council Directives 73/239/EEC and 88/357/EEC (so-called Fourth Motor Insurance Directive).

6.1. It was established in Paragraph 1 of Article 3 of the First Motor Insurance Directive 72/166/EEC:

Each Member State shall <…> take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of these measures.”

6.2. It was entrenched inter alia in Paragraph 2 of Article 1 of the Second Motor Insurance Directive 84/5/EEC:

Without prejudice to any higher guarantees which Member States may lay down, each Member State shall require that the amounts for which such insurance is compulsory are at least:

in the case of personal injury, 350,000 ECU where there is only one victim; where more than one victim is involved in a single claim, this amount shall be multiplied by the number of victims,

in the case of damage to property 100,000 ECU per claim, whatever the number of victims.

Member States may, in place of the above minimum amounts, provide for a minimum amount of 500,000 ECU for personal injury where more than one victim is involved in a single claim or, in the case of personal injury and damage to property, a minimum overall amount of 600,000 ECU per claim whatever the number of victims or the nature of the damage.”

By the Third and Fourth Motor Insurance directives 90/232/EEC and 2000/26/EC one regulates other aspects of compulsory insurance against civil liability of holders of vehicles that are not related to the establishment of maximum amount of compensation paid by the insurer as recovery of damage caused by holders of vehicles.

6.3. It needs to be noted that it was already after the date of coming into force of the Law (wording of 5 March 2004) that the Directive 2005/14/EC of the European Parliament and of the Council of 11 May 2005 amending Council Directives 72/166/EEC, 84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of the European Parliament and of the Council relating to insurance against civil liability in respect of the use of motor vehicles (Fifth Motor Insurance Directive) was adopted.

It was established in Item 10 of the Recital of the Fifth Motor Insurance Directive 2005/14/EC:

Member States’ obligations to guarantee insurance cover at least in respect of certain minimum amounts constitute an important element in ensuring the protection of victims. The minimum amounts provided for in Directive 84/5/EEC should not only be updated to take account of inflation, but also increased in real terms, to improve the protection of victims. The minimum amount of cover for personal injury should be calculated so as to compensate fully and fairly all victims who have suffered very serious injuries, whilst taking into account the low frequency of accidents involving several victims and the small number of accidents in which several victims suffer very serious injuries in the course of one and the same event. A minimum amount of cover of EUR 1,000,000 per victim or EUR 5,000,000 per claim, regardless of the number of victims, is a reasonable and adequate amount. With a view to facilitating the introduction of these minimum amounts, a transitional period of five years from the date of implementation of this Directive should be established. Member States should increase their amounts to at least a half of those levels within 30 months of the date of implementation.”

By Article 2 of the Fifth Motor Insurance Directive 2005/14/EC one amended inter alia Paragraph 2 of Article 1 of the Second Motor Insurance Directive 84/5/EEC and it was set forth as follows:

Without prejudice to any higher guarantees which Member States may lay down, each Member State shall require insurance to be compulsory at least in respect of the following amounts:

a) in the case of personal injury, a minimum amount of cover of EUR 1,000,000 per victim or EUR 5,000,000 per claim, whatever the number of victims;

b) in the case of damage to property, EUR 1,000,000 per claim, whatever the number of victims.

If necessary, Member States may establish a transitional period of up to five years from the date of implementation of Directive 2005/14/EC of the European Parliament and of the Council of 11 May 2005 amending Council Directives 72/166/EEC, 84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of the European Parliament and of the Council relating to insurance against civil liability in respect of the use of motor vehicles, within which to adapt their minimum amounts of cover to the amounts provided for in this paragraph.

6.4. In summary it is to be held that in the European Union directives related to insurance against civil liability of holders of motor vehicles one entrenches the obligation of Member States of the European Union to ensure the compulsory insurance against civil liability of holders of vehicles and indicates the minimum sum of damage caused during the road accident, which must be recovered by the insurer; one distinguishes between damage caused to property and damage caused to a person, however, compensation for non-pecuniary damage is not explicitly set forth. In the Fifth Motor Insurance Directive 2005/14/EC one also establishes the maximum transition period of five years from the date of implementation of this directive, within which the Member States must adapt the sums recovered by the insurer that are consolidated in their national legal acts to the amounts indicated in the directives.

7. On 17 May 2007, the Seimas adopted the Republic of Lithuania Law on Amending the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles, whereby it set forth the Law (wording of 5 March 2004) in a new wording.

Article 11 of the Law (wording of 17 May 2007) prescribes:

1. The sum insured under compulsory insurance against civil liability in respect of the use of vehicles in a single road accident in the Republic of Lithuania, whatever the number of injured third parties shall be:

1) until 10 December 2009—500,000 euros for personal injury (including 1,000 euros for non-pecuniary damage) and 100,000 euros for damage to property;

2) from 11 December 2009 until 10 June 2012—2,500,000 euros for personal injury (including 2,500 euros for non-pecuniary damage) and 500,000 euros for damage to property;

3) from 11 June 2012—5,000,000 euros for personal injury (including 5,000 euros for non-pecuniary damage) and 1,000,000 euros for damage to property.

2. A single road accident means an accident which occurred for same reason, even if more than one injured third party may pursue claims in respect of such a road accident.

3. The insurer shall pay compensation for the damage caused in another Member State of the European Union based on the sums insured in accordance with the legal acts of the Member State concerned or the sums insured as specified in Paragraph 1 of this Article, whichever are higher.

4. Amounts of insurance premiums shall be fixed by the insurer.

5. Should the insurance payer fail to pay the insurance premium in due time, the insurer shall have the right to charge late-payment interest of 0.04 percent on the overdue amount for each delayed day, unless otherwise provided in the insurance contract.

6. The insurer may not refuse to pay compensation in respect of an insured event which occurred in the period for which the insurance payer failed to pay the insurance premium within the time limit set in the insurance contract or in the period for which the insurance payer was released from the obligation to pay insurance premiums.

7. If the insurance payer failed to pay, within the time-limit set in the insurance contract, the insurance premium for the insurance coverage provided under the insurance contract and if the motor vehicle covered by that insurance contract caused damage during the said period or the damage was caused during the period for which the insurance payer was released from the obligation to pay insurance premiums in accordance with Paragraph 3 of Article 9 of this Law, the insurer shall be entitled to claim reimbursement from the insurance payer for the amounts paid by the insurer by way of compensation for the inflicted damage.

8. The insurer shall not have the right to fix a sum in the insurance contract whereby the compensation paid in the case of an insured event would be reduced.

9. Every five years from 11 June 2012 the amounts of the sums insured for personal injury and damage to property, referred to in Item 3 of Paragraph 1 of this Article, shall be adjusted in line with the percentage change of the European Index of Consumer Prices for the relevant period and rounded up to a multiple of 10,000 euros. The adjusted amounts of sums insured shall be announced in a resolution of the Government of the Republic of Lithuania.”

Having compared the legal regulation established in Paragraph 1 of Article 11 of the Law (wording of 17 May 2007) with the one established in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004), in the context of the constitutional justice case at issue it needs to be noted that the Law (wording of 17 May 2007) provided for bigger sums of compulsory insurance against civil liability in relation to compensation for non-pecuniary damage: the Law (wording of 5 March 2004) provides for the insurance sum of 500 euros for recovery of non-pecuniary damage, whereas the Law (wording of 17 May 2007) provides for the insurance sum of 1,000 euros for recovery of non-pecuniary damage; from 11 December 2009—the insurance sum of 2,500 euros for non-pecuniary damage, and from 11 June 2012—the insurance sum of 5,000 euros for recovery of non-pecuniary damage.

It is clear from the travaux préparatoires of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles that the legislator, while striving to transfer the provisions of directives of the European Union to the national law, made use of the five year transitional period, as provided for in the Fifth Motor Insurance Directive 2005/14/EC, which is calculated from the date of implementation of the aforementioned directive (i.e. from the date of coming into force of the Law (wording of 17 May 2007)), and consolidated the consistent increase of the sums of compulsory insurance against civil liability of holders of vehicles which are set forth in the Law (wording of 5 March 2004).

It needs to be noted that having adopted the Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability (codified version), Directives 72/166/EEC, 84/5/EEC, 90/232/EEC of the Council and Directive 2005/26/EC of the European Parliament and of the Council were codified and therefore revoked.

8. The disputed (by the petitioner) legal regulation, which regulates the relations of compulsory insurance against civil liability of holders of vehicles, is to be construed in the context of other provisions that regulate insurance relations, inter alia provisions of the Civil Code and the Law on Insurance.

8.1. Paragraph 2 of Article 6.250 “Non-pecuniary damage” of the Civil Code prescribes:

Non-pecuniary damage shall be compensated only in cases provided for by laws. Non-pecuniary damage shall be compensated in all cases where it is incurred due to crime, health impairment or deprivation of life, as well as in other cases provided for by laws. The court in assessing the amount of non-pecuniary damage shall take into consideration the consequences of such damage sustained, the gravity of the fault of the person by whom the damage is caused, his financial status, the amount of pecuniary damage sustained by the aggrieved person, also any other circumstances of importance for the case, likewise to the criteria of good faith, justice and reasonableness.”

Article 6.251 “Compensation of damages in full” of the Civil Code prescribes:

The damages incurred must be compensated in full, except in cases when limited liability is established by laws or a contract.

The court, having considered the nature of liability, the financial status of the parties and their interrelation, may reduce the amount of repairable damages if awarding full compensation would lead to unacceptable and grave consequences. However, the reduction may not exceed the amount for which the debtor has or ought to have covered his civil liability by compulsory insurance.”

Paragraph 2 of Article 6.263 “Obligation to compensate for damage caused” of the Civil Code prescribes: “Any bodily or property damage caused to another person and, in the cases established by the law, non-pecuniary damage must be fully compensated by the liable person.”

It is inter alia established in Paragraph 1 of Article 6.254 “Insurance of civil liability” of the Civil Code that “In the instances provided for by laws or a contract, civil liability may be insured by concluding a contract of insurance”.

It is established in Paragraph 2 of the same article that “where the insurance benefit <…> is not sufficient for the compensation for damage in whole, the difference between the insurance benefit and actual amount of damage shall be redressed by the insured person himself liable for the damage caused.”

In Article 6.987 “Concept of the insurance agreement” of the Civil Code it is established that “By the insurance agreement one party (the insurer) undertakes to pay, subject to the insurance contribution (premium), established in the agreement, to the other party (the insured) or the third person for whose benefit the agreement has been made, the insurance indemnity established in the insurance agreement to be calculated in the procedure prescribed in the insurance agreement, if an insured event set forth in the law or the insurance agreement occurs.”

Paragraph 1 of Article 6.997 “The amount of insurance” of the Civil Code prescribes: “The amount of insurance of property interests and the amount of the insurance indemnity (the amount of insurance) the insurer undertakes to pay, shall be established by agreement of the parties to the insurance agreement or by the law.”

Paragraph 3 of Article 6.988 “Forms and branches of insurance” of the Civil Code prescribes: “The types and conditions of insurance as well as the branches of insurance and the interests of insurance shall be governed by other laws.”

Article 6.1000 “Additional insurance” of the Civil Code prescribes:

If only a portion of the value of property or risk (insurance) is insured in the non-life insurance agreement, except for cases stipulated by laws, the insured (the beneficiary) shall be entitled to additionally insure them by entering into an additional insurance agreement with the same or any other insurer. However, in such cases the total amount of insurance under all insurance agreements may not exceed the value of insurance.”

In summary of this legal regulation, in the context of the case at issue it needs to be held that the insurer undertakes, in the event of the insured road accident, in return of the insurance premium established in the contract to pay to the third person an insurance compensation, which is calculated upon the procedure set forth in the law or insurance contract. In case the insurance compensation is not sufficient to recover the damage, inter alia non-pecuniary damage, in full, the difference between the actual amount of the damage and the insurance compensation is recovered by the person who caused the damage or another person who is liable for the actions of the latter. Having taken into account the criteria established in the law, a court may reduce the amount of compensation for incurred damages, however, the reduced amount of compensation for inter alia non-pecuniary damage may not be less than the sum of insurance, whereby the civil liability of the holder of vehicle was or had to be insured on a compulsory basis. It should be noted that the insurance payer, who strives that in case of the insured event the insurer recovers bigger damage caused by him in comparison to the sum of compulsory insurance established in the law, may get additional voluntary insurance against his civil liability for causing damage.

8.2. It was established in Paragraph 3 of Article 2 of the Law on Insurance (wording of 18 September 2003) that “‘Civil liability insurance’ means the insurance of property interests related to civil liability for the damage caused to the injured party or its property where the amount of the benefit paid by the insurer depends on the amount of the indemnity which the insured person must pay to the third party for the damage, which, however, must be within the limits of the insurance sum if it specified in the contract.”

The insurance object is defined in Paragraph 20 of Article 2 of the Law on Insurance (wording of 18 September 2003): “‘Insurance object’ means property interests related to a person’s life, health, property, or civil liability.”

Paragraph 8 of Article 2 of the Law on Insurance (wording of 18 September 2003) prescribes: “‘Insurer’ means a person authorised under law to engage in insurance activity.”

The activity of insurance companies is defined in Paragraph 27 of Article 2 of the Law on Insurance (wording of 18 September 2003), in which it is inter alia established: “‘Insurance activity’ means economic-commercial activity whereby the risk of the losses of other persons is assumed in the form of the insurance contract or it is sought to protect property interests of these persons in any other way upon occurrence of insured events <...>.”

In summary it needs to be held that the obligation of the insurer to compensate to the victim the inflicted damage stems from the insurance contract that was concluded on the basis of the law. The obligation of the insurer to recover damage caused by the insured person does not mean that in all cases when the insured event takes place the insurer undertakes the obligation to compensate the damage in full; the amount of damage to be compensated by the insurer is limited by the sum of insurance which is established in the contract. The insurance company is a kind of mediator, who recovers damages to the third person, to whom damage is caused, related to the damage caused by the person whose civil liability is insured against. The activity of insurers is economic-commercial activity.

The Law on Insurance (wording of 18 September 2003) has been amended and/or supplemented more than once, however, the quoted legal regulation virtually did not change.

8.3. Thus, in summary of the quoted provisions of the Civil Code and the Law on Insurance and in their construction together with the legal regulation entrenched in the Law (wording of 5 March 2004), a conclusion is to be made that compulsory insurance against civil liability of holders of vehicles is a specific economic-commercial activity, in which the insurers (insurance companies) are engaged. Insurance against civil liability of holders of vehicles is compulsory and aimed at protecting property and other interests of the victims and insurance payers. In case the sum of compulsory insurance against civil liability of holders of vehicles is not sufficient to fully recover the damage, inter alia non-pecuniary damage, inflicted during a road accident, the difference between the actual amount of the damage and the insurance compensation is recovered by the person who caused the damage or another person who is liable for the actions of the latter. The parties concerned who wish that in case of the insured event the insurer would compensate the bigger damage, inter alia non-pecuniary damage, that was caused by him in comparison to the sum of compulsory insurance established in the law, may get additional voluntary insurance against his civil liability for causing damage.

9. In the context of the constitutional justice case at issue it needs to be noted that certain aspects of the relations of compulsory insurance against civil liability of holders of vehicles are disclosed in jurisprudence of the Court of Justice of the European Union (former Court of Justice of the European Communities, hereinafter referred to as the CJEC).

In the course of assessment of a statement by the Republic of Italy that the objective of compulsory insurance against civil liability is the social protection of victims of road accidents, the CJEC noted that “social protection objective, which amounts, essentially, to ensuring that such victims will be adequately compensated, can be taken into account as an overriding requirement relating to the public interest“ (Judgment of the CJEC of 28 April 2009 in the case C-518/06 Commission of the European Communities v Italian Republic, items 73-74). The CJEC has stressed that “as Community law stands at present, the Member States are free to determine the type of civil liability applicable to road-traffic accidents” (Judgment of CJEC of 14 September 2000 in the case C-348/98 Mendes Ferreira and Delgado Correia Ferreira, Items 23–29; Judgment of 19 April 2007 in the case C-356/05 Elaine Farrell, Items 33–35). However, the Member States must exercise their powers in compliance with Community law, “whose aim is to ensure that compulsory motor vehicle insurance allows all passengers who are victims of an accident caused by a motor vehicle to be compensated for the injury or loss they have suffered. <…> The national provisions which govern compensation for road accidents cannot, therefore, deprive those provisions of their effectiveness.” (Judgment of the CJEC of 30 June 2005 in the case C-537/03 Katja Candolin, Items 27–28). Therefore any chosen type of civil liability established in the legal norms of national laws of the Member States must be covered by compulsory insurance in regard of the established minimum sums (Judgment of the CJEC of 14 September 2000 in the case C-348/98 Mendes Ferreira and Delgado Correia Ferreira, Items 39–40; Judgment of 19 April 2007 in the case C-356/05 Elaine Farrell, Item 33). The national legislation which provides for a number of types of civil liability applicable to road-traffic accidents and sets for one of them maximum amounts of cover which are lower than the minimum cover prescribed by the directive, are in conflict with the provisions of the directive (Order of the CJEC of 24 July 2003 in the case C-166/02 Daniel Fernando Messajana Viegas). The CJEC has also noted that one of the ways for the Member States to follow the established obligation to ensure that the citizens get insured by a type of insurance against civil liability of holder of vehicles is “to ensure that every owner of a vehicle is able to take out such insurance for a premium which is not excessive” (Judgment of the CJEC of 28 April 2009 in the case C-518/06 Commission of the European Communities v Italian Republic, Items 77–78).

In summary it needs to be noted that pursuant to the European Union directives, which consolidate provisions relating to compulsory insurance against civil liability of holders of vehicles, the Member States remain free to choose a system of compulsory insurance against civil liability and measures of its implementation. The Member States must ensure all persons, who suffered damage during a road accident shall receive compensation for damage, that the sums of insurance that are established in national legal acts of the Member States shall not be less than the minimum sums of insurance established in the directives, and they must ensure that owners and holders of vehicles have a possibility to get insured against this risk for a not too excessive insurance premium.

10. It should also be noted that in all Member States of the European Union and in many countries of the world the civil liability of holders of vehicles is ensured by compulsory insurance. Certain foreign countries (France, Belgium, Germany, United Kingdom, etc.) do not set forth any limits of recovery of non-pecuniary damage in their laws. In such countries the amount of moral damage in monetary expression is assessed by court pursuant to the established practice of courts. However, the principle that limits the compensation for non-pecuniary damage pursuant to the contracts of compulsory insurance against civil liability of drivers exists in law of certain foreign countries (Estonia, Latvia, Denmark). Restriction of recovery of non-pecuniary damage is set forth in the Motor Third Party Liability Insurance Act of the Republic of Estonia that was adopted on 10 April 2001 (with subsequent amendments), in the Mandatory Civil Liability Insurance of Owners of Motor Vehicles Law of the Republic of Latvia that was adopted on 27 September 2007, and in the Liability for Damages Act of the Kingdom of Denmark that was adopted on 8 September 1986.

III

1. It has been mentioned that the petitioners have doubts as to whether Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

2. In the context of the constitutional justice case at issue it needs to be noted that in Paragraph 2 of Article 30 of the Constitution, in which it is established that compensation for material and moral damage inflicted upon a person shall be established by law, one uses the notion “moral damage”, whereas in the disputed provision of the Law and provisions of the Civil Code, which regulate recovery of damage caused to the person, one uses the notion “non-pecuniary damage”.

The Constitutional Court has noted that treating the requirement to describe the same phenomena in laws and other legal acts always in the same words and formulas unreservedly would mean not only the seeking to artificially restrict and stop the development of language, inter alia legal terminology, when not only words (formulas) describing the same phenomena, which are different from the text of the Constitution, are used in the laws and other legal acts, but new terms (formulas) in general, which were not yet created at the time of drawing the text of the Constitution, but it might also provoke to correct the text of the Constitution according to the terminology (words, formulas) entrenched in the laws and other legal acts also in such cases, when the intervention into the text of the Constitution, which as the supreme law must be a permanent act, is not legally necessary; the Constitution does not prevent usage of other words or formulas in laws and other legal acts than those used in the text of the Constitution (Constitutional Court rulings of 16 January 2006 and 19 August 2006). Thus, the kinds of damage mentioned in Paragraph 2 of Article 30 of the Constitution may also be named in the laws by different terms only if these terms do not deny (distort) the constitutional concept of these kinds of damage (Constitutional Court ruling of 19 August 2006).

It needs to be held that the notion “non-pecuniary damage”, which is used in the disputed provision of the Law, means the same as the notion “moral damage”, which is used in the Constitution.

3. Constitutional Court has held that in the course of protection and defence of the human rights and freedoms (and, in general, personal ones—not only those of a natural but also legal person), inter alia dignity of the person, a particular importance falls on the institute of compensation for damage (Constitutional Court ruling of 19 August 2006). Thus, the necessity to compensate material and moral damage inflicted upon a person is a constitutional principle (Constitutional Court rulings of 20 January 1997, 13 December 2004, 19 August 2006, and 27 March 2009). While implementing this constitutional principle, it is attempted to ensure that the persons who suffered material or moral damage be compensated for it (Constitutional Court ruling of 20 January 1997).

4. Constitutional Court has also held that the grouping of damage (which is subject to compensation) inflicted upon the person into material and moral one entrenched in the Constitution determines the peculiarities of the legal regulation of the relations linked to the compensation for damage of a corresponding kind. One of these peculiarities is related to the establishment (assessment) of the amount of the inflicted damage and with the form of compensation for that damage. While compensating for material damage, in all cases it is possible to follow the principle of full (adequate) compensation for damage (restitutio in integrum), when the amount of the inflicted damage may be expressed in a monetary equivalent and the damage may be compensated with money (it does not deny the possibility to compensate for material damage also by means of other property or otherwise); thus, material losses are compensated with material assets. Meanwhile, moral damage is a spiritual offence which can only be assessed and compensated materially on condition; quite often the inflicted moral damage, as the sustained moral offence by the person, cannot be in general replaced (inter alia by any material compensation), because it is impossible to return back the psychological, emotional and other condition of the person, which had existed before the spiritual offence took place—such condition sometimes (at best) can be newly created while using inter alia material (first of all, monetary) compensation for that moral damage (however, sometimes, moral satisfaction alone for the sustained moral damage is not impossible) (Constitutional Court ruling of 19 August 2006).

5. When construing the legal regulation established in Paragraph 2 of Article 30 of the Constitution that compensation for material and moral damage inflicted upon a person shall be established by law, the Constitutional Court held that in this paragraph one provides for a duty of the legislator to pass a law or laws providing for compensation for damage for a person who suffered material or moral damage, that the laws must provide for factual protection of violated human rights and freedoms, and this protection must be coordinated with protection of the other values entrenched in the Constitution, as well as that the Constitution guarantees the right of an individual to compensation for material or moral damage, including recovery of damage under judicial procedure (Constitutional Court rulings of 30 June 2000 and 13 December 2004).

6. The aforementioned general constitutional principles of recovery of damage to the victim originate inter alia from the constitutional principles of justice and the state under the rule of law.

7. It needs to be noted that the legislator, while regulating by a law or laws the relations linked to the compensation for material and/or moral damage inflicted upon the person, has certain discretion, inasmuch as it is not restricted by the Constitution (Constitutional Court ruling of 19 August 2006).

The provision of Paragraph 2 of Article 30 of the Constitution, which consolidates the right of a person to recovery of material and moral damage caused to him, obligates the legislator to set sufficient measures of implementation of this right.

When performing the duty to adopt a law or laws that establish the recovery of damage to the person for the inflicted damage, the legislator, by using the discretion vested in him, may choose and consolidate in a law or laws various forms of recovery of the inflicted damage. In the context of the constitutional justice case at issue it should be noted that the constitutional principle of justice implies also that the damage must be usually recovered by the person who caused it or other person liable for the actions of the latter.

8. In the context of the constitutional justice case at issue it should also be noted that the legislator, having taken into account inter alia the fact that the risk of causing damage (origination of damage) is higher in certain spheres of activity, and while striving to ensure that the damage caused to the person is recovered efficiently and timely, may establish also such legal regulation, when on the basis of the contract the obligation to recover damage caused to other persons is undertaken by the person other than the one who has caused damage, or other than the one, who is liable for the actions of the latter, i.e. to establish the so-called insured method of damage recovery. When setting forth such method of recovery of damage caused to a person, the legislator must consolidate the fundamentals of the insured recovery of damage.

In the context of the constitutional justice case at issue it should also be noted that the legislator, having taken into account the fact that use of certain objects involves a bigger risk to the rights and legitimate interests of other persons, as well as having taken into account particularities of certain vocational or economic activity of other persons, may establish such legal regulation, according to which the persons who use certain objects or who are engaged in certain vocational or economic activity, must get insured against civil liability for causing damage. When setting the fundamentals and conditions of compulsory insurance, the legislator may inter alia set the maximum sums of insurance. When establishing such conditions, the legislator must ensure that the carrying out the duty to pay insurance contributions does not become a too heavy burden for the person who must, pursuant to the law, insure his civil liability for causing damage.

9. It has been mentioned that the activity of economic entities, which undertake, on the grounds of the law or contract, to recover to a certain extent the damage caused by another person, is to be considered as a type of certain economic-commercial activity. Thus, the legislator, when regulating the relations of recovery of the insured damage, inter alia when setting the grounds of legal position of the entities which undertake, under the contract, to recover to the certain extent the damage caused by another person, must pay heed to the imperatives that stem inter alia from Article 46 of the Constitution.

9.1. The Constitutional Court has held more than once that the freedom of individual economic activity and initiative is the whole complex of legal opportunities which creates preconditions for an individual independently to adopt decisions necessary for his economic activity and which implies inter alia freedom of conclusion of contracts.

9.2. The Constitutional Court has also held more than once that freedom of economic activity is not absolute, the person makes use of it only by following certain obligatory requirements and limitations (Constitutional Court rulings of inter alia 13 May 2005, 31 May 2006, 5 March 2008, 2 March 2009, 27 March 2009, 29 April 2009, 8 June 2009, and 8 October 2009).

9.3. It needs to be emphasised that Paragraph 3 of Article 46 of the Constitution clearly indicates the trend of legal regulation of economic activity: the economic activity must serve the general welfare of the Nation (Constitutional Court rulings of 13 February 1997, 13 May 2005, 31 May 2006, and 30 June 2008).

9.4. The state, while regulating the economic activity so that it would serve the general welfare of the Nation, may establish a differentiated legal regulation which is determined by the particularity of the economic activity; therefore, the state, taking account of the particularity of the economic activity, may use various measures of legal regulation (Constitutional Court ruling of 2 March 2009).

The concept “general welfare of the Nation” of Paragraph 3 of Article 46 of the Constitution implies also that by regulation of economic activity the state must strive for the balance of interests of various persons.

The general welfare of the Nation” cannot be opposed to the welfare, rights and legitimate interests of the economic entity the activity of which is regulated, as well as those of other persons who have established and are running the said economic entity or are otherwise related to the said entity (Constitutional Court rulings of 13 May 2005 and 31 May 2006). While regulating economic activity, the state has to follow the principle of coordination of interests of the person and society and has to guarantee the interests of both the private person (a subject of economic activity) and interests of society (Constitutional Court rulings of 18 October 2000, 9 April 2002, 17 March 2003, 26 January 2004, 13 May 2005, 31 May 2006, 5 March 2008, 30 June 2008, 2 March 2009, and 29 April 2009).

9.5. In the context of the constitutional justice case at issue it needs to be noted that the legislator, while paying heed to the requirement, which is entrenched in Article 46 of the Constitution, to regulate the economic activity so that it serves the general welfare of the Nation, as well as other norms and principles of the Constitution, may set forth, by a law, certain conditions of economic activity, inter alia insurance activity, in view of ensuring the interests of both the private person (an entity of economic activity), and the whole society and its members.

10. It needs to be noted that the legal regulation of relations of damage recovery may be differentiated by law in view of whether the damage is to be compensated to the person upon judicial or non-judicial procedure, however, under no circumstances one may establish such legal regulation, which would deny the right of the person to apply to court and to demand the just compensation for the caused damage either from the entity which undertook, under the contract, to recover damage to a certain extent, or from the person who caused damages, or from another person who is liable for the actions of the latter. When regulating the said relations by law, one must follow the principle of equality of rights of persons, justice and other constitutional principles.

11. Pursuant to the Constitution, the damage recovery must be realistic and fair.

11.1. The legislator may not establish any such legal regulation, which would create preconditions for a situation, where the person who suffered damage, inter alia moral damage, would not be able to get fair compensation for damages.

11.2. The constitutional principle of damage recovery is inseparable from the principle of justice entrenched in the Constitution: all the necessary legal preconditions must be created by laws in order to justly compensate for the inflicted damage (Constitutional Court ruling of 19 August 2006). Thus, the Constitution imperatively requires establishment by law such legal regulation that the person, to whom damage was caused, could in all cases demand fair compensation for damage and receive it.

11.3. The constitutional imperative whereby damage must be justly reimbursed is linked to the constitutional principles of proportionality and adequacy of reimbursement of damage which require that the measures which are established in laws and which are applied be proportionate to the objective sought and not limit the rights of a person more than it is necessary for achieving the lawful and universally significant, constitutionally grounded objective and not create preconditions to abuse law (Constitutional Court ruling of 27 March 2009).

11.4. In the context of the constitutional justice case at issue it should be noted that the legislator, who sets inter alia the legal regulation of reimbursement of damage caused to the person when certain entities on the basis of insurance contract undertake to compensate for damage that was caused by another person, is not obligated to establish such sums of insurance, which, in case of the insured event, in all cases would ensure the recovery of damage in full. However, the legislator must not deny the constitutional right of a person to claim, on general grounds, the full reimbursement of the damage that was caused to him, inter alia when the insurance sum does not suffice the full recovery of damage, i.e. to claim damages from the person who caused the damage or from another person who is liable for the actions of the latter.

11.5. The Constitutional Court has held more than once that the constitutional principle of a state under the rule of law is inseparable from the principle of justice and vice versa; the protection of legitimate expectations, legal certainty and legal security are inseparable elements of the principle of a state under the rule of law.

The principle of protection of legitimate interests implies the duty of the state, as well as institutions implementing state power and other state institutions, to fulfil obligations undertaken by the state. This principle also means protection of the acquired rights, i.e. persons have the right to reasonably expect that the rights that they have acquired pursuant to the valid laws and other legal acts, which are not in conflict with the Constitution, will be maintained for the established time and implemented in reality (Constitutional Court ruling of 24 December 2008).

12. The Constitutional Court has held more than once that the constitutional principle of equality of persons must be followed both in passing of laws and in their application; the constitutional principle of equality of persons before the law means an innate human right to be treated equally with the others (Constitutional Court rulings of 2 April 2001, 23 April 2002, 4 July 2003, and 3 December 2003) and obliges to legally assess the homogenous facts in the same manner and prohibits to arbitrarily assess the facts, which are the same in essence, in a different manner; on the other hand, this principle does not deny a possibility to provide in a law for a different legal regulation in respect to certain categories of persons who are in different situations (Constitutional Court rulings of 23 April 2002, 4 July 2003, 3 December 2003, and 26 September 2007).

13. Pursuant to Paragraph 2 of the Constitutional Act “On Membership of the Republic of Lithuania in the European Union”, legal norms of the European Union constitute a part of the legal system of the Republic of Lithuania, and where it concerns the founding Treaties of the European Union, the norms of the European Union law shall be applied directly, while in the event of collision of legal norms, they shall have supremacy over the laws and other legal acts of the Republic of Lithuania.

As mentioned, the relations of compulsory insurance against civil liability of holders of vehicles are regulated by respective legal acts of the European Union, as well. In the context of the constitutional justice case at issue it needs to be noted that in the course of regulation of relations of compulsory insurance against civil liability of holders of vehicles the legislator must pay heed also to the requirements that originate from legal acts of the European Union. The laws of the Republic of Lithuania that regulate the aforementioned relations may not compete with the legal acts of the European Union.

IV

On the compliance of Paragraph 1 of Article 11 of the Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004) with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

1. It has been mentioned that subsequent to the petitions of the petitioners the Constitutional Court will investigate whether Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

2. Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) prescribed: “The sum insured under compulsory insurance against civil liability in respect of the use of vehicles shall be 500,000 euros for personal injury (including 500 euros for non-pecuniary damage) and 100,000 euros for damage to property in a single road accident, whatever the number of injured third parties.”

In the context of the constitutional justice case at issue it should be noted that it was explicitly entrenched in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) that the sum insured under compulsory insurance against civil liability in respect of the use of vehicles is 500 euros for non-pecuniary damage in a single road accident, and it means that in case of the insured event the insurance compensation paid by the insurer for non-pecuniary damage that was caused to the person may not exceed the sum which is established in the Law.

3. In the opinion of the petitioners, Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was in conflict inter alia with the constitutional principle of a state under the rule of law, because by consolidating in the Law the maximum amounts of recovery of non-pecuniary damage the insurer is granted a possibility to avoid reimbursement of non-pecuniary damage that was caused to the person, whereas the limitation of amount of reimbursement of non-pecuniary damage does not meet the expectations of not only the victims, but the insured persons, as well.

4. It has been noted in this ruling that the necessity to compensate to the person for the inflicted material and moral damage is a constitutional principle and that the Constitution obliges the legislator to set sufficient measures of implementation of the right of the person to recovery of material and moral damage that was caused to him.

It has also been mentioned that the laws must create all the necessary preconditions for fair compensation of the inflicted damage; the constitutional principle of justice implies also that the damage must usually be recovered by the person who caused it or another person liable for the actions of the latter; while striving to ensure that the damage caused to the person is recovered efficiently and timely, the legislator may establish also such legal regulation when, on the basis of the contract the obligation to recover damage caused to other persons is undertaken by the person other than the one who has caused damage, or another than the one who is liable for the actions of the latter, i.e. to establish the so-called insured method of damage recovery. When setting the fundamentals and conditions of compulsory insurance, the legislator may inter alia set the maximum sums of insurance; when establishing inter alia such legal regulation of reimbursement of damage that was inflicted upon the person when certain entities, on the basis of the compulsory insurance contract, undertake to compensate for the damage caused by another person, the legislator has no obligation to set such sums of insurance, which, in case of the insured event, in all cases would ensure recovery of the inflicted damage in full, however, he must not deny the constitutional right of a person to claim, on general grounds, the full reimbursement of the damage that was caused to him, inter alia when the insurance sum does not suffice the full recovery of damage, i.e. to claim damages from the person who caused the damage or from another person who is liable for the actions of the latter.

It has also been mentioned that when establishing the conditions of compulsory insurance the legislator must ensure that the carrying out the duty to pay insurance contributions does not become a too heavy burden for the person who must, pursuant to the law, insure his civil liability for causing damage.

5. It has been mentioned that by compulsory insurance against civil liability of holders of vehicles one strives to protect property and other interests of the victims and insurance payers; in case the insurance compensation is not sufficient to recover the damage, inter alia non-pecuniary damage, in full, the difference between the actual amount of the damage and the insurance compensation is recovered by the person who caused the damage or another person who is liable for the actions of the latter.

It was also mentioned that the insurance payer, who strives that in case of the insured event the insurer recovers bigger damage that was caused by him than the sum of compulsory insurance established in the law, may get additional voluntary insurance against his civil liability for causing damage.

6. It means that by the legal regulation, which is entrenched in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004), pursuant to which the insurer pays compensation that amounts up to 500 euros for non-pecuniary damage, one strives to create conditions to the insurer to fulfil his obligations undertaken under the insurance contract rather than to avoid recovery of non-pecuniary damage inflicted to the person, as the petitioner believes. Such legal regulation does not deny the constitutional right of a person to claim, on general grounds, the full reimbursement of the damage that was caused to him, i.e. to claim damages from the person who caused the damage or from another person who is liable for the actions of the latter.

7. It has been mentioned that the principle of legitimate expectations means that the persons have the right to reasonably expect that their rights acquired under the valid laws or other legal acts that are not in conflict with the Constitution will be retained for the established period of time and could be implemented in reality.

It is to be held that the legislator, by entrenching the legal regulation, pursuant to which the holders of vehicles enter into compulsory insurance contract against civil liability, does not create the grounds for origination of legitimate expectations that the insurer will reimburse all the damage caused by them, because, as already mentioned, under the law the insurer undertakes to recover a certain amount of damage upon the procedure established by the law and on the grounds of insurance contract inter alia to the extent provided for in the law and in the contract. Thus, there is no ground to state that the legislator, while establishing that the insurer pays the maximum reimbursement of non-pecuniary damage amounting to 500 euros, violates the legitimate expectations of the insured persons.

8. Taking account of the arguments set forth, one is to draw a conclusion that Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with the constitutional principle of a state under the rule of law.

9. In the opinion of the petitioners, Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was in conflict with inter alia Paragraph 1 of Article 29 of the Constitution, because by such legal regulation the rights and interests of the victim are protected less than those of insurance companies, and without getting a realistic reimbursement of damage the victim is discriminated.

10. It has been mentioned in this ruling that the constitutional principle of equality of persons against the law means the innate right of the person to be treated equally with the others and obliges to assess the homogenous facts in the same manner and prohibits to arbitrarily assess the facts, which are the same in essence, in a different manner; on the other hand, this principle does not deny a possibility to provide in a law for a different legal regulation in respect to certain categories of persons who are in different situations.

The legal regulation established in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) is related to the interests of persons of different categories: the insurers who pay the compulsory insurance sums as set forth in the Law in case of the insured event; the persons who caused damage by a motor vehicle and who had insured their civil liability (the insurance payers); the persons who suffered damage during road accidents and who receive respective insurance compensation. It is obvious that insurers, insurance payers and victims have different rights and obligations, and comprise different categories of persons, whose legal position is different. They may not be identified as the same. It needs to be noted that the same legal regulation is established in regard to every individual category of such persons, who are insurers, insurance payers and victims. Thus, there are no grounds to state that the rights and interests victims are protected by the legal regulation established in Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) less than those of insurance companies, or that victims are discriminated in comparison to insurance companies.

11. Taking account of the arguments set forth, one is to draw a conclusion that Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with Paragraph 1 of Article 11 of the Constitution.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 54, 55 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania has passed the following

ruling:

To recognise that Paragraph 1 of Article 11 of the Republic of Lithuania Law on Compulsory Insurance Against Civil Liability of Holders of Vehicles (wording of 5 March 2004) (Official Gazette Valstybės žinios, 2004, No. 46-1498) to the extent that it established the maximum amount of 500 euros of non-pecuniary damage, which should be recovered by the insurer, was not in conflict with the Constitution of the Republic of Lithuania.

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

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

Justices of the Constitutional Court: Armanas Abramavičius
                                                                      Toma Birmontienė
                                                                      Pranas Kuconis
                                                                      Kęstutis Lapinskas
                                                                      Zenonas Namavičius
                                                                      Egidijus Šileikis
                                                                      Algirdas Taminskas
                                                                      Romualdas Kęstutis Urbaitis