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On the government resolution on the regulation of pricing

No. 12/97

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of the Resolution of the Government of the Republic of Lithuania (No. 777) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 77) ‘On the Regulation of Pricing’ of 3 February 1994, and a Partial Amendment, or Recognition as Null and Void, of the Resolutions of the Government of the Republic of Lithuania Connected with Price Establishment for Heat Energy, Electric Energy and Natural Gas” of 18 July 1997 with the Republic of Lithuania’s Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”

 

Vilnius, 25 March 1998

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Kęstutis Lapinskas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Pranas Vytautas Rasimavičius, Teodora Staugaitienė, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Česlovas Juršėnas, a Seimas member, acting as the representative of a group of Seimas members, the petitioner

Anicetas Ignotas, an adviser to the Minister of Economy, acting as the representative of the Government, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 12 March 1998, in its public hearing, considered case No. 12/97 subsequent to the petition submitted to the Court by a group of Seimas members, the petitioner, requesting an investigation into whether the Resolution of the Government of the Republic of Lithuania (No. 777) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 77) ‘On the Regulation of Pricing’ of 3 February 1994, and a Partial Amendment, or Recognition as Null and Void, of the Resolutions of the Government of the Republic of Lithuania Connected with Price Establishment for Heat Energy, Electric Energy and Natural Gas” of 18 July 1997 is in compliance with the Republic of Lithuania’s Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”.

The Constitutional Court

has established:

I

The petitioner—a group of Seimas members—applied to the Constitutional Court with a petition requesting an investigation into whether the Government Resolution (No. 777) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 77) ‘On the Regulation of Pricing’ of 3 February 1994, and a Partial Amendment, or Recognition as Null and Void, of the Resolutions of the Government of the Republic of Lithuania Connected with Price Establishment for Heat Energy, Electric Energy and Natural Gas” of 18 July 1997 (Official Gazette Valstybės žinios, 1997, No. 69-1760) is in compliance with the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”.

The petitioner grounds his request on these arguments.

Item 2.3 of government resolution No. 777 of 18 July 1997 provides that “after the new pricing procedure for energy resources comes into force, the suppliers of electric energy, central heating, hot water and natural gas must establish new prices for energy resources from 1 July 1997”. This impugned resolution was published in the official gazette Valstybės žinios on 23 July 1997, while it came into force on 24 July 1997 under Article 8 of the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”. Thus, the retroactive, i.e., backward validity of 23 days of the impugned resolution should be pointed out.

The petitioner indicates that by Item 3 eight government resolutions by which prices had been regulated and which were adopted in 1995–1997 were recognised either entirely or partly null and void. The petitioner is of opinion that the abrogated resolutions became null and void after the impugned resolution had come into force, i.e. on 24 July 1997. Thus, on 1–23 July 1997, in Lithuania, there existed both the old and new prices at the same time.

The petitioner points out that the departmental acts regarding the implementation of the impugned resolution appeared later. The Order of the Ministry of Economy of the Republic of Lithuania (No. 235) “On the Prices for Energy Resources” by which the old prices were abolished was adopted on 22 July 1997 (by implementing the impugned government resolution which still was not valid), while it was published in Valstybės žinios on 25 July 1997. The said order prescribed that the new prices “became valid from 1 July 1997 under the procedure established by the Government”. The decisions (Nos. 13–21) of the State Commission for Control over Prices of Energy Resources and Energy Activities concerning the new prices for various regions of Lithuania were published in Valstybės žinios on 1 August 1997. Therein it was indicated every time that the new prices “shall become valid under the procedure established by the Government”, i.e. from 1 July 1997.

The petitioner also notes that the impugned resolution was passed conforming to the 17 June 1997 Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities’” which came into force on 4 July 1997. Therefore, it became impossible to the Government to accomplish the provision of this law stipulating that “the new prices for heat energy and hot water must be established until 1 July 1997”. However, in the opinion of the petitioner, this does not mean that the Government was entitled to establish the retroactive validity of the impugned resolution due to which the life of the people of Lithuania has become more difficult as from 1 July 1997 the prices for heat energy, hot water and other energy resources were much increased.

II

The representative of the party concerned, in the course of preparation of the case for the Constitutional Court hearing, explained in writing that the impugned resolution was adopted by implementing the Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities’”. Under this law, the new prices for heat energy and hot water had to be established until 1 July 1997. Thus, to accomplish this job an unrealistic term of 13 days was provided for, as the law itself was adopted on 17 June 1997. In the opinion of the representative of the party concerned, it is practically impossible to prepare a legal act directly concerning the material interests and living standard of all the people of Lithuania. Besides, the Regulations for the Government Work establish the procedure of co-ordination and adoption of legal acts prepared by the Government, while this procedure continues for a certain period of time.

The representative of the party concerned is of opinion that even though the aforementioned law came into force retroactively, the Government adopted the impugned resolution conforming to Item 2 of Article 94 of the Constitution, and Item 2 of Article 21 of the Law on the Government of the Republic of Lithuania, which obligate the Government to implement laws.

III

In the course of preparation of the case for the Constitutional Court hearing, an explanation of V. Jankauskas, Chairman of the State Commission for Control over Prices of Energy Resources and Energy Activities, was received wherein it was pointed out that the adoption of the impugned resolution had been determined by the Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to the Municipalities’” which came into force on 4 July 1997. Meanwhile the said law indicated that the new prices for heat energy and hot water had to be established until 1 July 1997. The Chairman of the Commission noted that during the deliberation upon the draft law on the new prices the Commission was proposing that the new energy resource prices be established from the beginning of the new heating season, however, this was not done, therefore, when adopting its decisions, the Commission was following the laws and government resolutions.

IV

In the court hearing the representative of the petitioner reiterated the arguments set out in the petition and explicated that one has doubts whether Item 2.3 of the impugned resolution was in compliance with Article 8 of the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”.

The representative of the party concerned reiterated the arguments set out in the explanation which had been presented in writing and virtually recognised the validity of the request of the petitioner.

The Constitutional Court

holds that:

1. Paragraph 2 of Article 7 of the Constitution provides: “Only laws which are published shall be valid”, while Articles 70 and 72 of the Constitution establish the procedure of publication and entry into force of laws. Therefore, pursuant to these constitutional provisions the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania” was passed. Article 4 of this law stipulates: “The laws of the Republic of Lithuania shall come into force after they have been signed by the President of the Republic and officially published in the official gazette Valstybės žinios unless a later day of their entry into force is established in the laws”, while Article 8 whereof prescribes that “resolutions of the Government of the Republic of Lithuania by which legal norms are being established, amended or recognised as null and void shall come into force on the next day after they have been signed by the Prime Minister and by a respective minister and published in the official gazette Valstybės žinios.

The resolutions of the Government of the Republic of Lithuania by which legal norms are not being established, amended or recognised as null and void shall come into force on the same day after they have been signed by the Prime Minister provided a later day of their entry into force is not established in the resolutions or ordinances”.

It should be noted that an official publication of laws and other legal acts is considered their publication in the official gazette Valstybės žinios, while the day of the publication is the day of issue of Valstybės žinios which is indicated on the first page of every issue.

Corresponding provisions regarding the procedure of publication and entry into force of legal acts of the Government, ministries and other government institutions are established in Articles 33 and 38 of the Law on the Government of the Republic of Lithuania.

2. The impugned resolution was adopted on 18 July 1997 pursuant to the Republic of Lithuania’s Law “On the Amendment of Article 15 of the Law on Energy” of 17 June 1997, as well as the Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities’” which was adopted on the same day. This was indicated in the preamble of the said resolution.

Until the adoption of the Law “On the Amendment of Article 15 of the Law on Energy”, the Government used to confirm the prices and rates for electric and heat energy, as well as those for natural gas, on the proposal of the State Commission for Control over Prices of Energy Resources and Energy Activities (hereinafter referred to as the Commission). After the said law has been adopted, the prices for electric energy, centralised heating and hot water, and those for natural gas are being established by the suppliers upon co-ordinating these prices with the Commission.

The Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities’” (which, by the way, came into force on 4 July 1997) points out that the new prices for heat energy and hot water must be established until 1 July 1997.

3. Item 2.3 of the impugned government resolution which came into force on 24 July 1997 provides that after the new pricing procedure for energy resources comes into force, the suppliers of electric energy, central heating, hot water and natural gas must establish the new prices for energy resources from 1 July 1997. Thus, the provision of the Law “On the Amendment of Article 5 of the Law ‘On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities’” was thereby reiterated. Taking account of this, the government resolutions by which the prices and rates for electric energy, centralised heating and hot water, and those for natural gas had been established and which had been established under the former procedure of establishment of prices for energy resources, i.e. that which had existed before the adoption of the Law “On the Amendment of Article 15 of the Law on Energy”, were recognised as null and void by Item 3 of the impugned resolution.

4. The legal theory states clearly that in the sphere of legal regulation the rule lex retro non agit is in operation, i.e. the one stating that a legal act shall not be retroactively valid. Thus, as a rule, legal acts are not applied to those occurred legal facts and legal effects which had appeared before a newly adopted legal act came into force. The Constitutional Court has emphasised this for many a time in its rulings (e.g., the Constitutional Court’s rulings of 16 March 1994, 21 April 1994, 15 July 1994, and 1 December 1994).

The rule lex retro non agit is an important and necessary factor to ensure the stability and firmness of law, the laws and legal order, as well as the rights of the subjects of legal relations, along with the trust in the legal acts adopted in the state. The legal subject must be sure that his conduct which is in conformity with the legal acts which are valid, will also be deemed to be lawful and not causing any legal effects to him later.

It should be noted that an exception is made in cases when, in either criminal or administrative law, the liability is abolished or responsibility is mitigated for a deed. Such laws have the power of retroactive validity. This is in line with the rule of the legal doctrine lex benignior retro agit.

It should be presumed that, in other branches of law, the adoption of a legal act with retroactive validity would be possible if this were indicated by a relevant law itself and if such a legal act did not deteriorate the legal position of legal subjects. However, in all cases one has to take account of the fact that, in private law, after the legal position of one party of legal relations has been improved, the position of another party, as a rule, might deteriorate.

The Constitutional Court, analysing the problems of retroactive validity of legal acts, has noted in respect to government resolutions that “the government resolution which has been adopted applying the norms of a law and establishing their retroactive power, in all cases is not consistent with the law, since it interferes into the scope of the law validity, and its supremacy over substatutory acts is violated” (the Constitutional Court’s ruling of 16 March 1994).

5. Item 2 of Article 94 of the Constitution provides that the Government shall “implement laws and resolutions of the Seimas concerning the implementation of laws, as well as the decrees of the President of the Republic”. This constitutional provision is reiterated by Item 2 of Article 21 of the Law on the Government. Thus, adopting its resolutions, the Government must comply with the valid laws, and, when implementing certain laws, it must not violate other laws. Consequently, by implementing Article 5 of the Law “On the Reorganisation of the Special-Purpose Joint-stock Company Lietuvos Energija and the Transfer of the Heating Complex and Its Keeping to Municipalities” by which it is stipulated that the new prices for heat energy and hot water must be established until 1 July 1997, the impugned resolution was not allowed to disregard the requirements of Article 8 of the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”. In addition, one should note that, under Article 15 of the Law on Energy, the issues of pricing in the energy sector fall under the competence of the State Commission for Control over Prices of Energy Resources and Energy Activities but not that of the Government.

Item 2.3 of the impugned government resolution should be judged to be one among other legal grounds which the Commission had invoked when it established new, higher prices for energy resources by its resolutions Nos. 13 and 14 of 22 July 1997, resolutions Nos. 15 and 16 of 23 July 1997, resolutions Nos. 17 and 18 of 28 July 1997, resolution No. 19 of 28 July 1997, and resolutions Nos. 20 and 21 of 29 July 1997. These resolutions of the Commission were published in the official gazette Valstybės žinios on 1 August 1997. In deciding the question of the enforcement of the said resolutions of the Commission, one has to conform to Article 10 of the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”. The said article provides that “the legal acts issued by the Lithuanian Bank, ministries, departments and government offices as well as other institutions of state administration by which legal norms are established, amended or recognised as null and void shall come into force on the next day following their publication in the official gazette Valstybės žinios unless a later day of their enforcement is established in the said legal acts”. Thus, the departmental acts adopted by the Commission in pursuance of this law came into force on 2 August 1997. The said resolutions of the Commission, however, followed the impugned government resolution, too, and it was indicated in the said resolutions that the new prices for energy resources had to come into force under the procedure established by the Government which, in the opinion of the Commission, meant that that the new prices for energy resources had to be applied from 1 July 1997. Likewise, the Order of the Ministry of Economy of the Republic of Lithuania (No. 235) “On the Prices for Energy Resources” by which the old prices for some energy resources were abolished was also following the impugned government resolution.

Thus, it is evident that in the departmental legal acts Item 2.3 of the impugned government resolution was being followed and it was deemed to be one among other legal grounds in the establishment of the retroactive application of the new prices for energy resources.

In view of the foregoing, it should be concluded that Item 2.3 of the Government Resolution (No. 777) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 77) ‘On the Regulation of Pricing’ of 3 February 1994, and a Partial Amendment, or Recognition as Null and Void, of the Resolutions of the Government of the Republic of Lithuania Connected with Price Establishment for Heat Energy, Electric Energy and Natural Gas” of 18 July 1997 contradicts Article 8 of the Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 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 gives the following

ruling:

To recognise that Item 2.3 of the Resolution of the Government of the Republic of Lithuania (No. 777) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 77) ‘On the Regulation of Pricing’ of 3 February 1994, and a Partial Amendment, or Recognition as Null and Void, of the Resolutions of the Government of the Republic of Lithuania Connected with Price Establishment for Heat Energy, Electric Energy and Natural Gas” of 18 July 1997 contradicts Article 8 of the Republic of Lithuania’s Law “On the Procedure of Publication and Entry into Force of Laws and Other Legal Acts of the Republic of Lithuania”.

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

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

Justices of the Constitutional Court:

 

Egidijus Jarašiūnas      Kęstutis Lapinskas      Zigmas Levickis

 

Augustinas Normantas     Vladas Pavilonis     Jonas Prapiestis

 

Teodora Staugaitienė     Juozas Žilys