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On the legality of founding the national investor

Case No. 28/08

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF THE PROVISIONS OF PARAGRAPH 1 (WORDING OF 1 FEBRUARY 2008) OF ARTICLE 10 AND ITEM 1 OF ARTICLE 11 (WORDING OF 1 FEBRUARY 2008) THE REPUBLIC OF LITHUANIA’S LAW ON THE NUCLEAR POWER PLANT WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

2 March 2009
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

The court reporter—Daiva Pitrėnaitė

Raimondas Šukys, Deputy Speaker of the Seimas, and Seimas member Julius Veselka, acting as the representatives of the Seimas of the Republic of Lithuania, the petitioner

Seimas member Birutė Vėsaitė, acting as the representative of the Seimas of the Republic of Lithuania, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, in its public hearing, on 27–28 January 2009, considered case No. 28/08 subsequent to the petition of the Seimas of the Republic of Lithuania, the petitioner, set forth in the Seimas Resolution (No. X-1729) “On Applying to the Constitutional Court of the Republic of Lithuania with the Petition Requesting an Investigation into Whether the Republic of Lithuania’s Law on Amending and Supplementing Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant Is Not in Conflict with the Constitution of the Republic of Lithuania” of 22 September 2008 requesting an investigation into:

whether Paragraph 1 (Official Gazette Valstybės žinios, 2008, No. 19-674) of Article 2 of the Republic of Lithuania’s Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, which amends Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant and “which provides for the single aim of the national investor whereby ‘the national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner’ and which does not provide for protection of consumer rights” is not in conflict with Paragraph 5 of Article 46 of the Constitution of the Republic of Lithuania;

whether Paragraph 1 of Article 2 of the Republic of Lithuania’s Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, which amends Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant and provides that “the national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution of the Republic of Lithuania;

whether Item 1 of Paragraph 1 of Article 11 of the Law on the Nuclear Power Plant, which is set forth in Article 3 of the Republic of Lithuania’s Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, and which provides that “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor”, is not in conflict with Paragraph 4 of Article 46 and Article 29 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

1. On 22 September 2008, the Seimas, the petitioner, adopted the Resolution (No. X-1729) “On Applying to the Constitutional Court of the Republic of Lithuania with the Petition Requesting an Investigation into Whether the Republic of Lithuania’s Law on Amending and Supplementing Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant Is Not in Conflict with the Constitution of the Republic of Lithuania” in Article 1 whereof the petition was set forth requesting the Constitutional Court to investigate:

whether Paragraph 1 of Article 2 of the Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, which amends Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant and “which provides for the single aim of the national investor whereby ‘the national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner’ and which does not provide for protection of consumer rights” is not in conflict with Paragraph 5 of Article 46 of the Constitution;

whether Paragraph 1 of Article 2 of the Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, which amends Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant and provides that “the national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution;

whether Item 1 of Paragraph 1 of Article 11 of the Law on the Nuclear Power Plant, which is set forth in Article 3 of the Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, and which provides that “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor”, is not in conflict with Paragraph 4 of Article 46 and Article 29 of the Constitution of the Republic of Lithuania.

The petition of the Seimas, the petitioner, was received at the Constitutional Court on 6 October 2008.

2. By its Decision “On the Acceptance of the Petition of the Seimas of the Republic of Lithuania, the Petitioner, Set Forth in the Seimas Resolution (No. X-1729) ‘On Applying to the Constitutional Court of the Republic of Lithuania with the Petition Requesting an Investigation into Whether the Republic of Lithuania’s Law on Amending and Supplementing Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant is not in Conflict with the Constitution of the Republic of Lithuania’ Requesting an Investigation into Whether the Provisions of Articles 10 and 11 (Wording of 1 February 2008) of the Republic of Lithuania’s Law on the Nuclear Power Plant Are Not in Conflict with the Constitution” of 8 October 2008, the Constitutional Court decided to accept the petition set forth in the Seimas resolution of 22 September 2008 requesting an investigation into whether:

the provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that protection of consumer rights are not legislatively established therein, is not in conflict with Paragraph 5 of Article 46 of the Constitution;

the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that it provides to create the national investor which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution;

Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant which provides that “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor”, is not in conflict with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution.

3. The announcement of the President of the Constitutional Court regarding the acceptance of the aforesaid petition was officially published in the official gazette “Valstybės žinios” (Official Gazette Valstybės žinios, 2008, No. 177-4457) on 11 October 2008. From that day until the publication of a ruling of the Constitutional Court in this constitutional justice case the validity of Paragraph 1 (wording of 1 February 2008; Official Gazette Valstybės žinios, 2008, No. 19-674) of Article 10 and Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008; Official Gazette Valstybės žinios, 2008, No. 19-674) of the Law on the Nuclear Power Plant was suspended.

II

The petition of the Seimas, the petitioner, was grounded on the following arguments.

1. The impugned provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant consolidates the legal regulation which, according to the petitioner, provides for a single aim of the national investor—to gain benefits for itself and all its shareholders in a socially responsible manner—and does not legislatively establish the protection of the rights of consumers might be in conflict with Paragraph 5 of Article 46 of the Constitution, all the more so that the subchapter titled “Economic Policy” of Chapter 4 of Part I of the Appendix to the Republic of Lithuania’s Law on the Basics of National Security names the energy sector as a sector of economy which is strategically important to national security. Thus, according to the petitioner, the securing of generation of electricity, as well as that of its transmission, distribution and supply, which do not violate the rights of consumers, has a special significance to the Lithuanian economy and the population—consumers of electricity.

2. The impugned provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant consolidated the legal regulation which, according to the petitioner, provides for creation of such a national investor, which, as an owner, will concentrate the main portion of electricity generation, transmission, export, and import in its hands, and this might be in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution, all the more so that the subchapter titled “Economic Policy” of Chapter 4 of Part I of the Appendix to the Law on the Basics of National Security emphasises that a single investor shall be prohibited from dominating in an economic sector of strategic importance to national security.

The petitioner also notes that the Seimas has ratified the Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community, Item a of Paragraph 1 of Article 176a whereof provides: “1. In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to: (a) ensure the functioning of the energy market; <…>.”

3. According to the petitioner, by means of the legal regulation established in Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant (“the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor”) the state, failing to follow the principle of fair competition, created a possibility of establishing the national investor without a tender, since the only partner, the joint-stock company “VST”, was chosen and exclusive rights were established for this company, i.e. the law entrenched unequal legal regulation with regard to economic subjects. According to the petitioner, such legal regulation might be in conflict with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution, all the more so that, under the doctrine of the Constitutional Court, the state, while regulating economic activity, must heed the constitutional requirement of the equality of rights of subjects of economy, which is directly related with the principle of the equality of rights of all persons, which is entrenched in Article 29 of the Constitution, otherwise, the legal regulation of economic activity would not be considered as one serving the general welfare of the Nation.

III

In the course of the preparation of the case for the Constitutional Court’s hearing written explanations were received from a representative of the Seimas, the party concerned, who was B. Vėsaitė, Chairperson of the Seimas Committee on Economics, and a former representative of the Seimas, the party concerned, who was N. Pažūsienė, Director of the Law and Public Procurement Department of the Ministry of Economy (by the 12 January 2009 ordinance (No. PP-13) of the Speaker of the Seimas, N. Pažūsienė lost the powers to represent the Seimas in the constitutional justice case at issue), in which it is maintained that the arguments of the petitioner regarding the conflict of the impugned legal acts with the Constitution are groundless.

1. The position of the representatives of the party concerned regarding the compliance of the provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of the rights of consumers is not legislatively established, with Paragraph 5 of Article 46 of the Constitution, is substantiated by the following arguments.

1.1. B. Vėsaitė, a representative of the Seimas, the party concerned, explained that the impugned provision stated the status of the national investor in a formal manner. The national investor is a private legal person. The said investor is not a state institution to which functions of protection of the rights of consumers could be established. Due to this reason, it is not clear as regards the existence of the alleged violation of the rights of consumers and, accordingly, the existence of the shortcoming of the legal regulation, which had been perceived by the Seimas in the impugned provision.

The Law on the Nuclear Power Plant is a special law designed for the concrete objective specified in Article 1 thereof. This objective is to lay down the provisions and to create the legal, financial and organisational preconditions for the implementation of a new nuclear power plant project. The purpose and objective of the Law on the Nuclear Power Plant is not protection of the rights of consumers. The protection of the rights and interests of consumers is regulated by other legal acts whose validity has not been amended by the impugned provision.

In itself, the provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, wherein it is provided that the national investor will seek to gain benefits for itself and all its shareholders, is not in conflict with the Constitution. Seeking to gain benefits is the essential precondition of freedom of individual economic activity and initiative, which is safeguarded by Paragraph 1 of Article 46 of the Constitution. The representative of the party concerned drew attention to the fact that the impugned provision requires that the objective of gaining benefits be implemented in a socially responsible manner. In addition, Paragraph 2 of Article 10 of the Law on the Nuclear Power Plant provides that the Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor. This provision is an additional safeguard ensuring that the national investor will conduct its activity in a socially responsible manner.

1.2. In the opinion of N. Pažūsienė, a representative of the Seimas, the party concerned, Paragraph 5 of Article 46 of het Constitution should not be construed as one establishing the duty for the legislature to establish, in each law that he has adopted, measures of protection of the rights of consumers or state institutions securing the protection of the interests of consumers. Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant has not consolidated any concrete measures of protection of the rights of consumers, since such measures are entrenched in other legal acts of the Republic of Lithuania: the general protection of the rights and interests of consumers is secured by the Civil Code of the Republic of Lithuania and the Republic of Lithuania’s Law on Consumer Rights Protection; in the electricity sector the protection of the rights and interests of consumers is secured by means of a special law—the Republic of Lithuania’s Law on Electricity. The provisions which are entrenched in these legal acts and which secure the defence and protection of consumer rights have not been amended or repealed.

The impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant is not in conflict with Paragraph 5 of Article 46 of the Constitution. The market economy is based upon one’s seeking to gain benefits. The right to seek to gain benefits arises from the provisions of Paragraphs 1 and 2 of Article 46 of the Constitution; without the element of benefits seeking the freedom of economic activity and initiative are impossible. The fact that benefits are sought in the activity of a private legal person in itself does not deny the fact that such activity realises the economic efforts and initiative which are useful to society. The harmonisation of seeking benefits with Paragraph 5 of Article 46 of the Constitution is secured by the provisions of the Law on Electricity, and the provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant wherein it is provided that the national investor will seek gaining benefits for itself and all its shareholders in a socially responsible manner. The fact that the national investor will pursue its aims in a socially responsible manner is also secured by the provision of Paragraph 2 of Article 10 of the Law on the Nuclear Power Plant wherein it is provided that the Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor.

The impugned provision should be assessed in the context of the entire provision of Paragraph 1 (which consolidates the status and the main aims of the activity of the national investor) of Article 10 of the Law on the Nuclear Power Plant. When one takes account of Paragraph 5 of Article 46 of the Constitution, the duty to secure the protection of the rights of consumers cannot be transferred to private legal persons.

2. The position of the representatives of the party concerned regarding the compliance of the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that such a national investor is created, which, as an owner, will concentrate the main portion of electricity generation, transmission, export, and import in its hands, with Paragraphs 3 and 4 of Article 46 of the Constitution, is substantiated by the following arguments.

2.1. In her written explanations B. Vėsaitė, a representative of the Seimas, the party concerned, pointed out that prior to the adoption of the Law on the Nuclear Power Plant various ways of implementation of the new power plant building project had been analysed, including direct participation by the state and/or the implementation of the project solely by means of the capabilities of state-controlled joint-stock company “Lietuvos energija” and state-controlled joint-stock company Rytų skirstomieji tinklai. As the assessment (which was executed by experts) of a draft Law on the Nuclear Power Plant has shown, the state-controlled joint-stock company “Lietuvos energija” and the state-controlled joint-stock company Rytų skirstomieji tinklai are economically unable to implement the project of such a scale, while the direct participation of the state in this project might be regarded as state support upon which big limitations were placed in legal acts of the Republic of Lithuania and the European Union. Due to this reason—and this is supported by comprehensive economic calculations—only the alternative of the national investor formed on the basis of joint-stock company “Lietuvos energija”, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST” was viable from the economic point of view and was appropriate in order to achieve the strategic objectives of development of the electricity system of the Republic of Lithuania. By building the new nuclear power plant and interconnecting the electricity systems of Lithuania, Poland and Sweden, the energy security and energy independence of Lithuania would be strengthened.

According to the provisions of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, the national investor has not been granted any exceptional rights. The fact that the national investor is created and that it would participate in running the enterprise which will build the nuclear power plant does not restrict the rights of other economic subjects to conduct analogous activity, i.e. the activity related to planning the new nuclear power plant, its building, renovation, replacement, repair, management, use and/or maintenance as well as construction of interconnections of electricity systems. Under legal acts of the Republic of Lithuania, all economic subjects meeting the conditions and requirements established in legal acts may conduct analogous activity.

Upon creating the national investor, the state maintained the control over the joint-stock company “Lietuvos energija”, the operator of electricity transmission network, and the joint-stock company Rytų skirstomieji tinklai, an operator of electricity distribution network. Due to the creation of the national investor, the situation in corresponding markets, as long as this is related with the activity of the enterprises, has not changed in essence. The essential change that took place due to the creation of the national investor is the fact that the control over the joint-stock company “VST” has changed. Upon the creation of the national investor, the control exercised by a private person (shareholder) was replaced by state control. Regardless of such consolidation of the control over the enterprises that distribute electricity, the creation of the national investor may not be treated as creating preconditions for monopolising the production or the market, or as limiting freedom of fair competition. The problem of monopolisation of the market or that of fair competition could occur if several independent economic subjects, which compete with one another, are joined into one group of economic subjects. In such a case competition would decrease in the market, i.e. a threat of the monopolisation of the market and a limitation on competition would arise. The special character of the activity of the joint-stock company “VST” and the joint-stock company Rytų skirstomieji tinklai as enterprises operating distribution networks is that each of them is virtually the only operator of distribution networks in the corresponding market. This means that these enterprises do not compete with each other directly. Due to this reason, after the creation of the national investor, the competition in the market of electricity distribution services remains unchanged. In addition, there are not any preconditions for the emergence of such consequences as monopolisation of the market or limitation on fair competition. Meanwhile, the activity of electricity supply is not monopolistic: it can be undertaken by any person upon reception of a corresponding licence.

The representative of the party concerned drew attention also to the experience of foreign states (Austria, Czech Republic, Estonia), which confirms the tendency to consolidate generation of electricity, its transmission and distribution in a single enterprise.

2.2. The representative of the Seimas, the representative of the party concerned, explained that upon building the new nuclear power plant and after the electricity systems of Lithuania, Poland and Sweden are interconnected, the energy security (as well as national security) of Lithuania and its energy independence would by strengthened. Several possible alternatives of implementation of projects of building the new nuclear power plant and construction of interconnections of electricity system were discussed; an assessment (which was executed by an independent expert) of a draft Law on the Nuclear Power Plant has shown that there are not any other economically grounded alternatives (i.e. if one does not create the national investor) for implementation of the projects of building the new nuclear power plant and that of interconnection of the electricity systems. It was found out that upon joining the three electricity sector enterprises, the new group of enterprises would be financially capable of initiating and implementing the investment projects of the new nuclear power plant and the interconnection of the electricity systems.

The impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant does not establish a monopoly, i.e. the national investor is not granted any exceptional rights or privileges due to which other economic subject could be discriminated and their economic freedom in the sphere of generation of electricity, its transmission or distribution would be limited. Under legal acts of the Republic of Lithuania, all economic subjects which meet the conditions and requirements established in legal acts (inter alia, the Law on Electricity, the Law on Nuclear Energy) can generate electricity. The impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant does not monopolise generation of electricity.

The impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant does not monopolise construction of the interconnection of the electricity systems. This is grounded upon the provision of Paragraph 9 of Article 10 of the Law on the Nuclear Power Plant which provides that the Law on the Nuclear Power Plant shall not grant the national investor company any exclusive rights with respect to other persons regarding the implementation of power system interconnection projects with Poland and Sweden.

The formation of the national investor on the basis of the joint-stock company “Lietuvos energija”, which conducts electricity transmission activity, as well as the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST”, both of which are operators of distribution networks, should not be regarded as monopolisation of the market or limitation on competition due to two main reasons:

1) upon creation of the national investor, the structure and control of the shareholders of Lithuanian electricity companies has changed, however, this does not have any impact on the electricity transmission and electricity distribution markets. Prior to the creation of the national investor, the Republic of Lithuania exercised control over the joint-stock company “Lietuvos energija” (transmission of electricity) and the joint-stock company Rytų skirstomieji tinklai (distribution of electricity in the corresponding part of Lithuania). After the national investor was created, the Republic of Lithuania exercises control over the national investor as well, while holding the majority of shares and votes; it also controls the subsidiary companies of the national investor, which are the joint-stock company “Lietuvos energija” and the joint-stock company Rytų skirstomieji tinklai. The creation of the national investor did not have any impact on the situation of these two enterprises in the electricity transmission and distribution markets. In addition, since the joint-stock company “Lietuvos energija” is the only company in Lithuania that renders electricity transmission services, the creation of the national investor did not have any impact on the activity of electricity transmission activities, i.e. it did not monopolise it. The joint-stock company “VST” and the joint-stock company Rytų skirstomieji tinklai (which never competed with each other directly) possess electricity distribution networks that are in different geographical territories, therefore, two separate markets should be distinguished. Each of these enterprises is the only enterprise of such a character operating in the corresponding territory; due to this reason the creation of the national investor and the consolidation of the control over the joint-stock company “VST” and the joint-stock company Rytų skirstomieji tinklai has not any impact on their situation in the corresponding markets of rendering electricity distribution services.

2) Articles 32 and 40 of the Law on Electricity implement the model of the internal market in electricity provided for in Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC. Article 32 of the Law on Electricity consolidates the principle of distinguishing various types of activity, but not that of ownership, while Article 40 of the same law establishes the stages of liberalisation of the electricity market. The creation of the national investor does not create any preconditions for joining the types of activities, i.e. generation, transmission and distribution of electricity.

In the explanations attention is paid to the fact that an assessment (which was executed by an independent expert) of a draft Law on the Nuclear Power Plant presented fourteen examples of foreign enterprises in which the activities of electricity generation, transmission, distribution, supply and/or wholesale are consolidated.

3. The position of the representatives of the party concerned regarding the compliance of the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution is substantiated by the following arguments.

3.1. In her written explanations B. Vėsaitė, a representative of the Seimas, the party concerned, pointed out that the economic capabilities of the joint-stock company “Lietuvos energija” and the joint-stock company Rytų skirstomieji tinklai were insufficient for implementation of the project of such a scale, while direct participation of the state was hardly possible or even undesirable, since it could be treated as state help. Due to these circumstances it was necessary to bring a private investor to the implementation of the projects of building the new nuclear power plant and construction of interconnection of the electricity systems. Several objective circumstances determined the choice of the person holding the controlling block of shares in joint-stock company “VST”. First, in Lithuania there are only two operators of distribution networks, which are the joint-stock company “VST” and the joint-stock company Rytų skirstomieji tinklai. If only the joint-stock company Rytų skirstomieji tinklai was brought into the implementation of the project, the other distribution networks company—the joint-stock company “VST”—would have been discriminated. Second, if the person who holds the controlling block of shares in the joint-stock company “VST” is brought into the implementation of the project, the state could increase the control over the energy sector in Lithuania. In this respect the participation of any other person would not secure the attainment of this aim. Third, apart from the joint-stock company Rytų skirstomieji tinklai, the joint-stock company “VST” is the only economic subject that has a rather big market of electricity consumers. The opportunity to act in this market secures a stable generation of the flow of money, which is necessary in order to implement the project of building the new nuclear power plant.

The representative of the party concerned substantiates her position by the following conclusions presented by an independent expert after he conducted an assessment of the Law on the Nuclear Power Plant: “The draft law provisions, regarding the national investor as formation of a national energy company, by consolidating the capabilities and economic potential of the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’, on the grounds the financial indicators presented for this analysis by the consolidated companies and on the grounds of the assumption that the existing pricing policy for electricity generation, transmission, distribution and supply to the final consumers will remain stable, are economically grounded. The financial indicators presented for the analysis permit one to reasonably predict that the formation of the national investor will enable to attain the strategic objectives of the energy system of the Republic of Lithuania, which were specified in the draft law.”

The Law on the Nuclear Power Plant has not entrenched a final list of the participant in the national investor. It provides that later also other economic subjects will be able to join the activity of the national investor.

3.2. N. Pažūsienė, a representative of the Seimas, the party concerned, explained that in the course of the preparation of the Law on the Nuclear Power Plant a legal assessment was conducted which showed that neither legal acts of the Republic of Lithuania, nor those of the European Union establish a compulsory requirement to apply the tender procedure in forming the national investor, when a private investor is chosen.

Article 19 of the Law on the Possession, Use and Disposal of State and Municipal Property (hereinafter also referred to as the Law on State Property) provides for the right of the state to found a company together with a private investor and to bring some state-owned property into the capital of this company. This article provides that state property may be invested, i.e. transferred as contribution. The same article provides for ways of investment of such state property, among which there is, inter alia, the transfer of state-owned property (shares) as contribution to a joint-stock company or a closed-type joint-stock company by carrying out property obligations of a founder undertaken in the founding agreement, or by increasing the authorised capital of the joint-stock company wherein the state is a participant (Paragraph 1 of Article 19 of the Law on State Property). Pursuant to Paragraph 4 of Article 3 of the Law on State Property, also state financial property—securities which belong to the state by right of ownership and the property rights arising from these securities—may be invested by such a way. While adhering to the provisions of the Law on State Property, the procedure of state property investment as such was conducted by following a substatutory act—the Description for the Criteria for Adopting the Decision to Invest State and Municipal Property and of the Procedure for Adopting Decisions (hereinafter also referred to as the Description), which was approved by government resolution No. 758 of 4 July 2007 (Official Gazette Valstybės žinios, No. 80-3275)—which detailed the Law on State Property. The Description does not provide for a duty to arrange a public tender for choosing a private investor in cases when the state resolves to invest, together with a private investor, into a newly founded company or into the same company by increasing the authorised capital thereof.

IV

1. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from D. Kriaučiūnas, Director General of the European Law Department under the Ministry of Justice of the Republic of Lithuania. It is noted therein that the aim provided for in Paragraph 1 (wording of 1 February 2008) of the Law on the Nuclear Power Plant, which is gaining benefits for itself and all its shareholders in a socially responsible manner, is in line with the right of a subject specified in the Constitution to be guided by the principle of freedom of individual economic activity, while the condition that one has to gain benefits in a socially responsible manner confirms that compulsory requirements can be established for this subject. In addition, it is noted in the explanations that the bigger part of the shares of the national investor is held by the state which, while following the requirements of autonomy and independence of companies in adopting decisions, which are entrenched in the European Communities law, may decide as to what is useful not only to this company, but to society as well.

As for the second question regarding monopolisation of the market, it is noted that the national investor LEO LT, AB, does not monopolise the rights of transmission or distribution of electricity. These rights belonged and now belong to the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST”—these rights are not transferred to the national investor. Upon creation of the joint-stock company LEO LT, AB, which manages through its subsidiaries the main part of the electricity system of the Republic of Lithuania—electricity transmission and distribution networks—the situation with regard to the monopolisation of the market remained unchanged, i.e. the natural monopolies have persisted, which perform the functions of operators of electricity transmission networks and of electricity distribution networks. According to D. Kriaučiūnas, since these monopolies did not compete with one another, there are no grounds for speaking about the monopolisation of the electricity market only because at present the operators of transmission and distribution networks belong to one group of companies.

Regarding the choice of a single partner the explanations draw one’s attention to the historical circumstances of the adoption of the discussed provision. Inasmuch as this is related with the national investor, the Law on the Nuclear Power Plant has entrenched two main principles: private initiative, i.e. the national investor was appointed after a private legal person showed initiative to invest into the project, and the increase of the authorised capital of the national investor—the joint-stock company “Lietuvos energija”—by means of property contributions, i.e. by shares of the biggest Lithuanian energy companies—the joint-stock companies Rytų skirstomieji tinklai and “VST”. The fact that amendments were made to the initial law does not at all mean that the private initiative of the joint-stock company “Lietuvos energija” is no longer there.

It is noted that although European Union law does not establish unambiguously that in such cases as, for example, founding the national investor according to the Law on the Nuclear Power Plant of the present wording a tender had to be arranged in order to choose the private investor, it is obvious that such a tender would have cleared all doubts. However, since the consolidation was necessary and economically useful for the implementation of the project (as one is lead to believe by the assessments presented by consultants), in this case the tender would not have yielded any results. According to D. Kriaučiūnas, in the course of the application of the historical way of construction, if the single partner was chosen due to the reasons related to the property contribution held by the joint-stock company “VST” and by following the principles of a private investor (this principle means that in similar circumstances the private investor would have concluded a corresponding transaction under the same conditions, as those followed by the state), one should not regard that fair competition and the principle of equal rights were violated.

2. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from J. Vilemas, Chairperson of the Council of the Lithuanian Energy Institute. It is maintained therein that in the electricity systems the electricity transmission activity and distribution activity are natural monopolies. The implementation of competition in this area is very hard due to technological reasons, and if attempts were made to do so, the entire system would become more complex and more expensive, and due to this more expensive electricity would be supplied to consumers. The national investor merely participates in the implementation of the projects of building a new nuclear power plant and construction of the interconnections with Sweden and Poland. These projects are international ones, several states participate in them, while the legal status of these objects will be determined by the existing and would-be legal acts of Lithuania and European Union, which, it goes without saying, prohibit and will be prohibiting any creation of monopolistic structures in the electricity generation sector.

It is noted in the explanations that in general the fact that the state has chosen a single private partner—the joint-stock company “VST”—without a tender is not a violation. However, the state, while following political reasons, after it has inadequately assessed the real situation of the energy sector of Lithuania and its neighbours, as well as the actual economic capabilities of this country, made the building of the new nuclear power plant a primary and immediate task and established unrealistic terms for its implementation, which is building the new nuclear power plant until 2015. Being pressed for time, the Government began by all means to speed up the preparation for the building. One of the ways to gain time is refusal of an unavoidably long and complex process, which is choosing a partner for the national investor by tender procedure. After the Seimas confirmed unrealistic terms of this especially expensive, risky and one-sidedly argued project in the National Energy Strategy, the Government, trying not to violate these terms, had to violate other procedures. In the explanations attention is drawn to the fact that the power (-1.100 MW and more) of one unit of the planned nuclear power plant is very big if compared to that which is needed to the Lithuanian electricity system. Therefore, the new nuclear power plant will always be the dominant energy supplier not allowing competition.

3. In the course of the preparation of the case for the Constitutional Court’s hearing explanations were received from R. Stanikūnas, Chairperson of the Competition Council of the Republic of Lithuania. It is maintained therein that Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant does not entrench any exclusive rights for an economic subject to conduct one or other economic activity, therefore, it should not be regarded as one violating Paragraph 4 of Article 46 of the Constitution which prohibits monopolisation of the market, i.e. granting exclusive rights to an economic subject in a certain economic sector. It is noted that the principle of complete freedom of competition is difficult to apply in full extent to the electricity sector due to the specific character of certain types of activity (for example, the activity regarding transmission and distribution of electricity due to the necessity to hold certain resources is arranged according to a monopolistic model). Such a specific character of the sector is not related with the provisions of the Law on the Nuclear Power Plant.

In the explanations attention is drawn to the fact that the Competition Council did not perform the standard procedure of concentration control, since the legislature, while providing for the formation principles of the national investor in the Law on the Nuclear Power Plant, assessed a priori the concentration to be permissible.

Regarding the compliance of Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant, the explanations note that all interested economic subjects that meet the requirements raised for an economic subject intending to participate in founding the national investor, should have equal opportunities to compete in participation of the capital of the national investor. If a corresponding selection procedure is not performed and after a concrete economic subject is appointed as a participant of the project of the national investor, the rest of the economic subjects lose the opportunity to compete for acquisition of corresponding rights. Therefore, the discussed provisions of the Law on the Nuclear Power Plant might be treated as violating the provisions of Paragraph 4 of Article 46 of the Constitution. Alongside, attention is drawn to the fact that freedom of fair competition should not be regarded as a value of its own accord, therefore, in certain cases, limitation on the principle of fair competition may be justifiable due to various peculiarities of a respective situation (for example, in certain cases it is necessary to grant exclusive rights in order to secure efficient performance of certain activity, which cannot be guaranteed by unlimited competition of economic subjects). Therefore, in the opinion of the Competition Council, in this concrete situation one should also assess whether the chosen manner of the formation of the national investor is justifiable to the specific character of the electricity sector or other reasons.

4. In the course of the preparation of the case for the Constitutional Court’s hearing explanations were received from D. Janulionis, Acting Chairperson of the National Control Commission for Prices and Energy. It is noted therein that this commission assents to the doubts set forth in Seimas resolution No. X-1729 of 22 September 2008 regarding the compliance of the impugned provisions of the Law on the Nuclear Power Plant with the Constitution. In the opinion of the Commission, the adoption of the impugned articles changing and amending the Law on the Nuclear Power Plant may have negative impact upon the interests of consumers, since when the national investor is created without a tender (i.e. on the grounds of the law) preconditions are created to monopolise the main portion of the electricity generation, transmission, distribution, export and import markets.

5. In the course of the preparation of the case for the Constitutional Court’s hearing explanations were received from F. Petrauskas, Director of the State Consumer Rights Protection Authority. It is noted therein that, in the electricity sector, the legal measures must be established permitting decreasing the negative consequences to consumers and a sufficient protection of consumer rights must be ensured. The legal acts valid at present establish a certain protection of consumer rights in the electricity sector. According to F. Petrauskas, if a monopolist appears in the energy sector, the protection of consumer rights in the electricity sector (regulation of prices, establishment of top prices, duty of electricity sector enterprises to supply information to consumers) which is established in laws would be insufficient.

V

1. At the Constitutional Court’s hearing the representatives of the Seimas, the petitioner, who were R. Šukys, Deputy Speaker of the Seimas, and Seimas member J. Veselka took the floor.

1.1. R. Šukys, Deputy Speaker of the Seimas, a representative of the Seimas, the petitioner, noted that the Seimas, while establishing the objectives of the national investor in Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant, pointed out that the primary and single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner, however, the notion “in a socially responsible manner” has not been formulated. The specialists interpret the notion “in a socially responsible manner” differently. “Benefits for itself” mean benefits for the private national investor, benefits mean profit; although the state holds more than half of the shares constituting the authorised capital, in the legal meaning the national investor is a private legal person; the aim of the national investor to gain benefits for itself is entrenched as its main and most important aim also in the Articles of Association of LEO LT, AB, in the founding agreement and the shareholders’ agreement, which were confirmed later. In the opinion of R. Šukys, the biggest doubt arises regarding whether the notion “in a socially responsible manner” is of a declarative character, or whether it is a certain practical obligation to the national investor, and how such obligation could be implemented and who would control its implementation. It is possible to understand what is meant by conducting activities in a socially responsible manner, what is meant by reaching aims in a socially responsible manner (these are building the power plant and environmental issues), however, the concept of gaining benefits in a socially responsible manner is not clear.

According to R. Šukys, while taking account of Paragraph 5 of Article 46 of the Constitution, the law should have discussed separately in what manner the consumer interests would be secured and what is meant by “socially responsible manner”, what the essence of this concept is, and how the consumer interests would be protected. There are no provisions regarding protection of consumer rights in the Law on the Nuclear Power Plant. There are special laws regulating the relations of consumer rights protection: the Republic of Lithuania’s Law on Consumer Rights Protection, the Republic of Lithuania’s Law on Electricity, however, the general norms entrenched in these laws are not enough to defend consumer interests; when the monopoly was created no requirements applicable to the monopolist were created. After the state refused the governance in such a branch of economy as electricity, it has fewer possibilities of protecting consumer interests.

The representative of the petitioner noted that joining the joint-stock company “Lietuvos energija”, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST” into the absolute monopoly—LEO LT, AB—when no additional requirements were established and making the implementation of the control mechanisms in electricity system with regard to this enterprise more difficult, even though with the aim to build the new nuclear power plant and electricity interconnections, is groundless and is in conflict with the Constitution.

When creating the national investor, the state, without a tender and failing to apply the legal norms regulating fair competition, precisely by means of the Law on the Nuclear Power Plant, granted a special right, chose the only partner—the joint-stock company Vakarų skirstomieji tinklai—and established exceptional rights of the shareholder of this company, thus, this law entrenched unequal legal regulation of the situation of economic subjects. Under the Constitution, the state, while regulating economic activity, must heed the constitutional requirement of the equality of rights of economic subjects which is directly related with the principle of the equality of rights of all persons entrenched in Article 29 of the Constitution, otherwise, the legal regulation of economic activity would not be regarded as the one serving the general welfare of the Nation.

R. Šukys noted that the impugned articles entrench the exclusive right of the shareholder that has the controlling block of shares of the joint-stock company “VST” to participate in founding the national investor.

R. Šukys paid attention to the fact that it may be allowed not to apply the requirements of the Law on Public Procurement (as well as requirements of EU law provisions) regarding the discussed issue only in case where it is necessary to protect essential interests of state security. In the opinion of R. Šukys, there are not and there cannot be any essential interests of security of Lithuania, which are separate from the entire European Union as the common area, as the area of free movement of capital, in creating the national investor which, through a company (in which, according to the law, not less than 34 percent of shares must belong to the national investor) implementing the project, will build the nuclear power plant and, either independently through subsidiaries, or by making use of the capabilities of the “Lietuvos energija” enterprise, will construct interconnections with the electricity systems of the Kingdom of Sweden and the Republic of Poland. If such an exception is established, it must be rationally grounded in the Law on the Nuclear Power Plant itself. There must be a necessity for such an exception and it must be proved that the essential state security interests would not be protected otherwise.

The entering of the closed-type joint-stock company “NDX energija”, which is the owner of the shares of the joint-stock company “VST”, as a partner for negotiations, on the law itself is anticonstitutional, since all the rest of the economic subjects, including those of the European Union, were excluded. The fact that private capital, even though which is in line with the criteria of Euro-Atlantic integration, is granted exceptional rights, however, without giving reasons why the other capital, which also meets the criteria of Euro-Atlantic integration, is discriminated, and when no proof is given that in other ways the essential state security interests would not be protected, is in conflict with Article 29 and Paragraphs 3 and 4 of Article 46 of the Constitution. According to R. Šukys, there are a number of European enterprises which have much more experience in running the energy sector, therefore, it was possible to announce a tender and create the environment for competition without violating the structure and essence of the national investor, since the state could regulate as to what block of shares it was going to keep and to what extent it retains the opportunity to regulate the activity of the national investor so that the aims to build the nuclear power plant and to construct interconnections between the Lithuanian electricity system with the Western energy systems. In the opinion of R. Šukys, it is not necessary at all to grant an exclusive right only to one Lithuanian enterprise to participate in the project.

R. Šukys emphasised that after the Law on the Nuclear Power Plant has prescribed that the national investor does not have to implement, but only participates in implementing the project of building the new nuclear power plant in Lithuania, as well as in constructing the interconnections with the electricity systems of the Kingdom of Sweden and the Republic of Poland, the employed notion “participates” is not sufficient enough. If one holds that in this situation we speak about the aim to seek to regulate the economic activity so that it serves the general welfare of the Nation, this aim has not been reached. In such a case, the monopolisation, the transfer of all energy system to the private investor by merger, in the opinion of R. Šukys, is in conflict with the principles of free competition and the equality of rights of economic subjects.

R. Šukys emphasised that, in his opinion, in this case vertical concentration took place. The constitutional guarantee of protection of fair competition means a prohibition to the state and municipal institutions, which regulate economic activity, against adopting decisions distorting or capable of distorting fair competition. The possibility of competition diminishes, or competition is removed from the corresponding market at all after a monopoly becomes consolidated in it. The state must limit monopolistic tendencies by legal means. In case there is an established monopoly, the state regulates the monopolistic economic activity by establishing respective requirements to the monopolist by means of a law. The scope of such legal regulation may depend on a number of factors: the regulated area of economy, peculiarities of a certain time-period, etc. In this situation virtually no monopolies were established, although it is maintained in various explanations that the activity of distribution networks, transmission of electricity, generation of electricity are natural monopolies. In the opinion of R. Šukys, the joining of capital into vertical concentration, into an absolute monopoly, by not establishing any additional requirements, by making the implementation of the established principles and control over the electricity sector of the Republic of Lithuania with regard to such a monopoly more difficult, even though, ostensibly, seeking an objective, which is very important to society—building the new power plant and constructing the electricity systems interconnections—is groundless and is in conflict with the Constitution.

R. Šukys also noted that on 22 January 2008, the Seimas Committee on Legal Affairs adopted the Conclusion “On a Draft Amendment of Articles 10 and 11 of the Republic of Lithuania’s Law on the Nuclear Power Plant (XP-2799)” in which it is held that some provisions of the draft law might be in conflict with the Constitution.

The representative of the Seimas, the petitioner, drew attention to the fact that the provisions of state property investment, which are entrenched in the Law on State Property, were violated. Under this law, state property must be correspondingly assessed and brought in as a contribution without violating state interests, meanwhile, Kruonis Pump Storage Power Plant (hereinafter referred to as the Kruonis PSPP) and Kaunas Hydroelectric Plant (hereinafter referred to as the Kaunas HP) were transferred to the national investor, i.e. to a private legal person, without their prior assessment, and while distributing the share capital the value of the said plants was not included. The assessment by applying the method of flow of discount money was improper and useful to the private investor alone. Thus, the property worth several billion litas or even more was not included, and one failed to take account of the fact that without this property the activity of the joint-stock company “Lietuvos energija” would virtually be of quite different profitability. Thus, the private investor received more shares than it contributed its property, if compared to the value of property contributed by the state, and, due to this Paragraph 2 of Article 128 of the Constitution is violated.

1.2. As regards the aim of the national investor to gain benefits for itself and its all shareholders, Seimas member J. Veselka, a representative of the Seimas, the petitioner, noted that the establishment of such aim for state capital meets neither state nor private interests; there is not a state wherein state capital is dominant, where gaining benefits is established as the main aim; in this situation the state interest is sort of likened to striving to gain benefits. If such aim is legislatively established, consumer interests are violated, since they do not become the main thing. Everyone wants electricity, both natural and legal persons; electricity satisfies not private, but public interest; by establishing the said aim of the national investor, the public interest is no longer defended—it is violated. The Law on the Nuclear Power Plant is a national interest both in the economic and national security sense.

While speaking about the principle of fair competition, J. Veselka explained that under certain conditions a monopoly is justifiable, especially in small states (when one has to compete with energy companies of big states), since if actually the entire energy system is split, it would not be possible to compete. J. Veselka emphasised that in this case the most important thing is that from the very beginning the laws regulating electricity relations attempted to create preconditions for competition in the domestic market. For this purpose the single monopolistic structure “Lietuvos energy” was restructured. At present a vertical monopoly is being created again.

When speaking about the model of the formation of the national investor, J. Veselka pointed out that in this case the main thing is absence of competition. It is impossible to build the new nuclear power plant without consolidation. In the opinion of J. Veselka, it was possible that at least a partial competition was let to stay, and that consolidation be performed on the grounds of state national capital. The application of the consolidation principle is almost appropriate in this case, it was permitted to do so, but one has to analyse whether it is possible to achieve this by letting the opportunities for competition to stay.

J. Veselka noted that the subsidiaries of LEO LT, AB would not be able to operate independently, therefore, competition will be violated. In addition, J. Veselka noted that not a single specialist confirmed that LEO LT, AB will be able to build the nuclear power plant by its own funds; it is maintained that it will have to bring a foreign company, which has experience, funds, and the necessary capabilities. The Seimas member pointed out, as an example, one German electricity enterprise which has big experience in the area of organising the energy sector, noting that it is not clear to him why such an enterprise is “crossed out from potential participants in LEO LT, AB”, while an enterprise is chosen, which does not have any experience in the energy sector, which is engaged in trade only, and which does not have such financial capabilities to contribute to building the new nuclear power plant, which foreign companies might have. According to the representative of the petitioner, if one has the aim to develop the Lithuanian electricity system as efficiently as possible and to build the new nuclear power plant, one should have arranged a public tender and an opportunity should have been given to everyone to compete by contributing concrete cash, but not shares. If a public tender had been arranged in which all economic subjects (perhaps, even legal persons) took part, the principle of fair competition would have been implemented. However, in this case this principle was violated, since the right was granted exclusively to a single economic subject by “administrative means”. In this case the fact whether the person has experience in the area of electricity is not the most important thing, since a financially strong enterprise can make investments, hire the necessary specialists and the problems will be gone—the most important thing is that the principle of fair competition would not be violated, however, after the Law on the Nuclear Power Plant was adopted, this principle was violated.

J. Veselka noted that after the single partner was chosen neither the construction of interconnections with the Polish and Swedish electricity systems, nor the building of the new nuclear power plant were speeded up. The state, while failing to follow the Republic of Lithuania’s Law on Privatisation of State and Municipal Property, nor the Republic of Lithuania’s Law on Concessions, while failing to heed the benefit for its own citizens, without any reasoning transferred the control over the entire Lithuanian electricity system to a private company. Without a consent by this company, the state will not be able to adopt decisions on strategic issues. Under the Republic of Lithuania’s Law on Companies, the main decisions regarding distribution of the profit, accumulation of reserves, reorganisation of the company, its restructuring and other issues without having 2/3 of the shares and votes in the general meeting of the shareholders of the national investor cannot be adopted, therefore, the adoption of essential decisions without the consent of the private shareholder in LEO LT, AB would be impossible. While holding 38.3 percent of the shares of LEO LT, AB, the private person would be able to impose its conditions upon the entire electricity system. J. Veselka explained that the most important decisions are adopted regarding the distribution of profits. The aim of the activity of the national investor as provided for in the Law on the Nuclear Power Plant is gaining benefits for itself and its all shareholders in a socially responsible manner; in case when 38.3 percent of shares belong to the private person (private capital), it is clear that without his consent, his private interest, it would be impossible to distribute the profits of LEO LT, AB.

J. Veselka explained that formally there will be separate operators of distribution networks—the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST” (the generation of electricity is separated, since the Elektrėnai, Mažeikiai, Vilnius heat and power plants are independent legal units), however, under the Law on the Nuclear Power Plant, in practice the same shareholders will concentrate the activity of electricity transmission and distribution in their hands, as the state will not hold 2/3 of votes in the general meeting of the national investor in the course of adoption of decisions; the main aim is gaining benefits, but not satisfaction of the public interest.

2. At the Constitutional Court’s hearing, Seimas member B. Vėsaitė, a representative of the Seimas, the party concerned, virtually reiterated the arguments set forth in her written explanations.

3. At the Constitutional Court’s hearing, the following specialists took the floor: V. Miškinis, (Head of the State Energy Inspectorate under the Ministry of Economy), Prof. Habil. Dr. J. Vilemas (chief research associate of the Lithuanian Energy Institute, Chairperson of the Council of the same institute), V. Navickas, former Minister of Economy, V. Poderys (Chairperson of the National Control Commission for Prices and Energy), V. Švedas (Deputy Auditor General), T. Suslavičius (former advisor to LEO LT, AB on strategy and management issues), V. Paškevičius (President of the Lithuanian Electricity Association).

3.1. V. Miškinis explained that he assents to the explanations presented by R. Šukys and J. Veselka presented at the Constitutional Court’s hearing. V. Miškinis noted that the Law on the Nuclear Power Plant does not protect the consumer interests. In the opinion of this specialist, the security of electricity supply, i.e. continuous electricity supply, should have been entered as one of the aims of LEO LT, AB. The aims related with protection of the consumer interests are these: continuous, reliable, efficient (i.e. with minimum expenses and minimum price) electricity supply to consumers; reduction of the negative impact of the power sector upon the environment, stimulation of reasonable competition, stimulation to use local renewable resources.

Regarding the concentration of electricity transmission and distribution in the same hands, V. Miškinis noted that the activity of these types is monopolistic, therefore, the fact that such activity will be conducted by one company is not a bad thing; there is not a place in the world where we could find duplicating networks. Due to this, the import and export of electricity are concentrated in the same hands as well. According to V. Miškinis, at present the issue of electricity generation is subject to discussion, since the nuclear power plant generates electricity. Due to this other power plants (those of Vilnius, Kaunas, Mažeikiai, etc.) might be discriminated, and by establishing them electricity generation quotas one might fail to follow the competition conditions. In the opinion of V. Miškinis, in practice the state does not have any influence in the electricity sector.

Regarding the model of the national investor, V. Miškinis explained that it is not important whether it would be created by arranging a tender, or without arranging it, virtually everything depends on the raised aims. At present, the aims of the national investor are formulated improperly and the most important thing is that these aims should be corrected.

3.2. J. Vilemas, while speaking about protection of the consumer rights, noted that LEO LT, AB is virtually composed of one electricity transmission organisation and two electricity distribution organisations, which are natural monopolies; in these areas the consumer rights are protected by state institutions, and one of such institutions is the National Control Commission for Prices and Energy whose competence is clearly defined. If the Law on the Nuclear Power Plant specified other aims of the national investor, for example, reliable electricity supply, it would not change anything, it is only important that there should be state institutions which would efficiently supervise and control how laws are followed.

Regarding creation of the monopolistic structures and absence of competition, the specialist noted that LEO LT, AB is composed of electricity transmission and distribution organisations, which are natural monopolies. LEO LT, AB is not engaged in generation of electricity (it is provided for that the Kruonis PSPP and the Kaunas HP will be removed from the structure of LEO LT, AB). J. Vilemas explained that the Ignalina Nuclear Power Plant will no longer be there, but there are Vilnius, Kaunas, Mažeikiai heat and power plants, and there will be other sources for generation of electricity as well; in the opinion of J. Vilemas, there is big competition in the area of electricity generation; there are not any problems regarding the creation of the monopolistic structure; there will be solid environment for competition in Lithuania, and, providing state institutions will not discourage it, a situation which is favourable first of all to consumers will come into being, since only competition can protect the consumer interests in the best manner. The Law on the Nuclear Power Plant does not indicate that a structure is being created wherein also electricity generation would be vertically integrated.

3.3. V. Navickas noted that the Law on the Nuclear Power Plant does not contain any exceptions regarding protection of the consumer rights. These rights are sufficiently protected by special laws: the Law on Protection of Consumer Rights, the Law on Electricity. The formulation of the aim of the national investor which is gaining benefits for itself and all its shareholders is a norm of a general character applied to private legal persons; this is also provided for in the Law on Companies and the Civil Code. The notion “benefits” employed in the formula “gaining benefits for itself and all its shareholders” does not mean gaining profits, while the notion “ in a socially responsible manner” implies that one should gain benefits to society. The state, as a shareholder, while participating in running the company, can ensure the representation of state interests, their implementation and sufficient protection of consumer rights.

Regarding monopolisation, V. Navickas maintained that, upon creating the national investor, there emerged “neither horizontal, nor vertical integration which are essential features of monopolisation”. As a patronising company, LEO LT, AB will not conduct any activity—it will only conduct supervision of its subsidiaries; it will be the activity of a shareholder, which will manifest itself in participation in shareholders’ meetings, but not in participation in adopting concrete decisions in the subsidiaries regarding issues of everyday activity. After the adoption of the Law on the Nuclear Power Plant, the said three companies continue their activities, the activity conducted by them is not concentrated, and no one has overtaken the activity conducted by them. The conclusion of an independent expert who performed an expertise assessment of the Law on the Nuclear Power Plant pointed out that, in addition to this, analogous structures exist in other 14 Member States of the European Union.

As regards ensuring the principle of equal rights, V. Navickas explained that various alternatives were considered in the course of the preparation of the conception of the national investor and the Law on the Nuclear Power Plant. V. Navickas noted that two factors determined the choice of the joint-stock company “VST”: first, the drafters of the law sought to consolidate the entire electricity sector so that it would be harmonious and adequate to the structures functioning in other Member States of the European Union and, second, the joint-stock company “VST” is a really big consumer of electricity, it is a suitable partner, which could be a consumer of electricity from the new nuclear power plant and its supplier to small consumers. All conclusions of the experts were favourable for the creation of the national investor which was provided for in the Law on the Nuclear Power Plant.

3.4. While speaking about the aim of the national investor—gaining benefits for itself and all its shareholders in a socially responsible manner—V. Poderys asserted at the hearing that an enterprise of such infrastructure can only seek profit and benefits to itself and its shareholders. This stems from the Law on Companies and corporate law. As regards protection of the consumer rights, the specialist maintained that there are three institutions which discharge the function of protection of the rights: the State Energy Inspectorate, the State Consumer Rights Protection Authority, and the National Control Commission for Prices and Energy.

As regards monopolisation, V. Poderys noted that, while speaking about competitive activity, one has first of all to distinguish generation on the one hand, and, on the other hand, supply or sale of electricity, and it is only these areas where one can discuss about competition, while the activity of electricity transmission and that of distribution are monopolistic ones.

According to V. Poderys, due to the fact that one of the parties was invited for negotiation without a tender, while the other party was obliged to negotiate with the party appointed in advance, such negotiation is not a fully fledged negotiation.

3.5. V. Švedas noted that the National Audit Office did not conduct research directly related with the issues considered by the Constitutional Court. V. Švedas explained that the main aim of the national investor to gain benefits is appropriate for a joint-stock company; if the state had wanted that the main aim of the company was not gaining benefits, it should have created a person with a different legal status. He drew attention to the problem of assessment of property—the method of flow of discount money is better for an assessment of enterprises operating under free market conditions, while if this method is applied to assessment of enterprises of electricity transmission and those of electricity distribution which operate under conditions of natural monopolies, the value of these enterprises is not reflected precisely.

3.6. Regarding the aim of the national investor, T. Suslavičius noted that the aim of gaining benefits for itself and all its shareholders in a socially responsible manner is reasonable, however, its indication in the Law on the Nuclear Power Plant is an inappropriate thing. When partnership between the state and private capital is implemented, the private partner, when it makes investments to the company, always faces the risks that the state will diminish the benefits of the private partner by its own decisions, and, because of this the said provision was included into the law. In the course of the drafting the Law on the Nuclear Power Plant no one considered entering the provisions regarding consumer rights protection, since this law is not designed for the regulation of such relations.

As regards the concentration, the specialist noted that the tendency (history) in the electricity market is such that concentration was permitted and recognised in this market, however, it is attempted little by little to open this market for competition. In the beginning a monopoly was consolidated, now it is attempted to consolidate competition, however, not in activities of all types. There are types of activities which remain as monopolies entrenched by law—these are the transmission activity and the distribution activity. The market should be composed of relations between consumers, suppliers and manufacturers. When it is decided whether concentration is permissible, it is as a rule assessed what influence it exerts on the competitive market and the consumers. In the opinion of T. Suslavičius, there is not a competitive market in Lithuania. The main activity of the national investor is the activity of the operator of the transmission system and that of distribution system, which are monopolistic ones, and in this situation it is not expedient to assess the influence on competition (the Kruonis PSPP and the Kaunas HP are generators of electricity, however, they have a small portion of the market). The influence of the said merger on the market is minimal.

As regards the fact that one of the parties was invited for negotiation without a tender, T. Suslavičius noted that the fact is of importance that these companies are small, they expressed a private initiative to unite, to become a bigger company and to achieve better results. The joint-stock company “VST” (which renders services to almost half of all consumers of Lithuania) have an interest to secure the electricity supply to its consumers, while the public interest of the state is to take care of the citizens who are consumers of this company.

Upon founding the national investor, the role of the state in running the electricity sector changed, as the investor has an opportunity not to permit adopting decisions on certain issues.

3.7. As regards the fact that the national investor would concentrate in its hands the bigger part of electricity generation, distribution, export and import, V. Paškevičius noted that, if compared with other countries, particularly with Latvia and Estonia, in which vertically integrated energy enterprise function, and which run all electricity generation, transmission, distribution and supply, then there is not any generation concentration in Lithuania, since LEO LT, AB, has only two hydroelectric plants; it does not possess the Elektrėnai power plant, which will replace the Ignalina Nuclear Power Plant, nor the Vilnius and Kaunas heat and power plants, which have an important role and exert influence on the price of electricity generation.

The Constitutional Court

holds that:

I

1. While construing the impugned legal regulation established in Paragraph 1 (wording of 1 February 2008) of Article 10 and Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant, it is important to reveal the development of the law-making in the area of electricity, which is related with the legal regulation impugned in the constitutional justice case at issue by the Seimas, the petitioner, as well as to reveal the factual circumstances under which the said legal regulation was initiated, established and implemented.

2. After the independent State of Lithuania was restored on 11 March 1990, the state (monopolistic) electricity sector, which had been formed previously, persisted for some time. In the electricity sector the areas of electricity generation, transmission and distribution were not separated, thus, electricity generation, transmission and supply were run and developed in a centralised manner. During the first years there was the Electricity and Electrification Production Union “Lietuvos energetika”, which was later reorganised as the state company “Lietuvos valstybinė energetikos sistema” (Lithuanian state energy system).

3. After the Constitution was adopted by the 25 October 1992 referendum and after the entry of the Constitution into force on 2 November 1992, the legislature had a duty to pay heed to the requirements of the Constitution, inter alia, those of Article 46 thereof, when it regulated the relations linked with electricity.

4. On 15 February 1995, the Seimas adopted the Republic of Lithuania’s Law “On Special-purpose Enterprises and Areas of Their Activities”, which came into force on 10 March 1995. It was prescribed therein, inter alia, that the enterprises entered on Appendix 2 of this law must be reorganised to targeted-purpose joint-stock and closed-type joint-stock companies (Paragraph 1 of Article 2), that also the provisions of Article 3 of this law shall be applied to the Lithuania state energy system (Paragraph 2 of Article 4). The following was established in Article 3 of the Law “On Special-purpose Enterprises and Areas of Their Activities” (wording of 15 February 1995):

To establish the degree of privatisation of <…> the Lithuanian state energy system under the Law on the Initial Privatisation of State Property—until 15 percent of the authorised capital.

To prohibit the ‘Lithuanian state energy system’ <…>, which is reorganised as a special-purpose enterprise, to reduce, until the year 2000, the part of the shares belonging to the state.”

The “Lithuanian state energy system” was also entered on the List of State Enterprises Which Must be Special-purpose Enterprises until the Year 2000, which was presented in Appendix 2 of the Law “On Special-purpose Enterprises and Areas of Their Activities” (wording of 15 February 1995).

While following these provisions of the Law “On Special-purpose Enterprises and Areas of Their Activities” (wording of 15 February 1995), the state company “Lietuvos valstybinė energetikos sistema” was reorganised as the special-purpose joint-stock company “Lietuvos energija”. This company was managing, inter alia, the heat supply system.

5. On 28 March 1995, the Seimas adopted the Republic of Lithuania’s Law on Energy, which came into force on 14 April 1995. It prescribed, inter alia, the following: “The principal goals of the State energy policy are as follows: <…> reliable, good-quality and cost-effective production and supply of electricity <…>” (Article 3); “Electric <…> energy <…> prices and tariffs may be differentiated according to consumer groups, energy quality, reliability of supply <…> (Paragraph 2 of Article 15).

6. On 14 November 1996, the Seimas adopted the Republic of Lithuania’s Law on Nuclear Energy, which, pursuant to Article 76 thereof, came into force on 1 January 1997. This law regulates public relations arising during the use of nuclear energy for generation of electricity and heat; the same law provides a legal basis for the activities of natural and legal persons in the sphere of nuclear energy.

The said law has been amended and supplemented more than once.

7. On 19 December 1996, the Seimas adopted the Republic of Lithuania’s Law on the Basics of National Security, which came into force on 8 January 1997. This law established the basics of national security of Lithuania, which were set forth in the annex to the law (Paragraph 1 of Article 1). The Second Section “Potential Internal Risks and Domestic Crises” of Chapter 9 titled “The Risks and Threats to Lithuania’s Security” of the same annex indicated the Ignalina Nuclear Power Plant. In addition, Chapter 11 titled “Long-range National Programmes to Enhance National Security” indicates, inter alia, the following: “ensuring safe exploitation of the Ignalina NPP until its closure and thereafter”; “stability and integration of the energy supply system into the European energy supply systems”.

The said law and the annex thereto have been amended and/or supplemented more than once.

8. On 8 April 1997, the Seimas adopted the Republic of Lithuania’s Law on the Reorganisation of the Special-purpose Joint-Stock Company “Lietuvos energija” and Transfer of the Heat Supply System and Running Thereof to Municipalities, whose purpose was establishment of decentralisation of management of the heat supply system run by the special-purpose joint-stock company “Lietuvos energija” by reorganising this company by way of division, by separating the heat supply system and establishing new special-purpose joint-stock companies and by transferring their property and state-owned shares to municipalities (Article 1).

On 26 June 1997, by invoking, inter alia, this law, the Government adopted the Resolution (No. 675) “On the Reorganisation of the Special-purpose Joint-Stock Company ‘Lietuvos energija’” whereby it resolved, inter alia, to commission the representative of the Ministry of Economy, who represents the state interests in the special-purpose joint-stock company “Lietuvos energija” to vote in the general meeting of the shareholders of the company for reorganisation thereof by way of division, by separating the heat supply system and establishing new special-purpose joint-stock companies and by transferring their property and state-owned shares to municipalities (Item 1).

Thus, the special-purpose joint-stock company “Lietuvos energija” was reorganised by way of division, separating the heat supply system and establishing new special-purpose joint-stock companies.

9. On 23 June 1998, the Seimas adopted the Law “On Ratifying the Energy Charter Treaty and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects” which came into force on 24 July 1998. By this law also the 17 December 1994 Energy Charter Treaty was ratified, which provides, inter alia, that “Each Contracting Party shall work to alleviate market distortions and barriers to competition in Economic Activity in the Energy Sector” (Paragraph 1 of Article 6).

10. On 5 October 1999, the Seimas adopted the Resolution “On Approving the National Energy Strategy” by Article 1 whereof it approved the National Energy Strategy which had been presented by the Government. It was established in Section 1 “Electricity” of Chapter 4 “Energy Supply Strategy” of the said strategy that “taking account of special economic importance of use of all available capacities: (1) in the nearest future it is economically expedient (by ensuring the payment for services) to maintain the traditional electricity export to the north and the east by means of the available transmission lines; (2) in the future electricity export from the power plant “Lietuvos elektrinė” might become economically expedient during semi-peak and peak energy demand; (3) construction of electricity transmission line to the West is necessary in order to connect with trans-European electricity networks and integration in the European electricity energy market”. It was also established in the same chapter that in order to secure the reliability of electricity supply it is necessary inter alia “to prepare, together with Latvia and Estonia, a new high voltage networks scheme of the Baltic States, which would be better adapted for the integration to the Western and North European networks, and which would enable to better exploit the existing generating capacities in order to satisfy the needs of the three states”. In addition, it was established in the same chapter that “in Lithuania, there would be the least electric energy supply expenses (1) if the capacities of the Ignalina NPP and the Kruonis PSPP and by rationally working in the heat and power regime of the Vilnius HPP and the Kaunas HPP; (2) by working in partnership in an optimal manner with Estonia and Latvia, and, as it has been provided, by integrating and working in partnership with electricity companies of the Western Europe; <…> (5) if the electricity sector would, without delay, be restructured till 2001, and after one prepares to work under the free market conditions, and after electric energy generation, transmission and supply are separated.”

It needs to be noted that Article 3 of the said Seimas resolution, whereby the National Energy Strategy was approved, proposed that the Government inter alia “draft a plan for implementation of the National Energy Strategy, with the view of drafting the shutdown of the second unit of the Ignalina NPP, the final decision regarding which will be adopted in 2004 by renewing the National Energy Strategy. The National Energy Strategy implementation plan, which must be drafted and executed working in partnership with the respective international institutions, must provide what new electricity facilities, including possible nuclear power generation facilities replacing the RBMK reactors’ units of the Ignalina NPP, will be built in Lithuania until 2009”.

The National Energy Strategy has been amended more than once.

11. Thus, a state centralised monopolistic system of electricity, which was formed in the Soviet period, functioned in this country until the year 2000.

12. On 18 May 2000, the Seimas adopted the Republic of Lithuania’s Law on Reorganising the Special-Purpose Joint-Stock Company “Lietuvos energija”, which came into force on 2 June 2000. This law provided for the ways and procedure of reorganisation of the said special-purpose joint-stock company.

13. On 20 July 2000, the Seimas adopted the Republic of Lithuania’s Law on Electricity. The law established the basic principles regulating the generation, transmission, distribution, and supply of electricity in the Republic of Lithuania with account of the requirements of European Union law, as well as it established the relations between suppliers of electricity and their customers, and the conditions for the development of competition in the electricity sector (Article 1).

14. On 28 June 2001, the Seimas adopted the Republic of Lithuania’s Law on Amending the Law on Reorganising the Special-Purpose Joint-Stock Company “Lietuvos energija”, which came into force on 18 July 2001. By Article 1 of this law, the Law on Reorganising the Special-Purpose Joint-Stock Company Lietuvos energija (18 May 2000) was set forth in its new wording.

Paragraph 1 of Article 2 of the Law on Reorganising the Special-Purpose Joint-Stock Company Lietuvos energija (wording of 28 June 2001) prescribed, inter alia, the following: “The special-purpose joint-stock company ‘Lietuvos energija’ shall be reorganised according to the method of division of companies, i.e. by separating the parts of property, rights and obligations from the special-purpose joint-stock company ‘Lietuvos energija’, which shall continue its activity after reorganisation as a company, and by establishing new companies based on the said parts of property, rights and obligations.”

On 16 October 2001, the Seimas adopted the Resolution “On Distribution of the Authorised Capital, Which is Provided for in the Draft Reorganisation of the Special-purpose Joint-Stock Enterprise ‘Lietuvos energija’ and Obligations (Liabilities) Thereof Among the Newly Established Enterprises” in which the following was decided: “To assent to the distribution of the authorised capital, which is provided for in the draft reorganisation of the special-purpose joint-stock enterprise ‘Lietuvos energija’ and obligations (liabilities) thereof among the newly established enterprises <…>” (Paragraph 1 of Article 1).

On 29 October 2001, on such a basis, the Government adopted the Resolution (No. 1264) “On Assenting to the Project of Reorganisation of the Special-Purpose Joint-Stock Company ‘Lietuvos energija’ and on Granting the Authorisations” which, inter alia, prescribed: “To assent to the project of reorganisation of the special-purpose joint-stock company ‘Lietuvos energija’”; “To commission the Ministry of Economy, which is the possessor of the shares which belong to the state by right of ownership, to authorise its representative to vote in the general meeting of shareholders of the special-purpose joint-stock company Lietuvos energija in order that the following decisions would be adopted: <…> to approve the articles of association of the joint-stock companies ‘Lietuvos energija’, ‘Rytų skirstomieji tinklai’, ‘Vakarų skirstomieji tinklai’, ‘Lietuvos elektrinė’, and ‘Mažeikių elektrinė’.

Thus, the process of the restructuring and deconcentration of the electricity system of this country began. The said legal regulation created legal preconditions for reforming the state (monopolistic) electricity system which had been formed during the Soviet time—for separating electricity generation, transmission and distribution.

15. On 14 May 2002, the Seimas adopted the Resolution “On the Positions of Lithuania in the Negotiations with the European Union in the Acquis Chapter ‘Energy’ and the Amendments of the National Energy Strategy Necessary for Securing the Successful Accession to the European Union” which came into force on 18 May 2002.

This Seimas resolution, inter alia, recognised the necessity to establish the conditions for the final ending of the exploitation of the first and second units of the Ignalina Nuclear Power Plant according to the co-ordinated time-table of accession of Lithuania to the European Union; it is pointed out that the term of 2009–2015 might be technologically reasonable for ending the exploitation of the second unit of the Ignalina Nuclear Power Plant.

Article 1 of the said Seimas resolution suggests that the Government “negotiate with Member States of the European Union and the European Commission regarding the time-period of the shutdown of the second unit of the Ignalina Nuclear Power Plant and terms of funding, and continue negotiations regarding the financial and other terms of the ending of exploitation of the first and second units of the Ignalina Nuclear Power Plant.”

16. On 28 May 2002, the Seimas adopted the Resolution “On Approving the National Security Strategy” by Article 1 whereof it approved the National Security Strategy presented by the Government. Item 6.1.3.2 titled “Strategic Partnership with Poland” of the said strategy stipulated, inter alia, that due to its geographical location Poland is regarded as a necessary link in the integration of the infrastructure of energy sector of Lithuania into corresponding Western European systems.

17. On 10 October 2002, the Seimas adopted the Republic of Lithuania’s Law on Enterprises and Facilities of Strategic Importance to National Security and Other Enterprises Important to Ensuring National Security, which came into force on 30 October 2002. This law prescribed, inter alia, that, inter alia, the joint-stock company Vakarų skirstomieji tinklai and the joint-stock company Rytų skirstomieji tinklai are of importance to ensuring national security (Items 3 and 4 of Paragraph 1 of Article 4). The said law has been amended and/or supplemented more than once, however, the said provisions have not been amended.

18. On 10 October 2002, the Seimas adopted the Resolution “On Approving the National Energy Strategy” by Article 1 whereof it approved the renewed National Energy Strategy presented by the Government (i.e. the National Energy Strategy approved by the aforementioned Seimas resolution of 5 October 1999 was amended. The National Energy Strategy (wording of 10 October 2002) stipulated, inter alia, that the fact that the Lithuanian electricity networks do not have direct links with the energy systems of Western Europe is a weakness, therefore, there are not any possibilities of integrating Lithuania into the electricity systems of the states of Western and Central Europe. In addition, it was established in the National Energy Strategy (wording of 10 October 2002) that the fact that there is not any direct link with the electricity systems of Central and Western Europe is a big drawback; it is necessary to construct a powerful connection with the Polish electricity system as soon as possible. It also needs to be mentioned that the National Energy Strategy (wording of 10 October 2002) established an electricity export and electricity supply reliability prognosis: “(1) In case at least one unit of the Ignalina NPP is operational, it is possible to maintain the traditional electricity export through the available lines to the north and the east; (2) until 2010, it would be possible to export electricity from the power plant “Lietuvos elektrinė” at a profit only during semi-peak and peak energy demand; (3) the construction of an electricity transmission line to Poland is necessary in order to achieve the integration into the European electricity market.”

19. On 20 December 2002, the Government adopted the Resolution (No. 2015) “On Amending the Resolution of the Government of the Republic of Lithuania (No. 228) ‘On Approving the List of Privatisation Objects’ of 23 February 1998”, which came into force on 28 December 2002. By this resolution, the joint-stock companies “Rytų skirstomieji tinklai and Vakarų skirstomieji tinklai were entered on the List of Privatisation Objects.

20. On 22 April 2003, the Seimas adopted the Republic of Lithuania’s Law on Interchange of the Shares of the Joint-Stock Companies “Lietuvos energija” and Lietuvos elektrinė and Those of the Joint-Stock Companies “Rytų skirstomieji tinklai” and “Vakarų skirstomieji tinklai” which came into force on 1 May 2003. The purpose of this law is to permit the Government to arrange and execute the interchange of the shares (which belong to the state by right of ownership) of the joint-stock companies “Rytų skirstomieji tinklai” and “Vakarų skirstomieji tinklai” to the shares of the joint-stock companies “Lietuvos energija” and Lietuvos elektrinė which by right of ownership belong to the German company “E.ON Energie AG” (Article 1).

It needs to be mentioned that Paragraph 2 of Article 3 of this law provides: “The state-owned shares of the joint-stock companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’ shall be transferred in exchange of the shares of the joint-stock companies ‘Lietuvos energija’ and Lietuvos elektrinė which by right of ownership belong to the German company ‘E.ON Energie AG’ by the rate of exchange established during the negotiations and by taking account of the value of the shares of the said enterprises. This value shall be established by an independent property assessor by following the Republic of Lithuania’s Law on the Basics of Assessment of Property and Business.”

21. On 15 May 2003, the President of the Republic adopted the Decree (No. 83) “On Forming the Public Energy Council under the President of the Republic”, which, following Article 3 thereof, came into force as from the day of its signing.

By Article 1 of the said decree, the President of the Republic, having noted the striving to promote a dialogue between society and state institutions and inter-institutional cooperation in the energy sector of the economy of this country, formed the Public Energy Council under the President of the Republic and invited thirteen persons (six of whom work in state institutions and/or establishments, five of whom work in associations, one of whom works in the joint-stock company “Lietuvos energija”, and one—in the representative office of a private foreign company (“E.ON Energie AG”) in Lithuania) to this council.

In addition, by Article 2 of the said decree, the President of the Republic set the tasks for the formed Council, among which there is presentation of proposals on energy sector strategy, its development, formation and implementation of structural changes.

The said decree was abolished in 2004 by the Decree of the President of the Republic (No. 35) “On Recognising the President of the Republic’s Decree No. 62 of 28 April 2003, Decree No. 83 of 15 May 2003, Decree No. 100 of 4 June 2003, Decree No. 154 of 9 July 2003, and Decree No. 201 of 9 September 2003 as No Longer Valid” of 10 August 2004, which was issued by the newly-elected President of the Republic.

22. On 22 May 2003, the Government adopted the Resolution (No. 629) “On Interchange of the Shares of the Joint-Stock Companies ‘Lietuvos energija’ and Lietuvos elektrinė and Those of the Joint-Stock Companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’” which came into force on 29 May 2003. It was resolved in this resolution, inter alia, “to commission the Ministry of Economy to negotiate with the German company ‘E.ON Energie AG’ regarding exchange of state-owned shares of the joint-stock companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’ into the shares of the joint-stock companies ‘Lietuvos energija’ and Lietuvos elektrinė which by right of ownership belong to the German company ‘E.ON Energie AG’, by taking account of the value of the shares of the said enterprises” (Item 1); “to commission <…> the Ministry of Economy, within one month of the entry of this resolution into effect, to prepare and present to the Government a draft agreement on interchange of state-owned shares of the joint-stock companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’ to the shares of the joint-stock companies ‘Lietuvos energija’ and Lietuvos elektrinė which by right of ownership belong to the German company ‘E.ON Energie AG’” (Item 2.2).

23. On 10 July 2003, the Government adopted the Resolution (No. 893) “On Interchange of the Shares of the Joint-Stock Companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’ into the Shares of the Joint-Stock Companies ‘Lietuvos energija’ and Lietuvos elektrinė which by Right of Ownership Belong to the German Company ‘E.ON Energie AG’” which came into force on 11 July 2003. In this resolution the Government assented to a draft agreement on interchange of the shares of the joint-stock companies Rytų skirstomieji tinklai and Vakarų skirstomieji tinklai into the shares of the joint-stock companies “Lietuvos energija” and Lietuvos elektrinė which by right of ownership belong to the German company “E.ON Energie AG” (Item 1).

24. On 14 July 2003, the Government adopted the Resolution (No. 905) “On Assenting to the Privatisation Programmes of Joint-Stock Companies ‘Rytų skirstomieji tinklai’ and ‘Vakarų skirstomieji tinklai’” which came into force on 17 July 2003. It was resolved therein to assent to the privatisation programmes of shares (which belong to the state by right of ownership) of the joint-stock companies Rytų skirstomieji tinklai and Vakarų skirstomieji tinklai.

25. On 16 September 2003, the Seimas ratified the Treaty Between the Kingdom of Belgium, the Kingdom of Denmark, the Federal Republic of Germany, the Hellenic Republic, the Kingdom of Spain, the French Republic, Ireland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Finland, the Kingdom of Sweden, the United Kingdom of Great Britain and Northern Ireland (Member States of the European Union) and the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia, the Slovak Republic Concerning the Accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia, the Slovak Republic to the European Union, signed on 16 April 2003 in Athens (which came into force on 1 May 2004).

In Article 1 of Protocol No. 4 “On the Ignalina Nuclear Power Plant in Lithuania”, whose provisions are an inseparable part of the Act Concerning the Conditions of Accession of Lithuania to the European Union, acknowledging the readiness of the European Union to provide adequate additional Community assistance to the efforts by Lithuania to decommission the Ignalina Nuclear Power Plant and highlighting this expression of solidarity, Lithuania committed to the closure of Unit 1 of the Ignalina Nuclear Power Plant before 2005 and of Unit 2 of this plant by 31 December 2009 at the latest and to the subsequent decommissioning of these units.

26. By its 9 December 2003 decision (Protocol No. 2V-57 (352)), the Privatisation Commission assented to a draft agreement on sale and purchase of a block of shares of the joint-stock company Vakarų skirstomieji tinklai.

On 17 December 2003, the Government adopted the Resolution (No. 1625) “On Assenting to the Draft Agreement on Sale and Purchase of the State Block of Shares of the Joint-Stock Company ‘Vakarų skirstomieji tinklai’” which came into force on 19 December 2003. It was resolved therein to assent to the draft agreement on sale and purchase of the block of shares (which belong to the state by right of ownership) of the joint-stock company Vakarų skirstomieji tinklai.

27. On 9 March 2004, the Government adopted the Resolution (No. 262) “On Discontinuing the Implementation of the Privatisation Programme of the Joint-Stock Company ‘Rytų skirstomieji tinklai’”, which came into force on 12 March 2004. It was resolved therein to discontinue the implementation of the privatisation programme of the block of shares (which belong to the state by right of ownership) of the joint-stock company Rytų skirstomieji tinklai.

28. On 8 November 2004, the Government adopted the Resolution (No. 1400) “On the 2004 Lithuania National Structural Reform Account” which came into force on 12 November 2004. This resolution assented to the 2004 Lithuania National Structural Reform Account. This account, inter alia, specifies: “In July 2003 privatisation tenders of two electricity distribution networks companies (which were established after the reorganisation of the joint-stock company ‘Lietuvos energija’)—the joint-stock company ‘Rytų skirstomieji tinklai’ and the joint-stock company ‘Vakarų skirstomieji tinklai’. The privatisation of the joint-stock company ‘Vakarų skirstomieji tinklai’ <…> was over in December 2003: an agreement of sale and purchase of the shares (which belong to the state by right of ownership) of the company VST was signed with a group of natural persons (9 persons) from Lithuania. On the day of completing the transaction (on 23 December 2003), the consortium paid LTL 539.9 million for the privatised 77 percent shares of the company.”

29. On 14 December 2004, the Seimas adopted the Resolution “On the Programme of the Government” by Article 1 whereof it assented to the Programme of the Government. Item 1.9 of this programme entrenched, inter alia, the following provision: “To create possibilities of implementing the projects for shutdown of the Ignalina Nuclear Power Plant, and attracting investments for building new nuclear reactors.” In addition, Item 2.5 of the said programme prescribed: “To seek to retain Lithuania as a state which has a nuclear power plant.”

30. On 20 January 2005, the Seimas adopted the Resolution “On Amending the Annex to Seimas Resolution ‘On Approving the National Security Strategy’” by Article 1 whereof it resolved to amend the National Security Strategy (wording of 28 May 2002) and to set it forth in its new wording. This strategy stipulates, inter alia, that in order to secure the stability of the fast economic development of the Republic of Lithuania, one must seek for supply from various sources of energy resources by interconnecting the energy networks of Lithuania and other European Union countries (Subitem 6.2.5.11).

31. On 16 March 2005, the Constitutional Court adopted the Ruling “On the Compliance of Article 2 as well as Paragraphs 2 and 4 of Article 3 of the Republic of Lithuania’s Law on the Reorganisation of the Special Purpose Company ‘Lietuvos Energija’ (wording of 28 June 2001) with the Constitution of the Republic of Lithuania” wherein it ruled, inter alia, that the impugned provision of the law that the special-purpose company “Lietuvos energija” is reorganised according to the method of division of companies was not conflict with the Constitution. In addition, the Constitutional Court ruled in the said ruling that the impugned provision of the law that the shares of specified in this paragraph companies established on the basis of property of affiliated units and divisions of the special-purpose company “Lietuvos energija”, which are engaged in activity other than the principal activity, must be transferred to the shareholders of companies established upon reorganisation in proportion to the number of shares of the company owned by them was not in conflict with the Constitution.

32. On 24 March 2005, the Government adopted the Resolution (No. 315) “On Approving the Measures for Implementation of the 2004–2008 Government Programme” which came into force on 30 March 2005. Item 1 of this resolution approved the Measures of the Implementation of the 2004–2008 Government Programme. Item 28 of these measures established the measure “To analyse the conclusions regarding the issues of continuing the development of nuclear power in Lithuania and experience of other states”, while Item 29 established the measure “To conduct a poll among the companies from the EU and other states, which have experience in nuclear power, as to what preliminary investment proposals they might have regarding the construction of a new nuclear reactor”. The Ministry of Economy was indicated as the superintendent for execution of such measures.

33. On 29 September 2005, the Seimas adopted the Resolution “On Continuity of Nuclear Power and Renewal of the National Energy Strategy” wherein it stated that the Seimas “will make efforts that Lithuania remain a nuclear energy state and continue generating electricity in a nuclear power plant which meets modern requirements” and “will support, both legislatively and politically, the investments to the construction of a new reactor”. Besides, this resolution contains a proposal of the Seimas to the Government to adopt, inter alia, concrete decisions regarding perspectives of the new nuclear power plant.

34. On 27 February 2006, in Trakai, the Prime Ministers of the Republic of Lithuania, the Republic of Latvia, and the Republic of Estonia, adopted the Declaration “On Security of Energy Supply in the Baltic States and Common European Energy Policy” and announced a communiqué wherein they expressed their support to the construction of the new nuclear power plant in the region and invited the Baltic state energy companies “Lietuvos energija”, “Latvenergo” and “Eesti Energija” as participating parties to invest, under equal conditions, into the project and construction of the new nuclear power plant in Lithuania.

On 8 March 2006, in Visaginas, the heads of the aforesaid energy companies signed an agreement memorandum regarding the preparation of a study into a possibility of implementing the construction of the new nuclear power plant. It was provided for in the memorandum, inter alia, that the companies “Lietuvos energija”, “Latvenergo” and “Eesti Energija” will participate in the project under equal conditions, while a committee will be established for the purpose of general guidance and supervision, in which there will be the heads of all three energy companies.

35. On 18 July 2006, the Seimas adopted the Resolution “On the Programme of the Government of the Republic of Lithuania” by Article 1 whereof it assented to the Programme of the Government. Among the priority works of the Government, this programme specified the following: “to make every effort necessary for building the new nuclear power plant so that Lithuania would remain a state having a nuclear power plant”. In addition, Item 12.5 of the said programme, inter alia, specified: “To create opportunities for implementation of the projects for decommissioning the Ignalina Nuclear Power Plant and to attract investments for building new nuclear reactors.”

36. On 17 October 2006, the Government adopted the Resolution (No. 1020) “On Approving the Measures for Implementation of the 2006–2008 Government Programme” which came into force on 22 October 2006. Item 1 of this resolution approved the Measures of the Implementation of the 2006–2008 Programme of the Government of the Republic of Lithuania. One of such measures was “To prepare the Republic of Lithuania’s Draft Law on Building a New Nuclear Power Plant”, the Ministry of Economy was the superintendent for execution of this measure, and the date—the first quarter of 2007—of the execution of the measure was established.

The said Government resolution was amended more than once.

37. By his Ordinance (No. 384) “On Forming a Working Group” of 24 November 2006, the Prime Minister formed a working group for consultation with the authorised representatives from the Republic of Latvia and the Republic of Estonia regarding the building of the new nuclear power plant (Item 1); this working group was commissioned to discuss, together with the authorised representatives from the Republic of Latvia and the Republic of Estonia (Item 2.1), inter alia, the time period of founding an enterprise for implementation of the building project of the new nuclear power plant and the size of the initial capital (Item 2.1.1); the said working group was commissioned to submit the discussion results to the Government Strategic Planning Committee (Item 2.2).

38. On 8 December 2006, in Vilnius, the Prime Ministers of the Republic of Lithuania, the Republic of Latvia, and the Republic of Estonia, announced a joint statement in which Polish representatives were invited to participate in the consultations of energy experts of Lithuania, Latvia and Estonia regarding partnership possibilities in building and exploiting the new nuclear power plant in Lithuania.

39. On 5 January 2007, the Prime Minister adopted the Ordinance (No. 4) “On Forming a Working Group”, by Article 1 whereof it formed a working group for drafting essential provisions of the conception of a draft law on building the new nuclear power plant. After the Prime Minister adopted the Ordinance (No. 23) “On Amending the Ordinance of the Prime Minister of the Republic of Lithuania (No. 4) ‘On Forming a Working Group’ of 5 January 2007” of 15 January 2007, and after the said ordinance appointed a new person to the working group formed by the aforesaid ordinance, this working group was composed of 13 persons.

In addition, by Item 2.1 of the said ordinance the Prime Minister commissioned the formed working group to draft the essential provisions of the conception of a draft law on building the new nuclear power plant and, prior to 1 February 2007, to submit them to the Government Strategic Planning Commission for consideration.

40. On 15 January 2007, the Minister of Economy issued the Order “On Forming a Working Group”. By Item 1 of this order the Minister of Economy formed a working group for preparation of a draft law on building the new nuclear power plant.

In addition, by Item 2.2 of the said order the Minister of Economy commissioned the working group to submit proposals to the working group formed by Ordinance of the Prime Minister “On Forming a Working Group” of 5 January 2007.

41. On 13 February 2007, the Government Strategic Planning Committee, inter alia, assented in essence to the essential provisions of the conception of a draft law on building the new nuclear power plant and commissioned the Ministry of Economy to prepare, by taking account of the proposals of this committee, prior to 15 March 2007, a draft law on the new nuclear power plant and submit it to the Government, and assented to the proposal that a working group be established by an ordinance of the Prime Minister in order to draft the essential provisions for founding the Lithuanian national investor company (Protocol No. 8 of the 13 February 2007 sitting of the Government Strategic Planning Committee).

42. On 18 January 2007, by its Resolution “On Approving the National Energy Strategy” the Seimas approved the National Energy Strategy, which came into force on 27 January 2007. This strategy stipulates, inter alia, that the shutdown of the Ignalina Nuclear Power Plant in 2009 is the main factor which exerts influence on stable energy activity in Lithuania, which will have a big negative impact on the structure of the sources of electricity, the primary energy balance and electricity price in 2010–2015 (Subitem 2 of Item 8). In addition, the said strategy provides: “Upon shutdown of the Ignalina NPP, in order to avoid a too big dependency on imported fossil fuel whose prices are hard to predict, to reduce the pollutants emitted into the atmosphere and the ecological consequences linked thereto, it is necessary to build a new nuclear power plant in Lithuania (investments about LTL 10 billion). <…>” (Item 26). The said strategy also provides that it is necessary to construct strategic interconnections with Poland and Sweden (Subitem 3 of Item 31) and, not later than in 2015, to begin to exploit the new nuclear power plant (Subitem 7 of Item 31).

On the same day, i.e. on 18 January 2007, the Seimas adopted the Resolution “On Implementing the National Energy Strategy”, which came into force on 27 January 2007. In Article 1 of this resolution the Seimas proposed that the Government, inter alia, “organise the designing and building of the new regional nuclear power plant in such a manner so that it would be possible to adopt and implement decisions in the most efficient way and within the shortest time possible <…>; to make efforts that in the course of negotiation with the other partners in this project Lithuania gain the role of the leader in this project; <…> (Item 3); “taking account of the aim of the European Union to create a competitive energy market, to seek to create such a market in Lithuania, however, by such pace and measures that would not violate the interests of national security of Lithuania. Also, to make efforts that Lithuania remain a country exporting electricity” (Item 9).

43. On 19 February 2007, the Prime Minister adopted the Ordinance (No. 62) “On Forming a Working Group”.

By this ordinance the Prime Minister formed a working group for drafting essential provisions of the conception of founding the Lithuanian national investor company (which will participate in implementation of the project of the new nuclear power plant) (this working group was composed of six persons, out of whom four worked in state institutions, one worked in the joint-stock company “Lietuvos energija” and one worked in the closed-type joint-stock company “NDX energija”) and commissioned this group to submit these provisions, prior to 31 March 2007, to the Government Strategic Planning Committee for consideration (Items 1 and 2).

44. On 23 March 2007, the Government Strategic Planning Committee assented to the proposal of the working group formed by the Ordinance of the Prime Minister (No. 62) “On Forming a Working Group” of 19 February 2007 wherein it was suggested to found the Lithuanian national investor company on the basis of the joint-stock company “Lietuvos energija” by increasing the authorised capital of this company and by paying for this increase by means of non-monetary contributions—shares of the joint-stock company Rytų skirstomieji tinklai and of the joint-stock company “VST”, which constitute more than 50 percent of shares of each of those companies and of votes in the general meeting of shareholders. In addition, it was assented to the proposal that the management of the created company must be in line with the best practice of management of European Union energy companies, and that the Lithuanian national investor company would gain benefits for itself and all its shareholders in a socially responsible manner (Protocol No. 11 of the 23 March 2007 sitting of the Government Strategic Planning Committee).

45. In its Resolution (No. 308) “On Submitting the Republic of Lithuania’s Draft Law on the Nuclear Power Plant to the Seimas of the Republic of Lithuania”, the Government assented to the Republic of Lithuania’s Draft Law on the Nuclear Power Plant and presented it to the Seimas (Item 1).

In the explanatory note to the Republic of Lithuania’s Draft Law on the Nuclear Power Plant presented to the Seimas by the Government it was pointed out, inter alia, that the main principles of the activity and management of the national investor, as well as the requirement that more than 1/2 of the shares of the national investor and of votes in the general meeting of shareholders of the national investor must belong to the state by right of ownership, are provided for in Article 10 of the draft law. In addition, the said explanatory note pointed out that the legal preconditions are established in Article 11 of the draft law to unite the joint-stock company “Lietuvos energija”, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST” into one group of companies and the conditions of a possible increase of the authorised capital of the joint-stock company “Lietuvos energija” are provided for.

46. Upon the initiative of a group of members of the Seimas, subsequent to an order of the Office of the Seimas, on 30 May 2007, an independent expert—the company “Deloitte Lietuva” UAB—presented a legal and economic assessment of the provisions of the Republic of Lithuania’s Draft Law on the Nuclear Power Plant (No. XP-2144) regarding the national investor.

Having assessed the financial capabilities of the national investor to fund the project by its own and borrowed funds, where no state guarantees are granted to the received loans, the expert pointed out that the provisions of the law create preconditions for vertical integration of the electricity sector and for consolidation of state control in this sector; the national investor will be financially able to receive borrowed funds and to generate flows of money, which, if added together, might be a sufficient source of funds to finance the project; the national investor will have realistic financial possibilities of funding the project both by its own and borrowed funds also when state guarantees are not granted to the received loans.

Having analysed whether the limitation on the private capital in the national investor company to less than 50 percent of the shares is sufficient so that the prospective interests of the state could be secured, the expert pointed out that the establishment of bigger part of the shares and votes of the national investor to the state would not have a positive impact for the state in securing state interests.

Having assessed whether the participation of the only private capital investor (closed-type joint-stock company “NDX energija”) in the national investor company is sufficiently grounded, the expert presented the following conclusion: “in the stage of the national investor the incorporation of other economic subjects would be inefficient and not expedient”, since this virtually would not change the rights of the economic subjects “in running the national investor, however, it might create additional difficulties related with co-ordination of legal and economic conditions for formation of the national investor capital with a lot of persons at the same time. The joining of the processes of forming (creation) of the national investor and of the investment of other economic subjects into the national investor would be unreasonable from the economic point of view (since investment would be made into a subject, which has not been created yet) and from the organisational point of view (due to the organisational complexity of the process).”

The said assessment of the independent expert—the company “Deloitte Lietuva” UAB—submitted a number of examples of joint partnership of the state and private capital in big investment projects in the main energy companies of European countries.

47. On 12 April 2007, the Legal Department of the Office of the Seimas presented the Conclusion “Regarding the Republic of Lithuania’s Draft Law on the Nuclear Power Plant” (No. XP-2144). Item 1 of this conclusion, inter alia, stipulates: “<…> the explanatory note to the draft does not contain any reasoning which objectively justify the exceptional character of the joint-stock company Lietuvos energija’, which expressed a private initiative to make investments (Paragraph 1 of Article 10 of the draft), with respect to the subjects of economy of Lithuania and those of European Union countries. <…> It needs to be noted that the principles of a state under the rule of law, proportionality and equality of subjects are entrenched in the Preamble to the Constitution and Article 29 thereof.”

48. On 26 June 2007, the Legal Department of the Office of the Seimas presented the Conclusion “Regarding the Republic of Lithuania’s Draft Law on the Nuclear Power Plant” (No. XP-2144 (3)). Item 7 of this conclusion notes: “In its conclusion of 12 April 2007, the Legal Department drew attention to the fact that the draft provisions establishing the exceptional character of certain economic subjects with respect to the subjects of economy of Lithuania and those of European Union countries might be in conflict with the principles of non-discrimination and transparency established in the Founding Treaty of the European Community.”

49. On 28 June 2007, the Seimas adopted the Republic of Lithuania’s Law on the Nuclear Power Plant which came into force on 10 July 2007. The purpose and objective of this law is to lay down provisions and to create legal, financial and organisational preconditions for the implementation of a new nuclear power plant project (Article 1). This law provides that the Seimas shall give its approval for the construction of a new nuclear power plant in the Republic of Lithuania (Article 2); such power plant is defined as a complex of equipment and buildings intended for generating electricity or electricity and heat by using nuclear fuel (Paragraph 1 of Article 3).

Article 10 of the Law on the Nuclear Power Plant provided for the national investor—the joint-stock company “Lietuvos energija”, which expressed a private initiative to make investments into the project. In order to gain and implement the status of the national investor, the authorised capital of the joint-stock company “Lietuvos energija” had to be increased subsequent to Article 11 of this law, by investing for this purpose the shares of the joint-stock companies Rytų skirstomieji tinklai and “VST” amounting to more than 1/2 of shares of each company and carrying more than 1/2 of votes in the general meeting of shareholders into the said authorised capital; this means that one would be able to implement the right of the Government and that of the shareholder holding the controlling block of shares of the joint-stock company “VST” to invest correspondingly into the shares of the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST” amounting to more than 1/2 of shares of each company and carrying more than 1/2 of votes in the general meeting of shareholders, and that one would be able to implement the right of the Government to negotiate with the shareholder holding the controlling block of shares of the joint-stock company “VST” regarding the investment of all shares of the joint-stock company “VST” belonging to such shareholder by right of ownership, or part of the said shares amounting to more than 1/2 of shares of the joint-stock company “VST” and carrying more than 1/2 of votes in the general meeting of shareholders, and regarding the acquisition of the newly issued shares of the joint-stock company “Lietuvos energija”; in addition, the Government would be able to adopt decisions regarding the investment of the shares (which belong to the state by right of ownership) of the joint-stock company Rytų skirstomieji tinklai and regarding the voting in the general meetings of shareholders of the joint-stock companies “Lietuvos energija” and Rytų skirstomieji tinklai.

Under Paragraph 3 of Article 10 of the Law on the Nuclear Power Plant, the national investor and its subsidiaries shall make a group of companies of the national investor; the major activity of the national investor must be that of the parent company of the group of companies of the national investor. Paragraph 4 of Article 10 of this law provides that companies forming such a group of companies shall carry out separated activities of electricity generation, transmission, distribution, supply, market operator and other activities in accordance with the procedure laid down by means of legal acts.

50. According to Paragraphs 1, 2, 3, and 4 of Article 11 (wording of 28 June 2007) of the Law on the Nuclear Power Plant, the creation of the national investor depended on the fact whether the Government and the shareholder holding the controlling block of shares of the joint-stock company “VST” will reach an agreement on investing all or part of the shares of the joint-stock company “VST” amounting to more than 1/2 of shares of the joint-stock company “VST” and carrying more than 1/2 of votes in the general meeting of shareholders, into the authorised capital of the joint-stock company “Lietuvos energija” and regarding the acquisition of the newly issued shares of the joint-stock company “Lietuvos energija”.

On 11 July 2007, the Government, while following Item 1 of Paragraph 2 of Article 11 of the Law on the Nuclear Power Plant (wording of 28 June 2007) adopted the Resolution (No. 726) “On Implementing the Republic of Lithuania’s Law on the Nuclear Power Plant” whereby it formed a provisional commission (working group) (Item 1) and commissioned it: (1) to negotiate with the shareholder holding the controlling block of shares of the joint-stock company “VST” regarding the investment of all shares of the joint-stock company “VST” belonging to such shareholder by right of ownership, or part of the said shares amounting to more than 1/2 of shares of the joint-stock company “VST” and carrying more than 1/2 of votes in the general meeting of shareholders, and regarding the acquisition of the newly issued shares of the joint-stock company “Lietuvos energija” (Item 2.1); (2) to negotiate with the joint-stock company “Lietuvos energija” on the conditions of an agreement for signing the new shares issued by this company (Item 2.2).

51. On 23 October 2007, the Commission of the European Communities (hereinafter also referred to as the Commission) submitted an official announcement to Lithuania regarding violation No. 2007/2261 regarding the conditions of privatisation of the joint-stock company “VST”. The questions raised in this official report are linked with the conditions of the acquisition of the joint-stock company “VST”, the qualification requirements applied to the acquirer and insufficient reasoning of the established limitations.

Regarding these questions, on 22 December 2007, the Ministry of Economy presented an answer, in which it was noted, inter alia, that the joint-stock company “VST” operates in the economic sector which is important to security of the Republic of Lithuania, thus, it is an enterprise important for securing national security, and this enterprise had been privatised before the Republic of Lithuania acceded to the European Union. In addition, on 15 July 2008, the Ministry of Economy submitted additional information to the Commission (the Secretariat-General and the Directorate-General for Internal Market and Services) regarding conclusion of privatisation of the joint-stock company “Lietuvos energija”.

52. In the 27 December 2007 sitting of the Government, Item 27 “On assenting to the results of the negotiations for founding the national investor and submitting the Republic of Lithuania’s draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant and on Assenting to the Results of the Negotiations for Founding the National Investor” of the agenda was discussed. Entry No. 51 of the protocol of this sitting indicates the result of the consideration of Item 27 of the agenda as follows: “To adopt the draft resolution prepared by the Ministry of Economy and, after this draft is rectified by taking account of the remarks voiced in the sitting, to submit it to the Prime Minister for signing.”

Thus, on 27 December 2007, the Government adopted the Resolution (No. 1426) “On Assenting to the Results of the Negotiations for Founding the National Investor and Submitting the Republic of Lithuania’s Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant and on Assenting to the Results of the Negotiations for Founding the National Investor”.

By Item 1 of this resolution the Government assented to the results of the negotiations between the provisional commission (working group) and the shareholder holding the controlling block of shares of the joint-stock company “VST” regarding the founding of the national investor and the increase of the authorised capital—the provisions laid down in the draft agreement of the national investor, the draft agreement on the shareholders, and the draft Articles of Association of the national investor regarding the distribution of the authorised capital and the shares of the national investor among the shareholders (Item 1.1), the objective of the activity and the main tasks of the national investor (Item 1.2), the separation of the Kaunas Hydroelectric Plant (Kaunas HP) and the Kruonis Pump Storage Power Plant (Kruonis PSPP) from the joint-stock company “Lietuvos energija” (Item 1.3) and disposal of the shares of the national investor (Item 1.4).

In addition, by Item 2 of its resolution No. 1426 of 27 December 2007, the Government assented to the draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant, and, along with the draft agreement of the national investor, the draft agreement on the shareholders, and the draft Articles of Association of the national investor, presented it to the Seimas.

By the said resolution the Government requested that the Seimas consider the said draft law under an urgent procedure (Item 3.1) and give its opinion regarding the results of the negotiations between the Government and the shareholder holding the controlling block of shares of the joint-stock company “Lietuvos energija” regarding the founding of the national investor and the increase of the authorised capital (Item 3.2).

In the explanatory note to the draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant submitted to the Seimas by the Government it was pointed out, inter alia, that this draft law had been prepared by taking account of the fact that in the course of negotiating with the negotiations partner—the closed-type joint-stock company “NDX energija” which holds the controlling block of shares in the joint-stock company “VST”—it was proposed not to create the national investor on the basis of the joint-stock company “Lietuvos energija”, but to found a new legal person, while the State of Lithuania and the shareholder holding the controlling block of shares of the joint-stock company “VST” might be shareholders of the national investor. The change in the scheme of formation of the national investor is explained by the fact that the creation of the national investor on the basis of the joint-stock company “Lietuvos energija” and subsequent reorganisation of this joint-stock company so that it might become the parent company (as provided for in Article 10 of the Law on the Nuclear Power Plant (wording of 28 June 2007)) is legally complicated, in addition, there is a big risk that the creation of the national investor as a parent company might remain unfulfilled or can take an indefinite period of time, since:

small shareholders and creditors of the joint-stock company “Lietuvos energija”, or the parties of the transactions, can dispute the reorganisation of this company in courts (the separation of the operator of the transmission system and that of other types of activities, by separating the Kaunas HP and the Kruonis PSPP);

assents by creditors (parties of transactions) of the joint-stock company “Lietuvos energija” might be necessary in order to reorganise the joint-stock company “Lietuvos energija” or to separate a certain activity, or else the creditors might demand that the joint-stock company “Lietuvos energija” give additional guarantees to secure its liabilities;

the joint-stock company “Lietuvos energija”, even after it becomes the parent company, might remain jointly and severally responsible to creditors for liabilities of separate enterprises, and it might be required to reorganise the joint-stock company “Lietuvos energija” by several phases (by separating certain activities into individual enterprises which would become affiliate companies of the national investor and the Republic of Lithuania would contribute the shares of these companies, which belong to the Republic of Lithuania, to the capital of the national investor company).

53. On 8 January 2008, the Legal Department of the Office of the Seimas presented the Conclusion “On the Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant” (No. XP-2799).

In Item 1 of this conclusion attention was drawn to the fact that “by Item 1 of government resolution No. 1426 of 27 December 2007, by means of which the draft is presented to the Seimas, the Government assented to the results of the negotiations with the shareholder holding the controlling block of shares of the joint-stock company ‘VST’, while by Item 3 it requests that the Seimas give its opinion regarding the results of the negotiations between the Government and the shareholder holding the controlling block of shares of the joint-stock company ‘VST’ regarding the founding of the national investor and the increase of the authorised capital. Taking account of this, the conclusion should be drawn that the negotiations between the Government and the shareholder holding the controlling block of shares of the joint-stock company ‘VST’ regarding the founding of the national investor and the increase of the authorised capital is over. The Government suggests that the Seimas amend the law by taking account of the results of the completed negotiations in which it was agreed on a different model of forming the national investor than it was established in the law which is proposed to be amended, i.e. it requests granting the powers to negotiate after the negotiation has been completed. It needs to be noted that the power of the law must be prospective. <…> Alongside, we draw attention to the fact that the Government does not suggest that the law be amended by stipulating that the Seimas should express its opinion on the results of the negotiation, although this is requested in the said Government resolution”.

In addition, Item 5 of the said conclusion points out that “the Legal Department keeps to its opinion regarding the provisions establishing the exceptional situation of certain economic subjects with regard to other economic subjects, which were set forth in Item 1 of the 12 April 2007 conclusion on the draft Law on the Nuclear Power Plant and Item 7 of the 26 June 2007 conclusion regarding the same draft law”.

54. On 22 January 2008, the Seimas Committee on Legal Affairs, as a supplementary committee for considering the said draft law, adopted the Conclusion “On the Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant (No. XP-2799)”. This conclusion, inter alia, specifies: “The provisions of Draft No. XP-2799 establishing the participation of the national investor in constructing the interconnections of electricity systems are possibly in conflict with the principles of a state under the rule of law and legal clarity, which are entrenched in the Constitution of the Republic of Lithuania. The provisions of Paragraph 1 of Article 1 of Draft No. XP-2799 are also possibly in conflict with Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania (which provides that the state shall regulate economic activity so that it serves the general welfare of the Nation) with Paragraph 4 of the same article (which provides that the law shall prohibit monopolisation of production and the market and shall protect freedom of fair competition), and with Paragraph 5 of the same article (which provides that the state shall defend the interests of the consumer).” In addition, the said conclusion indicated the following: “Pursuant to the provision of Paragraph 2 of Article 128 of the Constitution of the Republic of Lithuania that the procedure for the possession, use and disposal of state property shall be established by law, the provisions of Item 18 of the Articles of Association of the National Investor must be regulated by means of a law.”

55. In the course of consideration of the Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant (No. XP-2799) in the Seimas it was decided to amend and supplement not only Article 10 and 11 of the Law on the Nuclear Power Plant, but also Articles 8 and 20 of this law. Members of the Seimas submitted more than 20 proposals regarding such amendment and supplement. The Seimas assented to some of these proposals.

56. By its Note “On the Necessity of Permission for the Concentration in Founding the National Investor Subsequent to the Provisions of the Republic of Lithuania’s Law on the Nuclear Power Plant” of 25 January 2008, the Competition Council submitted the information to the Ministry of Economy (this ministry had requested such information) regarding the possible concentration in the course of founding the national investor by the Republic of Lithuania and the closed-type joint-stock company “NDX energija”.

In this note, the Competition Council, inter alia, specified: “Although founding the national investor is concentration in the sense of the Law on Competition, while, under Paragraph 1 of Article 12 of the Law on Competition, the enterprises or controlling persons participating in the concentration which is subject to notification shall have no right to implement concentration until the resolution of the Competition Council is passed in accordance with Items 1 or 2 of Paragraph 1 of Article 14 of the said law, however, this concentration is regulated by means of a law wherein, among other things, the subjects participating in the concentration and their parts in the founded legal subject are specified. Therefore, while taking account of the provisions of the <…> Law on the Nuclear Power Plant, it should be assumed that the legislature decided a priori that concentration is permissible in creating the national investor.”

57. At the 1 February 2008 sitting of the Seimas it was decided to consider the Draft Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant under special urgency procedure.

On the same day, the Seimas adopted the Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant, which came into force on 14 February 2008.

By Paragraph 1 of Article 10 of the said law, the following was established in the respectively amended Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant: “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner and taking part in implementing the strategic goal of Lithuania provided for in Paragraph 3 of Article 8 of this Law. The legal form of the national investor shall be a joint-stock company; the registered office of the national investor shall be located in the Republic of Lithuania. The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden.”

In addition, it was established in Paragraph 1 of Article 11 (wording of 1 February 2007) of the Law on the Nuclear Power Plant (which was respectively amended and newly laid down by Article 3 of the Law on Amending Articles 8, 10, 11, and 20 of the Law on the Nuclear Power Plant):

The Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: (1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>.”

It was established in Paragraph 1 (wording of 28 June 2007) of Article 10 of the Law on the Nuclear Power Plant: “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established and operated for an indefinite period of time under laws of the Republic of Lithuania, with the aim of gaining benefits for itself and all shareholders in a socially responsible manner. The registered office of the national investor shall be situated in the Republic of Lithuania. The national investor shall be the joint-stock company ‘Lietuvos Energija’ which has shown a private initiative to invest in the project and fulfils the requirements laid down in this Law.”

It was established in Paragraph 1 of Article 11 (wording of 28 June 2007) of the Law on the Nuclear Power Plant: “The Government of the Republic of Lithuania and the shareholder of the controlling block of shares in the joint-stock company ‘VST’ shall have the right to invest the shares held in the public company Rytų skirstomieji tinklai (Eastern Distribution Networks) or in the joint-stock company ‘VST’ respectively, amounting to more than 1/2 of shares of each company and carrying more than 1/2 of votes at the general shareholders’ meeting, in the authorised capital of the national investor, the joint-stock company ‘Lietuvos Energija’, in accordance with the procedure laid down by this Law and other laws.” In addition, it was established in Item 1 of Paragraph 2 of Article 11 (wording of 28 June 2007) of the Law on the Nuclear Power Plant that the Government of the Republic of Lithuania shall have the right to “negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 1/2 of the shares of the joint-stock company ‘VST’ and carrying more than 1/2 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the joint-stock company ‘Lietuvos energija’ in the manner set forth in Paragraph 3 of this Article and, having agreed to that effect, make respective decisions provided for in this Law and other laws and conclude respective transactions”.

58. If one compares the legal regulation established in Paragraph 1 (wording of 28 June 2007) of Article 10 of the Law on the Nuclear Power Plant with the legal regulation established in Paragraph 1 (wording of 1 February 2008) of Article 10 of the same law, it is clear that the essential difference between them is that the model of the national investor was changed. Under Paragraph 1 (wording of 28 June 2007) of Article 10 of the Law on the Nuclear Power Plant, the national investor had to be formed on the basis of the joint-stock company “Lietuvos energija”, i.e. by investing the corresponding shares of the joint-stock company Rytų skirstomieji tinklai and of the joint-stock company “VST” into the joint-stock company “Lietuvos energija”, as it was provided for in Article 11 (wording of 28 June 2007) of this law. Under Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in order to form the national investor one has to found a national electricity company, and its authorised capital must be increased by investing the corresponding shares of the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST” into the national investor company (the authorised capital thereof), as provided for in Article 11 (wording of 1 February 2008) of this law.

59. If one compares the procedure of forming the national investor established in Paragraph 1 (wording of 28 June 2007) of Article 11 of the Law on the Nuclear Power Plant with the procedure of forming the national investor established in Paragraph 1 (wording of 1 February 2008) of Article 11 of the same law, it is clear that the legal regulation of the latter was amended by taking account of the said legal regulation whereby the model of the national investor was changed.

Under Paragraph 1 (wording of 28 June 2007) of Article 11 of the Law on the Nuclear Power Plant, the Government and the shareholder of the controlling block of shares in the joint-stock company “VST” had the right to invest correspondingly into the shares of the joint-stock company Rytų skirstomieji tinklai and the joint-stock company “VST”, and into the authorised capital of the joint-stock company “Lietuvos energija” and (under Item 1 of Paragraph 2 of the same article) to negotiate on such investment. Under Paragraph 1 of Article 11 (wording of 1 February 2008) of this law, the Government has the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of a corresponding portion of shares of the joint-stock company “VST”, as well as on the acquisition of newly issued shares of the national investor.

In addition, when one compares the established legal regulation, it is clear that it is different as regards the minimum specified amount of the shares of the joint-stock company “VST”, which can be invested into the authorised capital of the national investor. Under Paragraph 1 (wording of 28 June 2007) of Article 11 of the Law on the Nuclear Power Plant, the shareholder of the controlling block of shares in the joint-stock company “VST” has the right to invest more than 1/2 of the shares of this company, and, under Item 1 of Paragraph 2 of the same article, it has the right to negotiate with the Government on investment of such portion of the shares, while, under Paragraph 1 of Article 11 (wording of 1 February 2008) of the same law, the Government has the right to negotiate with the shareholder of the controlling block of shares in the said company on the investment of all the shares owned by that shareholder in the joint-stock company “VST”, or part thereof amounting to more than 2/3 of the shares of the joint-stock company “VST” carrying more than 2/3 of votes at the general shareholders’ meeting.

If one compares the said legal regulation, it needs to be noted that it is not different, inter alia, in the aspect that both Item 1 (wording of 28 June 2007) of Paragraph 2 of Article 11 of the Law on the Nuclear Power Plant and Item 1 of Article 11 (wording of 1 February 2008) of the same law indicate one concrete company (joint-stock company “VST”); the Government has the right to negotiate with the shareholder holding the controlling block of shares in the said company on the investment of a certain portion of shares, which belong to the said shareholder by right of ownership, into the national investor. In addition, this legal regulation is not different also in the aspect that the same way of investment of the shareholder of the controlling block of shares in the joint-stock company “VST” into the national investor (the authorised capital thereof)—investment by way of the shares of the joint-stock company “VST” which belong by right of ownership to the said shareholder—was and is established.

If the said legal regulation is related with the legal regulation (which is not impugned by the Seimas, the petitioner, in the constitutional justice case at issue) of the portion of the shares (the minimum amount of the shares) which must belong to the Republic of Lithuania by right of ownership which is established in Paragraph 2 (wordings of 28 June 2007 and 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, it needs to be noted that this regulation is not different—the Republic of Lithuania must hold by right of ownership a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor.

60. Paragraph 1 (wording of 1 February 2008) of Article 10 and Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant have not been amended or supplemented.

61. On 1 February 2008, the Seimas adopted the Republic of Lithuania’s Law on Amending Article 3 of the Law on Enterprises and Facilities of Strategic Importance to National Security and Other Enterprises Important to Ensuring National Security and Supplementing the Law with Article 41, which came into force on 14 February 2008.

Paragraph 1 of Article 1 of this law supplemented Paragraph 1 (which establishes the list of enterprises, which are of strategic importance to national security, and in which a proportion of the capital may be held by the private national and foreign capital meeting the criteria of European and transatlantic integration, provided the power of decision is retained by the state) of Article 3 of the Law on Enterprises and Facilities of Strategic Importance to National Security and Other Enterprises Important to Ensuring National Security (wording of 10 October 2002 with subsequent amendments and/or supplements) with new items, inter alia, with Item 9: “the national investor indicated in Section Four of the Republic of Lithuania’s Law on the Nuclear Power Plant <…>”.

Paragraph 2 of Article 1 of the aforesaid law amended Paragraph 3 (which establishes the power of decision of the state) of Article 3 of the Law on Enterprises and Facilities of Strategic Importance to National Security and Other Enterprises Important to Ensuring National Security (wording of 10 October 2002 with subsequent amendments and/or supplements) and set it forth as follows: “In this Law, the power of decision of the State shall mean that in the enterprises indicated in Paragraph 1 of this Article, with the exception of the joint-stock company ‘Lietuvos energija’, the State must hold over 1/2 of the voting shares of these enterprises. The power of decision of the State in the joint-stock company ‘Lietuvos energija’ shall mean that the State and, upon establishment of the national investor and contribution to its authorised capital as a non-monetary contribution of the shares of the joint-stock company ‘Lietuvos energija’ belonging to the State by the right of ownership, the national investor shall hold over 2/3 of the voting shares of this enterprise.”

Article 2 of the said law supplemented the Law on Enterprises and Facilities of Strategic Importance to National Security and Other Enterprises Important to Ensuring National Security with Article 41 in Paragraph 1 whereof it was prescribed: “Of particular strategic importance to national security shall be the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden indicated in the Republic of Lithuania’s Law on the Nuclear Power Plant, the project implementing company and the new nuclear power plant.”

62. On 20 February 2008, the Government adopted the Resolution (No. 131) “On Forming a Committee”, which came into force on 27 February 2008. By Item 1 of this resolution, the Government formed the Committee for Supervision of the National Investor. In addition, by Item 2 of the said resolution, the Government commissioned the Committee for Supervision of the National Investor, inter alia, “to present recommendations to the Government of the Republic of Lithuania regarding the draft agreement of creation of the national investor, the draft shareholders’ agreement, the draft Articles of Association of the national investor and annexes thereof <…>”, “to coordinate the procedures for selection and appointment of candidates delegated by the state to the supervisory bodies of the national investor company”.

63. On 15 April 2008, the Government adopted the Resolution (No. 331) “On Assenting to the Draft Agreement with the Closed-Type Joint-Stock Company ‘NDX energija’ and on Granting Powers”, which came into force on 20 April 2008.

By Item 1 of this resolution, the Government assented to the draft Agreement Between the Government of the Republic of Lithuania, Acting on Behalf of the Republic of Lithuania, and the Closed-Type Joint-Stock Company “NDX energija” Regarding the Creation of the National Investor and Draft Annexes Thereto—No. 1 (LEO LT, AB Founding Agreement), No. 2 (LEO LT, AB Articles of Association), No. 3. (Property, Rights and Duties of the Kaunas HP), No. 4 (Property, Rights and Duties of the Kruonis PSPP), No. 6 (Government Letter of Disclosure), No. 7 (Decisions of the General Meeting of Shareholders of LEO LT, AB), No. 8 (Agreement on Singing the Shares), No. 10 (Form of Completing the Transaction), No. 11 (Form of the Agreement on Recognition of the End of the VST Privatisation Agreement), No. 12 (Form of the Shareholders’ Agreement Between the Government of the Republic of Lithuania, Acting on Behalf of the Republic of Lithuania, and the Closed-Type Joint-Stock Company “NDX energija”).

In Addition, by Item 2 of the said resolution, the Government agreed that the closed-type joint-stock company “NDX energija” would transfer the shares of the joint-stock company “VST”, which belong to it by right of ownership, to the founded LEO LT, AB.

By Item 3 of the said resolution, the Government authorised the Minister of Economy to sign, on behalf of the State of Lithuania, the documents specified in Item 1 of the resolution (save draft Annex No. 10 (Form of the Agreement on Recognition of the End of the VST Privatisation Agreement) and other documents necessary for completing the transaction with the closed-type joint-stock company “NDX energija”.

64. On 15 April 2008, the Government adopted the Resolution (No. 332) “On Dividends of the Joint-Stock Company ‘Lietuvos energija’ and Those of the Joint-Stock Company Rytų skirstomieji tinklai” whereby it commissioned “the Ministry of Economy as the manager of the shares (which belong to the state by right of ownership) of the joint-stock company ‘Lietuvos energija’ and the joint-stock company Rytų skirstomieji tinklai to adopt decisions not to allot the distributable 2007 profits of these companies for dividends”.

It is clear from the material of this constitutional justice case that also the closed-type joint-stock company “NDX energija”—the shareholder of the controlling block of shares in the joint-stock company “VST”—adopted the same decision.

65. On 7 April 2008, the Commission of the European Communities submitted to Lithuania an unofficial inquiry regarding information about the Law on the Nuclear Power Plant and adherence to European Union public procurement legal acts in the course of founding the national investor of Lithuania. The Ministry of Economy responded to this inquiry on 30 April 2008.

66. On 24 April 2008, while following the provisions of the Law on State Property, inter alia, Items 1 and 2 of Paragraph 1 of Article 19 thereof, the Law on Companies, the Law on the Nuclear Power Plant, and while implementing the Description for the Criteria for Adopting the Decision to Invest State and Municipal Property and of the Procedure for Adopting Decisions as approved by government resolution No. 758 of 4 July 2007 and the Description of the Procedure for Transfer of State Property for Possession, Use and Disposal by Trust as approved by government resolution No. 16 of 5 January 2001, the Government adopted the Resolution (No. 364) “On Investing State Property and Increasing the Authorised Capital”, which came into force as from 27 April 2008, and Items 1.2 and 3 of this resolution came into force after LEO LT, AB had been founded and the authorised capital had been paid for, as established in Item 5 of the said resolution.

In Item 1 of the aforesaid resolution the Government stipulated that, as a contribution of the state which is represented by the Ministry of Economy, by fulfilling the obligations of a founder undertaken in the LEO LT, AB founding agreement, the financial property which belongs to the state by right of ownership, i.e. LTL 308,500 from the ordinary allocations of the State Budget of the Republic of Lithuania designated to the Ministry of Economy, shall be transferred to the founded LEO LT, AB, by acquiring 30,850 ordinary registered shares each of which are LTL 10 in nominal value (Item 1.1), while the 664,700,833 ordinary registered shares (which belong to the state by right of ownership) of the joint-stock company “Lietuvos energija” (each of which are LTL 1 in nominal value), which constitute 96.4012 percent of shares of the joint-stock company “Lietuvos energija” and the same number of votes in the general meeting of shareholders thereof, and the 351,316,161 ordinary registered shares (which belong to the state by right of ownership) of the joint-stock company Rytų skirstomieji tinklai (each of which are LTL 1 in nominal value), which constitute 71.347 percent of shares of the joint-stock company Rytų skirstomieji tinklai and the same number of votes in the general meeting of shareholders thereof, shall be transferred as a contribution of the state, which is represented by the Ministry of Economy, by increasing the authorised capital of LEO LT, AB (Item 1.2).

In addition, in Items 2 and 3 of the said resolution, the Government commissioned the Ministry of Economy to represent the state in the LEO LT, AB founding meeting and to authorise its representative to vote in the general meeting of shareholders to vote for increasing the authorised capital by LTL 4,999,500,000 by means of additional contributions and establishing the price of issue of shares—LTL 14.28—and by issuing 499,950,000 ordinary registered shares whose price is LTL 10 in nominal value, and 308,469,150 of the said amount of shares shall be transferred to the state.

By Item 4 of this resolution the Government transferred the said shares (specified in the aforesaid resolution) to the Ministry of Economy for use, possession, and disposal by trust.

67. On 29 April 2008, the Minister of Economy, while acting pursuant to Government Resolution “On Assenting to the Draft Agreement with the Closed-Type Joint-Stock Company ‘NDX energija’ and on Granting Powers” of 15 April 2008, on behalf of the Republic of Lithuania signed the Agreement on Creating the National Investor with the closed-type joint-stock company “NDX energija”.

It is established in Item 2 of this agreement that the object of the agreement is creation of the national investor by founding LEO LT and by consolidating the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai and “VST” into the group of companies LEO LT of the national investor, in which LEO LT, AB will act as the parent company of this group, while more than 1/2 of the shares in LEO LT, AB and more than 1/2 votes in the general meeting of shareholders of LEO LT, AB will belong to the Republic of Lithuania.

In addition, the creation of the national investor encompasses, inter alia, the founding of the national investor (Item 3.1), the increase of the authorised capital and signing of shares (Item 3.2), and completing the transaction (Item 3.3).

Under Item 3.1 of the said agreement, the Government and the closed-type joint-stock company “NDX energija” will found LEO LT within 21 days of signing the agreement; at the time of founding the authorised capital of LEO LT will constitute LTL 500,000 and will be divided into 50,000 ordinary registered shares with LTL 10 in nominal value each; on behalf of the Republic of Lithuania, the Government will sign and pay cash for 30,850 ordinary registered shares of LEO LT, which will constitute 61.7 percent of the authorised capital of LEO LT, while the closed-type joint-stock company “NDX energija” will sign and pay cash for 19,150 ordinary registered shares of LEO LT, which will constitute 38.3 percent of the authorised capital of LEO LT.

In addition, under Item 3.2 of the said agreement, the authorised capital of LEO LT must be increased by issuing, on the day of the completion of the transaction, 499,950,000 ordinary registered shares whose price is LTL 10 in nominal value, but the issue price of each of the shares will be LTL 14.28; the issue price of the newly issued shares of LEO LT will be paid by the shares of the joint-stock companies “Lietuvos energija” and Rytų skirstomieji tinklai which belong to the Republic of Lithuania by right of ownership (which correspondingly constitute 96.4012 percent of shares of the joint-stock company “Lietuvos energija” and the same number of votes in the general meeting of shareholders thereof and 71.347 percent of shares of the joint-stock company “RST” and the same number of votes in the general meeting of shareholders thereof) and by the shares of the joint-stock company “VST” which belong to the closed-type joint-stock company “NDX energija” by right of ownership (which constitute 97.0955 percent of shares of the joint-stock company “VST” and the same number of votes in the general meeting of shareholders thereof).

Item 3.3 of the said agreement provides that the transaction will be ended on 27 May 2008.

It is established in Item 10 of the said agreement that the 12 annexes to the agreement shall be an inseparable part thereof. These annexes are: No. 1 “Founding Agreement”; No. 2 “Articles of Association”; No. 3 “Property, Rights and Duties of the Kaunas HP”; No. 4 “Property, Rights and Duties of the Kruonis PSPP”; No. 5 “NDX energija Letter of Disclosure”; No. 6 “Government Letter of Disclosure”; No. 7 “Draft Decisions of the General Meeting of Shareholders of LEO LT”; No. 8 “Form of Agreement on Singing the Shares”; No. 9 “Forms of Entries in Personal Securities Accounts of the Government, LEO LT and NDX energija, Which are Related to Completing the Transaction”, No. 10 “Form of Completing the Transaction”; No. 11 “Form of the Agreement on Recognition of the End of the VST Privatisation Agreement”; No. 12 “Form of the Shareholders’ Agreement”.

Under Items 1.3 and 2.7 of Annex No. 3. (Property, Rights and Duties of the Kaunas HP) and practically identical Items 1.3 and 2.7 of Annex No. 4 (Property, Rights and Duties of the Kruonis PSPP) as well as under other provisions of these items, within 24 months of the day of completing the transaction, the Kaunas HP, a subsidiary of the joint-stock company “Lietuvos energija”, “must be separated legally and functionally” from the joint-stock company “Lietuvos energija”; the Kaunas HP “will be managed by a newly created joint-stock company, which will conduct electricity generation and reservation activity”; also, the Kruonis PSPP, a subsidiary of the joint-stock company “Lietuvos energija”, “must be separated legally and functionally” from the joint-stock company “Lietuvos energija”; the Kruonis PSPP “will be managed by a newly created joint-stock company, which will conduct electricity generation and reservation activity”; in addition, all the expenses related with the implementation of the separation will be assumed and covered in equal parts by “Lietuvos energija”, the Kaunas HP and the Kruonis PSPP.

In Annex No. 12 the Shareholders’ Agreement is entrenched. Under Item 7.2.1 of the said agreement, the closed-type joint-stock company “NDX energija” takes an obligation, within 24 months of the day (provided for in the Agreement on Creating the National Investor) of completing the transaction creating the national investor, not to sell or transfer otherwise, without an agreement of the Government, the shares of LEO LT, AB held by the closed-type joint-stock company “NDX energija” and the rights granted by the said shares and/or the votes granted by the said shares in the general meeting of shareholders in such a manner that the portion of shares of LEO LT, AB held by the closed-type joint-stock company “NDX energija” becomes smaller than 166,700,000 (one hundred sixty seven million seven hundred thousand) of ordinary registered shares, the price of one share being LTL 10 in nominal value, which constitute, on the day of completing the Transaction which is provided for in the Agreement on Creating the National Investor, 33.34 percent (thirty-three point thirty-four percent) of all shares of LEO LT, AB and votes in the general meeting of shareholders of the same company.

68. On 19 May 2008, while following the provisions of Articles 8 and 20 of the Law on the Nuclear Power Plant (wording of 28 June 2007 with the amendments and supplements of 1 February 2008), the Government adopted the Resolution (No. 479) “On Approving the Description of the Procedure for Implementing the Rights Granted by the State Shares of LEO LT, AB”, which came into force on 30 May 2008.

In Item 1 of this resolution the Government approved the Description of the Procedure for Implementing the Rights Granted by the State Shares of LEO LT, AB.

Item 2.1 of the said resolution the Government prescribed, inter alia, that the property and non-property rights granted by the states-owned shares of LEO LT, AB shall be implemented by the Ministry of Economy to which the shares are transferred for possession, use and disposal by trust.

Under Item 2.2 of the said resolution, the possessor of the shares (the Ministry of Economy), while representing the state, must analyse the activity of the company and act for the benefit of the state by following the provisions of the Law on the Nuclear Power Plant and the principles set forth in Article 81 of the Law on State Property.

Under Item 2.4 of the said resolution, when the state is represented in the company, the provisions (as well as later amendments thereof) of the Government Resolution (No. 567) “On Implementing the Property and Non-property Rights of the State and Municipalities in Joint-Stock Companies and Closed-Type Joint-Stock Companies” of 6 June 2007, the Government Resolution (No. 20) “On Dividends for Shares Which Belong to the State by Right of Ownership” of 14 January 1997, and the Government Resolution (No. 1341) “On Remuneration for Work of the Heads, Their Deputies and Chief Accountants in State Enterprises and State-controlled Joint-Stock Companies and Closed-Type Joint-Stock Companies” of 23 August 2002.

The Description of the Procedure for Implementing the Rights Granted by the State Shares of LEO LT, AB, which was approved by Item 1 of the aforesaid Government resolution, inter alia, regulates the procedure for implementing the right, which was transferred by the state to the Ministry of Economy by trust, to use and dispose of the shares (which belong to the state by right of ownership) of the founded LEO LT, AB. In addition, the said description consolidates the rights and duties of the natural person, who is authorised by the Ministry of Economy to implement the non-property rights of the state, as a shareholder of the company, both at the general meeting of shareholders of the company and outside such a meeting. The said description, inter alia, specifies: “A state servant from the Ministry of Economy shall be appointed as the representative.”

69. On 20 May 2008, LEO LT, AB was registered in the register of legal persons.

70. Item 1 of the Articles of Association of LEO LT, AB provides, inter alia, that “LEO means ‘Lithuanian Electricity Organisation’”; under Item 4 of these Articles of Association, Leo LT, AB together with its subsidiary enterprises are the LEO LT, AB group of enterprises, which is not a legal person; Item 20 of the said Articles of Association provides that the authorised capital of the company shall be LTL 5 billion; Item 17 of the Articles of Association provides: “<…> the activity of the company shall be the activity of the parent company of the group of enterprises; the object of the activity of the company shall be: acquisition, use, possession and disposal of the rights of a participant in electricity enterprises; analysis of the activity of subsidiary enterprises and other enterprises, wherein the company is one of participants; control of subsidiary enterprises; establishment of guidelines and rules of activity for subsidiary enterprises; coordination of activity of subsidiary enterprises; the rendition of services to subsidiary enterprises and the funding of other enterprises, wherein the company is one of participants; representing the group of company enterprises; the company may not engage in any other activity.”

71. On 29 July 2008, the national investor—the joint-stock company LEO LT, AB—founded the closed-type joint-stock company “InterLinks”. Under Item 13 of the Articles of Association of this company, the main activity of this company is “the development and implementation of the projects of intersystemic electricity inter-connections which will connect the electricity transmission networks of the Republic of Lithuania with those of other electricity systems <…>”.

In addition, on 28 August 2008, the national investor—the joint-stock company LEO LT, AB—founded the closed-type joint-stock company “Visagino atominė elektrinė”. Under Item 11 of the Articles of Association of this company, “the main activity of the company shall be the preparation of the project of the new nuclear power plant in the Republic of Lithuania, including, but not limiting to, the preparation of project studies, strategic planning and risk management, investment planning, the arrangement and execution of and the control over the preparatory work of the project”.

72. On 25 August 2008, the Commission of the European Communities (the Secretariat-General and the Directorate-General for Internal Market and Services) submitted an additional inquiry related with the official announcement regarding the conditions of privatisation of the joint-stock company “VST” and requested additional information about LEO LT, AB, the structure of shareholders of the joint-stock company “VST”, the Articles of Association of these enterprises, the impact on the small shareholders of the joint-stock company “VST”, the criteria of European and transatlantic integration, and it made a request to assure that after selling the shares of LEO LT, AB to other private investors, the Law on the Nuclear Power Plant would not discriminate European Union investors, if compared with Lithuanian investors.

On 7 October 2008, the Ministry of Economy submitted a response to the said additional inquiry. In this response it presented, inter alia, an opinion that the creation of LEO LT, AB did not have any extraordinary impact on the rights of small shareholders of the joint-stock company “VST” and the rights of small shareholders of the subsidiary companies (joint-stock company “Lietuvos energija” and the joint-stock company Rytų skirstomieji tinklai) of LEO LT, AB and set forth the arguments substantiating this opinion. In addition, referring to Paragraph 1 of Article 4 of the Constitutional Law on Implementing Paragraph 3 of Article 47 of the Constitution of the Republic of Lithuania, in its response the Ministry of Economy assured that at present there are not any established rules and not any practice is applied in the Republic of Lithuania, which would not allow the subjects of Member States of the European Union, the European Economic Community, the Organisation for Economic Co-operation and Development (OECD) or the North Atlantic Treaty Organisation (NATO) to invest into Lithuanian legal persons, inter alia, LEO LT, AB and its subsidiary enterprises, or due to which permits or limitations of another character would be applied.

73. On 28 August 2008, the Commission of the European Communities (the Directorate-General for Competition) submitted a request to the Competition Council of the Republic of Lithuania to provide certain information about the LEO LT, AB transaction. In this request, the Commission asked, inter alia, to provide evidence that the Republic of Lithuania was acting as a private investor, i.e. it attempted to receive the biggest portion of LEO LT, AB by taking account of the conditions of the market, and that the 38.3 percent portion of the property rights of the closed-type joint-stock company “NDX energija” in LEO LT, AB fairly corresponds to the part of the property contributed (in kind or other ways) by the Vilniaus prekybos grupė to LEO LT, AB, if it is compared with the contribution of the Republic of Lithuania. On 22 November 2008, the Ministry of Economy gave an answer to this inquiry.

74. On 18 September 2008, the Committee for Supervision of the National Investor assented to the prepared strategy of activity of LEO LT, AB in essence and proposed that the LEO LT, AB Council of Observers particularise this strategy by taking account of the remarks and proposals given at the meeting of the Committee for Supervision of the National Investor (Protocol No. 1 of the 18 September 2008 meeting of the Committee for Supervision of the National Investor).

75. Summing up the herein presented review of the development of the law-making of the Republic of Lithuania in the sphere of electricity, it should be noted that, as mentioned before, after the independence of the Republic of Lithuania had been restored, the state centralised monopolistic system of electricity continued to function for some time, in which the electricity generation, transmission and distribution areas were not separated; until the privatisation of the joint-stock company “VST”, which took place in 2003, the said company had been a constituent part of the electricity system, and it continued to be a part of this system after the privatisation; after the Republic of Lithuania had become a Member State of the European Union and after it had assumed the international obligation to shut down the Ignalina Nuclear Power Plant, efforts were made in order that Lithuania would remain a nuclear energy state. This is regarded as a strategic goal of the State of Lithuania, which ensures national security. Striving to achieve this goal, one adopted the Law on the Nuclear Power Plant.

II

1. The Constitutional Court has held more than once that the principles consolidated in Article 46 of the Constitution constitute a whole, which is the constitutional basis of the economy of this country; therefore, the provisions of all paragraphs of this article are interrelated and supplement one another, there is a balance between these principles, each of them should be interpreted without denying the other principles, and when a legal norm which is in a certain part of the article is violated, the legal norms laid down in the other parts of this article are violated or pre-conditions are created for their violation.

1.1. Paragraph 1 of Article 46 of the Constitution prescribes that Lithuania’s economy shall be based on the right of private ownership, freedom of individual economic activity and initiative. All these three values, the right of private ownership, freedom of individual economic activity and initiative, as the Constitutional Court noted more than once, define the foundation of the national economy, inter alia, in the respect that freedom of individual economic activity and initiative is the whole complex of legal opportunities which implies freedom of conclusion of contracts, opportunities to restructure economic subjects without restrictions, to change the character of their activity, to establish new economic subjects or liquidate the existing ones, to get into the market without artificial barriers and to abandon it without artificial barriers.

As the Constitutional Court has held more than once, freedom of economic activity is not absolute, the person makes use of it only by following certain obligatory requirements and limitations. On the other hand, the state may not unrestrictedly interfere with the economic activity of a person (the Constitutional Court’s rulings of 20 April 1995, 13 May 2005 and 31 May 2006). Therefore, it is impermissible by means of state-imposed limitations to deny such essential provisions of freedom of economic activity as the equality of rights of subjects of economic activity or fair competition.

The Constitutional Court has also more than once held that freedom of economic activity and initiative are grounded on the innate human freedom and innate right to possess property, thus, a person’s constitutional right to property which is consolidated in Article 23 of the Constitution is an essential (necessary) condition for implementation of freedom of individual economic activity; if a person’s ownership right is limited, individual economic freedom is limited as well.

1.2 The provision of Paragraph 2 of Article 46 of the Constitution that the state shall support economic efforts and initiative that are useful to society, as the Constitutional Court has held more than once, is one of the main rules of the country’s economic activity, it creates constitutional legal preconditions, inter alia, for a possible differentiated regulation of economic activity, according to the criterion of the general welfare of the Nation and implies the duty of state institutions and municipal institutions not to hinder any expression and development of initiative of persons, provided this initiative or economic activities are not harmful to society.

The Constitutional Court has also held that it would be incorrect to comprehend the provision of Article 46 of the Constitution that the state shall support economic efforts and initiative that are useful to society “as the duty of the state to decisively support any economic efforts or activity”, as the state has the opportunity of choice (the Constitutional Court’s ruling of 13 February 1997).

1.3. Paragraph 3 of Article 46 of the Constitution prescribes that the state shall regulate economic activity so that it serves the general welfare of the Nation.

The Constitutional Court has held more than once that while regulating economic activity, the state has to follow the principle of coordination of interests of the person and society and has to guarantee the interests of both the private person (a subject of economic activity) and interests of society; to seek the welfare of not individual persons but precisely the general welfare of the Nation which cannot be opposed to the welfare, rights and legitimate interests of the economic subject itself the activity of which is regulated, as well as those of other persons who have established and are running the said economic subject or are otherwise related to the said subject; one is not permitted either to ground or to justify, by invoking the general welfare of the Nation, any regulation by which, in order to ensure the public interest and to protect constitutional values, the rights and legitimate interests of a certain economic subject are limited more than necessary, and whereby unfavourable and unequal economic conditions are established to economic subjects, whereby their initiative is restricted and opportunities for its manifestation are not created.

In addition, the Constitutional Court has held more than once that legal regulation is a form of establishment of a certain social order, whereby one may establish, inter alia, reasoned, non-discriminatory and clearly formulated prohibitions on economic activity and, taking account of the particularity of the regulated social relations, change the proportion between prohibitions and permissions of the economic activity, provided that the principles of regulation of the economic activity which are consolidated in the Constitution are not denied when the content of the legal regulation changes. Thus, the Seimas as the institution of legislative power and the Government as an institution of executive power enjoy very broad discretion to form and execute the economic policy of the state.

As the Constitutional Court has construed, the assessment of “measures and methods (whoever assessed them) of the content (inter alia, the priorities), of such policy also in the aspect of reasonableness and expediency, even if in the course of time it becomes clear that better alternatives of the chosen economic policy existed (thus, also that, reasonably, one should give a negative assessment to the previously formulated and executed economic policy in the aspect of reasonableness and expediency), in itself it may not be a pretext to question the compliance of the legal regulation of the economic activities which corresponded the economic policy of that time (as previously formulated and executed) with legal acts of higher legal force, inter alia, with the Constitution (also through the initiation of constitutional justice cases in the Constitutional Court), unless that legal regulation already while establishing it in the legal acts would clearly be contrary to the wellbeing of the Nation, the interests of the Lithuanian society and the state, would clearly negate the values consolidated in, protected and defended by the Constitution” (the Constitutional Court’s rulings of 31 May 2006, 26 September 2006, and 21 December 2006, as well as its decision of 13 November 2007).

In addition, the Constitutional Court has construed that the fact where in legal acts differentiated legal regulation was established to a certain sector of economy, which is different from the legal regulation of other economic sectors, or the fact that the legal regulation of a certain economic activity is changed in reacting to changes in the market as well as the economic (as well as international) conjuncture, cannot in itself serve as the aforementioned pretext, since the legal pre-conditions of differentiated legal regulation (when account is taken of the importance and nature of the regulated relations) originate from the Constitution itself, while the differentiated establishment of the legal situation of separate economic subjects should be related with the objectives raised by the state in a certain sector of economy and the striving to arrange the economy of this country in a corresponding manner; besides, due to a specific character, variety and dynamism of economic activity, regulation of concrete relations in this area cannot be the same all the time, i.e. the ratio of prohibitions and permissions is subject to change, inter alia, while seeking to ensure the public interest.

The Constitutional Court has also more than once held that “the right of the state to regulate economic activity which is consolidated in Paragraph 3 of Article 46 of the Constitution creates constitutional pre-conditions for passing laws by means of which one reacts to the state of the national economy, the diversity of and changes in social life”.

It needs also to be noted that establishment of the exceptions of certain general regulation may be constitutionally justifiable, if one seeks to ensure the constitutionally grounded universally important interest, the values protected and defended by the Constitution and only inasmuch as it is sought. The said exceptions have to be proportional to the constitutionally grounded objective sought and not to restrict the rights of subjects more than it is necessary to ensure the constitutionally grounded universally significant interest (the Constitutional Court’s ruling of 12 December 2005).

Under the Constitution, the state, while regulating economic activity, must secure that state property should be managed so that there were no contradictions to the requirement consolidated in Paragraph 3 of Article 46 of the Constitution, whereby the economic activity must be regulated so that it serves the general welfare of the Nation (the Constitutional Court’s ruling of 24 January 1996).

In the context of this constitutional justice case at issue, it needs to be noted that 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; the possibilities of the legislature to establish the measures while ensuring the general welfare of the Nation in the field of electricity are determined by the particularities of electricity, inter alia, limited resources of electricity, material, financial and other important factors; the constitutional duty of the legislature to establish the legal regulation that, taking account of the resources of the state and society, material and financial possibilities and other important factors, would ensure the general welfare of the Nation stems from the Constitution (inter alia, the provision that the state shall regulate economic activity so that it serves the general welfare of the Nation of Paragraph 3 of Article 46 thereof).

In the context of the constitutional justice case at issue, it needs also to be noted that the principles and values consolidated in the provisions of Article 46 of the Constitution, inter alia, the fact that the state shall regulate economic activity so that it serves the general welfare of the Nation and that the law shall prohibit monopolisation of production and the market and shall protect freedom of fair competition may not be opposed. While seeking for the general welfare of the Nation, a differentiated legal regulation is justifiable taking account of the particularity of the sphere of the regulated economic activity. The said particularity of electricity—limited resources of electricity—determine the limited possibilities of the legislature to choose alternative measures in order to ensure the general welfare of the Nation in the sphere of electricity. Thus, in order to ensure the general welfare of the Nation in the sphere of electricity, a special legal regulation with regard to the particularity of electricity is necessary.

1.4. Paragraph 4 of Article 46 of the Constitution prescribes that the law shall prohibit monopolisation of production and the market and shall protect freedom of fair competition.

The provision “the law shall prohibit monopolisation of production and the market”, as the Constitutional Court has more than once held, means that it is prohibited to introduce a monopoly, i.e. it is prohibited to grant, by law, an economic subject exceptional rights to operate in a certain sector of economy due to which this sector would become monopolised, however, it is not prohibited, under certain circumstances, to state in the law the existence of monopoly in a certain sector of economy or to reflect factual monopolistic relations otherwise and to regulate them accordingly, i.e. to create legal preconditions in order to apply corresponding requirements (including, inter alia, a restriction on the establishment of discriminatory prices, state regulation of the size of prices and tariffs for the goods of the monopolistic market, establishment of the requirements for the quality of goods for the monopolistic subject of economy, as well as control carried out by the state institutions how the economic subjects are following the established requirements) to the monopoly while defending the rights and legitimate interests of other economic subjects and consumers. In addition, as the Constitutional Court has held, monopoly is an exclusive right of a person, or a group of persons, or a state to operate in a certain field (the Constitutional Court’s rulings of 20 April 1995 and 15 March 1996). Monopoly is such a state, a situation when certain person or organisation may act without competition in a certain field (the Constitutional Court’s ruling of 20 April 1995). In addition, as the Constitutional Court held in its ruling of 26 January 2004, according to the Constitution, the introduction of a monopoly is an ungrounded granting of privileges to a certain subject of economy (groups thereof) and, alongside, the discrimination of other subjects of economy, the restriction on their freedom of economic activity; granting privileges to a certain group of subjects of economy should also be related with the discrimination of other subjects of economy, the restriction on their freedom of economic activity and initiative; this is incompatible with the requirements of Articles 29 and 46 of the Constitution; other various other means but the introduction of a monopoly may be established while seeking to attain socially significant objectives.

Protection of fair competition, as the Constitutional Court has more than once held, is the main way to ensure the harmony between the interests of a person and the interests of the state while regulating economic activity, to create self-regulation of economy as a system which would encourage distribution of economic resources in an optimal manner, using them efficiently, increasing economic growth and improving the welfare of consumers. However, in itself, freedom of economic activity of an individual does not guarantee competition, therefore, the state must protect fair competition. Thus, the constitutional guarantee of protection of fair competition obliges the institutions of the state power and municipal institutions to ensure freedom of fair competition by legal means; such means—the prohibition against such agreements among economic subjects, whereby one seeks to limit competition and which limit or may limit competition, the prohibition on abusing the dominant position, the control over market concentration and the corresponding prohibitions on concentration, the prohibition on unfair competition, the control over the observance of the rules for the protection of fair competition which are established in laws and the liability for violations thereof (the Constitutional Court’s rulings of 6 October 1999, 9 April 2002, 17 March 2003, and 26 January 2004).

In the context of the constitutional justice case at issue, it needs to be noted that the state, while regulating the economic activity, inter alia, in the aspect of administration (inter alia, investment) of property which belongs to it by right of ownership, under Paragraph 3 (regulation of economic activity so that it serves the general welfare of the Nation) of Article 46 of the Constitution, must take heed of the fact that such regulation should meet the requirements which stem from Paragraph 4 of Article 46 of the Constitution, i.e. would not create preconditions for monopolisation of production and the market and to deny freedom of fair competition.

1.5. The Constitutional Court has held that the provision which is consolidated in Paragraph 5 of Article 46 of the Constitution that the state shall defend the interests of the consumer implies that laws and other legal acts should establish various measures of the protection of consumers’ interests, that state institutions should control economic subjects how they observe such measures, and if the production and the market are virtually concentrated in the area of certain economic relations, a duty falls on the institutions of the state power to establish an additional legal regulation which would ensure the protection of the interests of consumers (the Constitutional Court’s rulings of 18 October 2000, 17 March 2003, 26 January 2004, and 5 March 2008).

In the context of the constitutional justice case at issue, it needs to be noted that the constitutional duty of the state to defend the interests of consumers must be implemented first of all by the legislature establishing the general and, taking account of the concrete particularity of the regulated economic activity, special measures of protection and defence of the rights and interests of consumers.

In the context of this constitutional justice case at issue, it needs to be noted that certain spheres of economic activity have a specificity of relations which is typical of them only. Such specificity may imply, inter alia, the peculiarities of regulation of the relations of protection and defence of the rights and interests of consumers in certain fields of economic activity; namely the content of the economic activity, its specificity, peculiarities in certain fields of economy may determine the necessity and need of the special regulation of the legal relations of protection and defence of the rights and interests of consumers in a certain sphere of economic activity. Thus, the measures of protection and defence of the rights and interests of the consumers in certain spheres of economic activity may differ depending on the specificity of relations of a concrete economic activity.

The specificity, diversity and dynamism of the economic activity implies that the regulation of concrete relations in a certain sphere does not necessarily have to be the same all the time, i.e. it may change; and that, inter alia, it should also be applied to the regulation of relations of protection and defence of the rights and interests of consumers which may change, and must be changed in certain cases.

The guarantee of efficient protection and defence of the rights and interests of consumers implies, inter alia, the fact that the legislature has the duty to establish an institutional system of protection of consumer rights and interests, i.e. by means of a law, the legislature must establish the corresponding state institutions, clearly define their competence, create legal preconditions for such state institutions to ensure the real protection and defence of the rights and interests of consumers in the corresponding sphere of economic activity.

The imperative of the guarantee of efficient protection of the rights and interests of consumers which stems from the Constitution, inter alia, Paragraph 5 of Article 46 thereof, also implies that the legislature must establish the legal regulation whereby the preconditions would be created for each consumer to receive electricity under non-discriminatory conditions, and ensuring that electricity would be supplied to all consumers in a safe and reliable manner.

The establishment of limits on prices is one of the ways to defend the interests of consumers, it should also be applied, inter alia, in the sphere of protection and defence of the rights and interests of consumers of electricity; the legislature has the duty to define, by means of a law, the criteria for the establishment of limits on prices of electricity; such criteria and the methodology and procedure for establishing them must be clear, transparent and reasonable so that no preconditions would be created for abuse when establishing the prices of electricity and, thus, so that no preconditions would be created for violating the rights and interests of the consumers of electricity.

2. The content of the provisions of Article 46 of the Constitution should be construed in a systemic manner and, in the context of the whole constitutional regulation, when account is taken, inter alia, of the provisions of Paragraph 2 of Article 128 of the Constitution.

3. Paragraph 2 of Article 128 of the Constitution provides that the procedure for the possession, use and disposal of State property shall be established by law. When construing that, the Constitutional Court has held that the transfer of the property, which belongs by right of ownership to the state, as ownership to other subjects must be based on the law, that the laws must, inter alia, establish the state institutions which have the powers to adopt decisions concerning the transfer of the property, which belongs by right of ownership to the state, as ownership to other subjects, and the powers of these institutions to transfer the said property, as well as the conditions and procedure of this transfer of the property (the Constitutional Court’s rulings of 30 September 2003, 8 July 2005, 23 August 2005, 23 May 2007, and 23 November 2007). This is also applicable to the Government which does not enjoy any discretion to decide not to apply provisions of a certain law which regulates corresponding relations, unless the non-application of a certain provision of the law is expressis verbis provided for in laws (the Constitutional Court’s ruling of 23 May 2007).

It needs to be noted that the provision of the official constitutional doctrine “the transfer of the property, which belongs by right of ownership to the state, as ownership to other subjects must be based on the law” may not be construed as meaning that, purportedly, all relations of transfer of the property under the ownership of the state should be regulated only by means of a law—the Government as well as other subjects of the law-making according to their competence may also regulate these relations by means of substatutory legal acts which are grounded on the law and which do not compete with it (the Constitutional Court’s ruling of 23 November 2007).

While construing Paragraph 2 of Article 128 of the Constitution, the Constitutional Court has also held that the state property is not an end in itself, but that it should provide benefits to society and should be treasured, subjected to no waste, and managed rationally; laws should protect the rights of ownership of all owners, including the state as the organisation of the entire society; under the Constitution, no such legal regulation is permissible whereby the property under the ownership of the state is possessed, used, and disposed of in such a way that the interest or needs of only one social group or individual persons were satisfied and this property did not serve the public interest, the needs of society or the welfare of the Nation (which may not be understood only in the material and financial sense) (the Constitutional Court’s rulings of 30 September 2003, 8 July 2005, 5 July 2007, 23 November 2007, and 20 March 2008). These constitutional imperatives should also be applied in the situations of the investment of state property.

In the context of the constitutional justice case at issue, it needs to be noted that, under Paragraph 2 of Article 128 of the Constitution, the investment of state property must be grounded on the law, which must establish the following: the criteria and conditions of the investment of state property as well as subjects of such investment which have the right to adopt decisions regarding the investment of state property. The establishment of the criteria of the investment of state property is not an end in itself—such criteria must be established which would ensure the public interest and the observance of the imperatives which stem from the Constitution, inter alia, Paragraph 2 of Article 128 thereof. The duty arises for the legislature to establish such criteria of the investment of state property which would permit, inter alia, differentiating the investment of state property by taking account of the specificity of the invested property and its significance for the general welfare of the Nation, as well as of other constitutionally important circumstances. The fact that the criteria and conditions of the investment of state property as well as subjects of such investment which have the right to adopt decisions regarding the investment of state property must be established only by means of a law does not mean that the Government and other law-making subjects, under their competence, may not regulate the relations of state property also by means of substatutory legal acts (for example, to establish the procedure and proceedings of the investment of state property) which are grounded on the law and do not compete with it. The legislature may establish various ways of the investment of state property. The Constitution also does not prohibit establishing such a way of the investment of the state property, where state property is invested together with other persons (person), inter alia, with a private person. When choosing the ways of the investment of state property, the state must take account of the fact whether, upon choosing a certain way, the important and constitutionally grounded needs and interests of society will be satisfied. The investment of state property would be constitutionally unjustifiable, if by such investment one would obviously harm society or if the rights of other persons would be violated. While regulating the relations of investment of the state property, the legislature must establish such legal regulation that one would not violate the imperative of fair competition which stems from Paragraph 4 of Article 46 of the Constitution or that no preconditions would be created for abuse while investing state property and administering the invested state property.

4. Under the Constitution, the state, while regulating economic activity, must pay heed to the constitutional requirement of the equality of rights of economic subjects, which is directly related to the principle of the equality of rights of all persons, and which is entrenched in Article 29 of the Constitution; otherwise, the legal regulation of economic activity would not be regarded as one serving the general welfare of the Nation (the Constitutional Court’s rulings of 13 May 2005 and 31 May 2006).

Paragraph 1 of Article 29 of the Constitution prescribes that all persons shall be equal before the law, the court, and other state institutions and officials. This provision enshrines formal equality of all persons. The constitutional principle of equality of all persons before the law requires that in law the main rights and duties be established equally to all (the Constitutional Court’s rulings of 18 April 1994, 30 June 2000, and 24 December 2008, as well as its decision of 23 September 2008).

The Constitutional Court has held more than once that this principle must be followed in the course of enactment of laws and their application. This principle does not deny a possibility of providing in a law for different legal regulation in respect to certain categories of persons who are in different situations (the Constitutional Court’s rulings of 23 April 2002, 4 July 2003, 3 December 2003, 26 September 2007, and 24 December 2008). However, the constitutional principle of equality of all persons before the law would be violated when a certain group of people to which the legal norm is established, if compared to other addressees of the same legal norm, were treated differently, even though there are not any differences in their character and extent between these groups that such an uneven treatment would be objectively justified (the Constitutional Court’s rulings of 20 November 1996, 30 December 2003, 13 December 2004, 26 September 2007, and 24 December 2008).

In the context of the constitutional justice case at issue it needs to be noted that, as the Constitutional Court has held, the constitutional principle of the equality of rights of persons (of economic subjects in this case) in itself does not deny an opportunity to establish diverse, differentiated legal regulation by means of legislation with respect to certain persons (economic subjects in this case) which belong to different categories, if there exist differences between these persons (economic subjects in this case) of such a character, which objectively justify such differentiated regulation. Differentiated legal regulation, when it is applied to certain groups of persons which are distinguished by the same signs, and in case it strives for positive and socially meaningful goals, or if the establishment of certain limitations or conditions is linked with peculiarities of regulated social relations, is not regarded as discrimination (the Constitutional Court’s rulings of 11 November 1998, 13 May 2005, and 31 May 2006).

While assessing whether an established different legal regulation is a grounded one, concrete legal circumstances must be taken into account. First of all, differences of the legal situation of subjects and objects to which different legal regulation is applied must be considered (the Constitutional Court’s rulings of 28 February 1996, 13 November 1997, 4 July 2003, and 24 December 2008). The compliance of a concrete legal norm with Article 29 of the Constitution may be assessed only by taking into account all significant circumstances (the Constitutional Court’s rulings of 4 July 2003 and 24 December 2008).

The constitutional principle of the equality of all persons before the law would not be violated, inter alia, if by means of a different (differentiated) legal regulation, whereby special requirements or certain conditions linked to the peculiarities of the regulated relations are established, one would seek for positive and socially significant objectives. The problem of equality of persons in the laws cannot be adequately decided without assessment of the fact in each case whether peculiarities of legal regulation are reasonably established in respect to these persons (the Constitutional Court’s rulings of 13 November 1997, 23 October 2002, 30 June 2008, and 30 October 2008).

5. It needs to be noted that the constitutional values upon which the national economy is grounded are tightly related with other constitutional values (the Constitutional Court’s ruling of 13 May 2005), inter alia, with the constitutional principle of a state under the rule of law (the Constitutional Court’s ruling of 4 December 2008).

The constitutional principle of a state under the rule of law, as the Constitutional Court has held more than once, implies various requirements for the legislature, other law-making subjects, inter alia, the fact that the requirements established in legal acts must be based on the provisions of general type (legal norms and principles) which can be applied in regard to all the specified subjects of respective legal relations; the differentiated legal regulation must be based only on objective differences of the situation of subjects of public relations regulated by respective legal acts; the legal regulation established in laws and other legal acts must be clear, easy to understand, consistent, the formulas in legal acts must be precise, consistency and internal harmony of the legal system must be ensured, the legal acts may not contain any provisions, which at the same time regulate the same public relations in a different manner; when setting legal limitations, heed must paid to the requirement of reasonableness and the principle of proportionality, according to which the established legal measures have to be necessary in a democratic society and suitable for achieving legitimate and universally important objectives (there must be a balance between the objectives and the measures), they may not restrict the rights of the person more than it is necessary in order to achieve the said objectives; when legally regulating public relations it is compulsory to pay heed to the requirements of natural justice comprising, inter alia, the necessity to ensure the equality of persons before the law, the court and state institutions and officials, etc.

One of essential elements of the constitutional principle of a state under the rule of law is the principle whereby a legal act, which is in conflict with a legal act of higher legal force, may not be applied. The Constitutional Court has held that, while administering justice, the court must invoke only the laws and legal acts that are not in conflict with the Constitution, it may not apply a law, which is in conflict with the Constitution (the Constitutional Court’s rulings of 13 December 2004, 16 January 2006, and 27 June 2007). The Constitutional Court, having established that the provisions of a law the compliance with the Constitution of which is not impugned by the petitioner but by which the social relations regulated by the impugned law are interfered with conflict with the Constitution, must state so (the Constitutional Court’s rulings of 29 November 2001, 14 January 2002, 19 June 2002, and 27 June 2007). Implementation of constitutional justice pre-supposes the fact that a legal act (part thereof) which conflicts with the Constitution must be removed from the legal system (the Constitutional Court’s ruling of 29 November 2001).

In this context it needs to be noted that the constitutional principle of a state under the rule of law is related to the constitutional principle of the separation of powers, inter alia, consolidated in Paragraph 2 of Article 5 of the Constitution. Under the Constitution, in Lithuania, state power shall be organised and implemented on the basis of the principle of the separation of powers. The Constitutional Court has held in its acts more than once that the constitutional principle of the separation of powers means that the legislative, executive and judicial powers are separated, and sufficiently independent; but that at the same time there must be a balance among them; that every institution of power has the competence corresponding to its purpose whose concrete content depends on the state power to which this institution belongs and on the place of the institution among other institutions of power as well as the relation of its powers with those of other institutions; that after the powers to a concrete institution of state power have been directly established in the Constitution, no other institution of state power may take over, transfer or waive such powers; and that such powers may neither be changed nor restricted by law. The Seimas does not have the right to commission the Government or any other institution to implement the constitutional competence of the Seimas (the Constitutional Court’s ruling of 14 January 2002).

Under Paragraph 2 of Article 5 of the Constitution, the scope of power shall be limited by the Constitution. The Constitutional Court has held that if the legal regulation is established whereby the powers of the state institution specified in Paragraph 1 of Article 5 of the Constitution or those of any other state institution are broadened in a constitutionally unreasonable manner, it should be held that the provision of Paragraph 2 of Article 5 of the Constitution that the scope of power shall be limited by the Constitution is violated (the Constitutional Court’s rulings of 24 December 2002, 13 May 2004, 13 December 2004, 23 August 2005, and 28 March 2006).

An internal harmony of the legal system which is implied by the constitutional principle of a state under the rule of law is connected, inter alia, with legal gaps, i.e. lack of legal regulation, inter alia, it is also connected with legislative omission. The Constitutional Court has held that a legal gap, inter alia, legislative omission, always means that the legal regulation of corresponding social relations is established neither explicitly nor implicitly, neither in the said legal act (part thereof) nor in any other legal acts, even though there exists a need for legal regulation of these social relations, while the said legal regulation, in case of legislative omission, must be established, while heeding the imperatives of the consistency and inner uniformity of the legal system stemming from the Constitution and taking account of the content of these social relations, precisely in that legal act (precisely in that part thereof), since this is required by a certain legal act of higher legal force, inter alia, the Constitution itself (the Constitutional Court’s decisions of 8 August 2006 and 5 November 2008).

In addition, as the Constitutional Court has held, “it is necessary to distinguish legislative omission, as a consequence of an action by the law-making subject that issued a corresponding legal act, from the legal gaps that appeared due to the fact that the necessary law-making actions were not undertaken at all, neither one nor another law-making subject issued a legal act designated for regulation of certain social relations, and due to this these social relations remained legally not regulated. Under certain circumstances, especially when the Constitution demands that these social relations be legally regulated (and sometimes it explicitly indicates that they must be regulated not by means of any legal act, but by way of a constitutional law or a law), the absence of law-making actions actually may create preconditions for the emergence of an anti-constitutional situation—such state of social relations, where these relations are developing not on the grounds of law, although, as mentioned before, the Constitution demands that they be legally regulated. However, such legal regulation, to be more precise, its absence, is not legislative omission” (the Constitutional Court’s decision of 8 August 2006).

In this context, the following provisions of the doctrine of legislative omission formulated in the acts previously adopted by the Constitutional Court should be noted:

non-establishment of certain explicit legal regulation in the investigated legal act (part thereof) may be linked, inter alia, with the legal situations, when the non-establishment of certain explicit legal regulation precisely in that legal act (precisely in that part thereof), provided they are not explicitly nor implicitly consolidated in other legal acts (or in other parts of the same legal act), means that in that legal act (part thereof) there is a legal gap, which, in its turn, may be treated either as legislative omission, i.e. the legal gap prohibited by the Constitution (or some other act of higher legal force);

the concept of legislative omission includes several aspects:

(1) the absence of explicit legal provisions regulating certain social relations in the investigated legal act (part thereof) of lower legal force, provided corresponding legal regulation is not established either explicitly or implicitly also in other legal acts (or in other parts of the same legal act) and provided it is impossible to treat the non-establishment of the legal regulation in the investigated legal act (part thereof) as the discussed implicit legal regulation, which supplements and extends the explicitly established legal regulation, it to be treated as such legal gap that is prohibited by the Constitution (or a certain other legal act of higher legal force), i.e. as legislative omission;

(2) legislative omission means that the corresponding legal regulation which is not established in the investigated legal act (part thereof), must be established, while heeding the imperatives of the consistency and inner uniformity of the legal system stemming from the Constitution and taking account of the content of these social relations, namely in that legal act (namely in that part thereof);

(3) the corresponding legal regulation must be established namely in that legal act (namely in that part thereof), as this is required by the Constitution (or any other legal act of higher legal force in whose respect the compliance of the investigated legal act (part thereof) of lower legal force is assessed);

the “detection” of legislative omission par excellence in a legal act (part thereof) of lower legal force is, if it is necessary because of the logic of the investigated constitutional justice case, sufficient grounds for ruling that legal act (part thereof) to be in conflict (to corresponding extent, i.e. to the extent that the legal act (part thereof) does not consolidate the legal regulation required by legal acts of higher legal force, inter alia (and, first of all), with the Constitution) with the Constitution (another legal act of higher legal force).

III

On the compliance of the provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of the rights of consumers is not legislatively established, with Paragraph 5 of Article 46 of the Constitution.

1. Article 10 titled “National Investor” (wording of 1 February 2008) of the Law on the Nuclear Power Plant provides:

1. The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner and taking part in implementing the strategic goal of Lithuania provided for in paragraph 3 of Article 8 of this Law. The legal form of the national investor shall be a joint-stock company; the registered office of the national investor shall be located in the Republic of Lithuania. The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden.

2. The Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor. The other part of the authorised capital of the national investor may consist of private national capital and foreign capital meeting the criteria of European and transatlantic integration according to the conditions and procedure established in the Law on Enterprises and Facilities of Strategic Importance to National Security and other Enterprises Important to Ensuring National Security as well as other laws and legal acts of the Republic of Lithuania.

3. The national investor and its subsidiaries shall make a group of companies of the national investor. The major activity of the national investor must be that of the parent company of the group of companies of the national investor. The national investor may also engage in other activities that do not contradict the purpose of activities of the national investor.

4. Companies from the group of companies of the national investor shall carry out the activities of electricity generation, transmission, distribution, supply, market operator and other activities unbundled in accordance with the procedure laid down by means of legal acts. A company from the group of companies of the national investor may also engage in other activities that do not contradict the purpose of activities of that company.

5. The bodies of the national investor shall be the general shareholders’ meeting, the supervisory board, the board and the head of the company.

6. Decisions taken by the Government of the Republic of Lithuania or an institution authorised by it concerning the voting at the general shareholders’ meeting of the national investor must create the necessary preconditions for public trading in the shares of the national investor on the regulated market as defined in the Law on Markets in Financial Instruments. This provision shall not bind the Government of the Republic of Lithuania or an institution authorised by it to take any decision on the sale or other transfer of the shares of the national investor.

7. Agreements shall be concluded with the supervisory of board of the national investor, in which the rights, duties and liability of members of the board must be provided for. The supervisory board shall establish conditions of an agreement with each member of the board and appoints an authorised person to sign agreements on behalf of the national investor.

8. The national investor and the bodies of the national investor must operate so that the national investor would under any circumstances hold at least 2/3 of shares and votes of the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ at the general meeting of shareholders of each company. Where the activities pursued by the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ are separated, transferred or conveyed when reorganising, transforming the companies or otherwise, the national investor must, directly or indirectly, hold at least 2/3 of shares and votes at the general meeting of shareholders in the companies holding by the right of ownership the electricity transmission network of the Republic of Lithuania, electricity distribution networks, also in the companies pursuing the activities of electricity transmission, the electricity market operator, electricity distribution and the public electricity supplier.

9. This Law shall not grant the national investor company any exclusive rights with respect to other persons regarding the implementation of power system interconnection projects with the Republic of Poland and the Kingdom of Sweden referred to in this Article.”

2. As mentioned before, the petitioner impugns the compliance of the provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of the rights of consumers is not legislatively established, with Paragraph 5 of Article 46 of the Constitution.

3. The impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant should be construed, as regards the aspect of the aim of the national investor, in the context of the provisions of entire Paragraph 1 (wording of 1 February 2008) of Article 10, Paragraph 3 (wording of 1 February 2008) of Article 8, and other provisions of the same law, as, for instance:

The Seimas of the Republic of Lithuania passes this Law on the Nuclear Power Plant while implementing, inter alia, the National Energy Strategy and having regard to the energy policy strategy of the European Union; seeking to secure supplies of energy from diverse, secure, sustainable energy sources which do not emit greenhouse gases, and to promote future economic growth; seeking to protect the vital interests and national security of the Republic of Lithuania; emphasising the importance of implementing the principles of European and transatlantic integration when developing energy sectors of Lithuania and ensuring the country’s energy security; evaluating the initiative of private legal subjects which may form a basis for preparing, developing and implementing a regional nuclear power plant project in Lithuania; aiming at substituting for the electricity generating capacities to be lost as a result of the decommissioning of the Ignalina Nuclear Power Plant and creating legal preconditions for the construction of a new nuclear power plant in Lithuania with the capacity to be established in the light of the results of environmental impact assessment and investors’ agreements (Preamble to the Law on the Nuclear Power Plant (wording of 28 June 2007));

– “The purpose and objective of this Law shall be to lay down provisions and to create legal, financial and organisational preconditions for the implementation of a new nuclear power plant project” (Article 1 (wording of 28 June 2007));

– “National investor shall mean the private legal subject referred to in Chapter Four of this Law” (Paragraph 3 of Article 3 (wording of 28 June 2007)); “The Government of the Republic of Lithuania and the national investor, managing the main part of the Lithuanian power system through its subsidiaries, shall implement the strategic goal of Lithuania, namely, integrate in a complex manner the power system of the Republic of Lithuania into the power transmission systems of the states of the European Union and internal power markets” (Paragraph 3 (wording of 1 February 2008) of Article 8);

Implementing the strategic goal provided for in Paragraph 3 of Article 8, “the Government of the Republic of Lithuania and the state institutions <…> shall ensure that: (1) in seeking to attain the goal of its activity (gaining benefits for itself and all its shareholders in a socially responsible manner), the national investor would effectively implement the principal task of the power system of the Republic of Lithuania—to provide Lithuanian consumers with power for an unlimited period of time in an independent, safe and reliable manner; (2) the activity of the national investor and its subsidiaries would be organised in such a manner that it would comply with the requirements of legal acts of the Republic of Lithuania and the European Union and the best business practice of electricity companies of the European Union member states; <…>” (Paragraph 4 (wording of 1 February 2008) of Article 8);

– “Investors shall mean the national investor and strategic partners” (Paragraph 2 of Article 3 (wording of 28 June 2007)); “Project implementing company shall mean a private legal subject established for implementing the project” (Paragraph 5 of Article 3 (wording of 28 June 2007));

– “The project implementing company may be established on the initiative of the national investor, with the opportunity being provided for strategic partners to participate in it” (Paragraph 1 of Article 6 (wording of 28 June 2007)); “Investors shall participate in the implementation of the project on equal terms: their contribution, rights and obligations in implementing the project must be proportionate to the future participation of each investor in the capital of the project implementing company. The stakes of investors in the capital of the project implementing company shall be established by mutual agreements, subject to the requirements laid down in this Law” (Paragraph 3 of Article 6 (wording of 28 June 2007));

– “Each investor shall finance or ensure the financing of that portion of the project costs (including costs associated with the project implementation, the operation of the project implementing company, the decommissioning of the nuclear power plant and radioactive waste management) which is proportionate to its stake in the capital of the project implementing company” (Paragraph 4 of Article 6 (wording of 28 June 2007));

– “The rights and duties of the national investor in the management of the project implementing company shall be established by taking into account the vital national interests” (Paragraph 5 of Article 6 (wording of 28 June 2007)).

4. Summing up the said legal regulation of the Law on the Nuclear Power Plant in the aspect of founding the national investor and the aim of its activity, it needs to be held that, although the petitioner points out in its petition that the only aim of the activity of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner, this aim of the national investor is not the only one. The aim of the Law on the Nuclear Power Plant and the strategic aim of Lithuania in the area of electricity imply also corresponding aims of founding the national investor, which in their turn determine the aims of the activity of the national investor, inter alia, to fund the project (part thereof) of the new nuclear power plant or to secure such funding, also to participate in implementation of the project of building a new nuclear power plant in Lithuania, in constructing the interconnection of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden, to integrate, in a complex manner, the electricity system of the Republic of Lithuania into the electricity transmission systems and internal electricity markets of states of the European Union, to efficiently implement the main task of the electricity system of the Republic of Lithuania—within unlimited period, independently, safely and securely to supply Lithuanian electricity consumers with electricity. Thus, the aims of the national investor should be construed by not opposing them to the aim of the Law on the Nuclear Power Plant and the strategic aim of Lithuania, which is entrenched in this law, and by not opposing them to the aim of founding the national investor.

It needs to be noted that the content of the formula “gaining benefits for itself and all its shareholders in a socially responsible manner” employed in Paragraph 4 of Article 8 and Paragraph 1 of Article 10 of the Law on the Nuclear Power Plant is revealed neither in these nor in other articles of this law. Such formulation should be regarded as incorrect, since it lacks legal clarity.

5. It also needs to be noted that the petitioner does not raise a question whether in itself gaining benefits, as the alleged single aim of the national investor, is not in conflict with the Constitution. This aim, according to the petitioner, is in conflict with the Constitution inasmuch as the protection of consumer rights is not entrenched in the Law on the Nuclear Power Plant. Thus, one has to elucidate whether the Law on the Nuclear Power Plant regulates the relations of protection of consumer rights and interests.

6. As mentioned before, Paragraph 4 (wording of 1 February 2008) of Article 8 of the Law on the Nuclear Power Plant, inter alia, provides: “Implementing the strategic goal provided for in paragraph 3 of this Article, the Government of the Republic of Lithuania and the state institutions, taking resolutions and decisions and concluding agreements, as well as the managers of state shares, taking decisions, concluding agreements and exercising the rights of shareholders in the company of the national investor or successor to its rights, owned by the State, also in the subsidiaries established by these companies, shall ensure that: <…> in seeking to attain the goal of its activity (gaining benefits for itself and all its shareholders in a socially responsible manner), the national investor would effectively implement the principal task of the power system of the Republic of Lithuania—to provide Lithuanian consumers with power for an unlimited period of time in an independent, safe and reliable manner; <…>.” The Law on the Nuclear Power Plant does not contain any other provisions in which protection of consumer rights and interests would be regulated. Thus, the relations of protection of consumer rights and interests are not virtually the matter of regulation of this law.

7. The relations of protection and defence of consumer rights and interests, inter alia, in the sphere of electricity are regulated by the Republic of Lithuania’s Law on Consumer Rights Protection, the Civil Code of the Republic of Lithuania, and the Republic of Lithuania Electricity Law. In addition, the relations of protection of consumer rights and interests in the sphere of electricity are regulated by Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC.

7.1. The Law on Consumer Rights Protection (wording of 12 January 2007) defines general consumer rights, spheres of the protection of consumer rights, the institutional system of the protection of consumer rights, the competence of the institutions of the protection of consumer rights, the education of consumers, relations of consumers and sellers, suppliers of services, the protection of consumer rights out of court and the liability for violations of the legal acts regulating the protection of consumer rights (Paragraph 1 of Article 1). Paragraph 3 of Article 1 of this law, wherein it is established with respect to which services and goods the said law is not applicable, does not contain a provision that this law shall not apply with respect to electricity. Article 2 of the Law on Consumer Rights Protection (wording of 12 January 2007) provides that “goods” means any item offered for sale or being sold to a consumer; heat and electricity, water, natural gas are also considered to be goods (Paragraph 11); “consumer” means a natural person, who expresses his intention to buy, who buys and uses goods or services to meet his own personal, family or household needs are outside his business or profession (Paragraph 15).

Thus, the Law on Consumer Rights Protection (wording of 12 January 2007) is designed to regulate the relations of protection of consumer rights in various areas and it does not entrench any special protective measures which would be designed for exceptional protection of the rights and interests of electricity consumers.

7.2. The protection of consumer rights is regulated in the Civil Code (wording of 18 July 2000) as well. Chapter XXIII “Sale and Purchase” of Part IV “Nominate Contracts” contains section seven titled “Contracts for the Sale and Purchase of Energy”, which is composed of Articles 6.383-6.391. Article 6.391 of the Civil Code provides that “the provisions of this Article shall apply with respect to supply of electricity, heat energy, gas, oil and oil products, water and other energy through the distribution network, unless the laws establish otherwise or unless, taking into account the essence of the obligation, a different conclusion should not be made”.

Article 6.383 “The Concept of the Contract of the Sale and Purchase of Energy” defines as to what agreement is regarded as a contract of the sale and purchase of energy (or energy resources) (Paragraph 1) and provides that a contract of the sale and purchase of energy (or energy resources) is a public contract (Paragraph 3).

Article 6.161 of the Civil Code, inter alia, provides:

1. A public contract is a contract concluded by a legal person (businessman) that renders services or sells goods to an indefinite number of persons, i.e. to everyone who makes a request (enterprises of transport, communications, electricity, heating, gas, water supply and others).

2. In rendering services or selling goods, any legal person (businessman) shall be bound to enter into contracts with every person who applies for those services, with the exception of cases approved in accordance with the procedure established by law.

<…>

4. Prices and other conditions of goods and services under public contracts must be equal to all consumers of the same category, except in cases expressly provided for by law where preferential conditions may be applied to the separate categories of consumers. <…>.”

In addition, according to Paragraph 4 of aforesaid Article 6.383 of the Civil Code, where a contract for the sale and purchase of energy is a consumer contract, i.e. the subscriber is a natural person purchasing energy for personal, family or household needs (consumer), Article 6.188 of this code and other articles of this code, specifying the characteristics of a consumer’s contract for sale and purchase apply mutatis mutandis to a contract for the sale and purchase of energy.

Under Article 6.188 “Peculiarities of Conditions in Consumer Contracts” of the Civil Code, a consumer shall have the right to claim within the judicial procedure for invalidity of conditions in a consumer contract that are contrary to the criterion of good faith (Paragraph 1); the consumer whose interests are violated by the application of unfair conditions shall be entitled to apply also to institutions for the protection of consumer rights (Paragraph 8 (wording of 18 July 2000 with the amendment of 16 December 2008)); the institutions for the protection of consumer rights shall be entitled within the procedure established by law to effectuate control over the standard conditions of contracts and challenge unfair conditions in the consumer contracts (Paragraph 9 (wording of 18 July 2000 with the amendment of 16 December 2008)).

The Civil Code provides, inter alia, that the energy price (tariffs) shall be fixed according to the procedure established by law (Paragraph 4 of Article 6.385); energy quality must conform to the standards of the contract and quality standards as well as to the requirements established by other normative documents (Paragraph 1 of Article 6.386).

Summing up the legal regulation entrenched in section seven titled “Contracts for the Sale and Purchase of Energy” of Chapter XXIII “Sale and Purchase” of Part IV of Book Six of the Civil Code, it should be held that the conditions of a contract of the sale and purchase of energy, as a consumer contract, must be fair, they may not discriminate any consumers; the said contract, as a public contract, is characteristic of the fact that it must be concluded with each person who applies to a legal person selling electricity as a commodity and rendering the services related with electricity supply; the electricity price is established under procedure established by law; the energy quality must be in line with the requirements established in legal acts.

7.3. While construing the legal regulation established in the Law on Electricity (wording of 1 July 2004) in the aspect of protection of consumer rights and interests, inter alia, the following provisions of this law should be mentioned:

the main objectives of the law are: “(2) development of a legal framework for the functioning of competition based electricity market and establishment of fair competition between producers and suppliers; (3) ensuring and promoting efficiency in the production, transmission, distribution and consumption of electricity; (4) ensuring safe and reliable operation of electricity system, electricity generation, transmission and distribution; (5) ensuring public service obligations and establishing reasonable, comprehensive and transparent requirements and obligations in the electricity sector <…>” (Article 3 “Main Objectives of the Law”);

– “‘Customer’ means any person whose equipment is connected to the transmission or distribution systems or direct line and who purchases electricity for consumption (Paragraph 35 of Article 2); “‘Household customer’ means any natural person purchasing electricity for his own household consumption, excluding commercial or professional activities” (Paragraph 3 of Article 2); “‘Eligible customer’ means a customer who is free to choose a supplier in compliance with the procedure laid down in this Law” (Paragraph 13 of Article 2);

– “Unless otherwise established by law, the electricity sector shall be regulated and compliance with this Law and the implementing legislation shall be controlled by: (1) the Government or a body authorised by it; (2) the National Control Commission for Prices and Energy” (Article 4);

– “In the electricity sector, the Government or an body authorised by it shall: <…> (3) draw up the list of public service obligations; (4) set the requirements for electricity supply security and service quality; (5) set the expected time for connecting consumers’ equipment to the system and of electricity supply restoration <…>” (Article 5);

– “<…>The Commission shall regulate the prices for the transmission, distribution and public supply services as well as public electricity prices by setting the price caps. The specific prices and tariffs for the transmission, distribution, public supply services and public electricity shall be set and changed by the service supplier. <…> The fees for the connection of customer equipment to the network shall be approved by the Commission according to the principles of non-discrimination of customers, network development and efficient use of electricity” (Paragraphs 2 and 3 of Article 42);

the National Control Commission for Prices and Energy “shall be responsible for ensuring effective competition in the electricity market, non-discrimination of customers and suppliers and provision of all customers with services of established quality. The Commission shall control: <…>

(6) the level or transparency and competition, monitoring of the security of supply and service quality” (Paragraph 2 of Article 6);

– “The transmission system operator shall be responsible for stability and reliability of the electricity system, performance of the national balance function as well as provision of system services in the territory of the Republic of Lithuania, operation, maintenance, management and development of interconnectors to other systems by eliminating bottlenecks in the transmission networks in accordance with its customers’ needs” (Paragraph 1 of Article 15);

– “The transmission system operator shall be responsible for ensuring that conditions for the connection of equipment of electricity producers, distribution system operators and customers are in conformity with the requirements laid down in legal acts and that discriminatory conduct is excluded. <…>” (Paragraph 2 of Article 15);

– “The transmission system operator must: <...> guarantee safe, reliable and effective operation of electricity transmission networks and all ancillary services necessary for that purpose <...>” (Item 13 of Article 17);

– “The distribution system operator shall be responsible for the distribution system from the connection point of the transmission network facilities to the connection point of customers’ or producers’ facilities, also for their safety, reliability, operation, maintenance, management and development in observance of the needs of distribution system users and for the metering of electricity transmitted through distribution system and installation of electricity meters” (Paragraph 1 of Article 19);

– “The distribution system operator must: <…> operate, maintain, manage and develop distribution networks and interconnections with other networks, securing reliable operation of the distribution network, guaranteeing reliable, effective and safe supply with due regard to the environment <…>” (Item 3 of Article 21);

– “Control over compliance with the requirements for reliable supply of electricity and quality of services shall be exercised by a body authorised by the Government” (Paragraph 4 of Article 48).

Chapter Seven “Electricity Supply” of the Law on Electricity (wording of 1 July 2004) contains a separate article designed for consumer protection; Article 31 titled “Customer Protection” of the said law provides:

1. Enterprises of the electricity sector shall inform customers about efficient electricity consumption, services provided by the enterprise, conditions of service provision, prices and tariffs of services and electricity, tariffs and terms for the connection of customer equipment to the grid and expected revision of contract terms. Enterprises of the electricity sector shall notify household customers in writing or by other means at least one month before the increase of prices and tariffs.

2. Household customers shall have the right to:

1) freely and without payment of charges choose the supplier;

2) receive from the suppliers information containing the supplier’s name, principal place of business address, company code and legal form, services provided and their terms, prices and tariffs for services and tariffs, ways of notifying about prices, contract dates, contract conclusion and termination conditions, dispute settlement procedure.

3) unilaterally terminate the contracts without payment of charges if the revised contract terms are unacceptable to household customers.

4) receive from electricity enterprises proposals concerning the ways of payment settlement and choose the way of settlement.”

Summing up the legal regulation entrenched in the Law on Electricity (wording of 1 July 2004), it should be held that it regulates various relations of protection of consumer rights and interests, that it specifies the institutions participating in running the electricity sector, that it establishes the competence of these institutions, inter alia, in the areas of the protection of the rights and interests of electricity consumers (inter alia, in the areas of electricity generation, transmission, distribution, as well as safety and reliability of electricity supply, quality of services, and establishment of prices for supplied electricity).

It needs to be noted that at the time when there was the situation with a state monopoly in the electricity system (prior to the restructuring of the energy sector), the Law on Electricity used to contain the corresponding measures for protection of consumer rights and interests, which remained virtually intact upon rearrangement of the electricity sector, inter alia, upon providing for and founding the national investor.

8. In this context it needs to be noted that after the Law on the Nuclear Power Plant entrenched the legal regulation which is impugned by the petitioner, the regulation of protection and defence of consumer rights and interests, which is established in the Law on Consumer Rights Protection, the Civil Code, and the Law on Electricity, was not amended.

It needs to be mentioned that the norms which are entrenched in the said laws and which regulate the protection and defence of consumer rights and interests are not a matter of investigation in the constitutional justice case at issue.

9. In the context of the constitutional justice case at issue, the following provisions, which have been formulated in previously adopted acts of the Constitutional Court, should be mentioned:

the provision “the State shall defend the interests of the consumer” entrenched in Paragraph 5 of Article 46 of the Constitution implies that legal norms must establish various measures for protection of consumer interests;

the constitutional duty of the state to protect consumer interests must be implemented first of all by the legislature who establishes general and, by taking account of the specificity of the regulated economic activity, special measures of protection and defence of consumer rights which are correspondingly applicable in general to all areas of economic activity and specially to separate areas if economy, inter alia, the area of electricity;

separate areas of economic activity are noted by the specificity of relations characteristic of such area only; such specificity itself can imply, inter alia, certain peculiarities of regulation of the relations of protection and defence of consumer rights and interests in certain areas of economic activity; it is the content of economic activity, its specificity and peculiarities that may determine the necessity of and need for special regulation of legal relations of protection and defence of consumer rights and interests in certain areas of economic activity; the measures of protection and defence of consumer rights and interests in certain areas of economic activity may be different when account is taken of a concrete specificity of relations of economic activity;

the specificity, variety and dynamism of an economic activity imply that in a certain area of concrete relations the regulation need not be the same all the time, i.e. it can be subject to change, while in some situations it must be changed;

it needs to be noted that if in a certain sphere of economic relations of the production or the market are concentrated, a duty falls upon state institutions to establish additional legal regulation ensuring the protection of consumer interests;

ensuring efficient protection and defence of consumer interests implies, inter alia, the fact that the legislature has the duty to establish an institutional system of protection of consumer rights and interests, i.e. the law must establish corresponding state institutions, clearly define the competence thereof, create legal preconditions for such institutions to secure realistic protection and defence of consumer rights in a corresponding area of economic activity;

ensuring efficient protection and defence of consumer interests implies also the fact that the legislature must establish such legal regulation which would create preconditions for every consumer to receive electricity under non-discriminatory conditions and that electricity be supplied safely and reliably to all consumers;

the establishment of price limits is one of the ways to protect consumer interests; this is applicable, inter alia, in the area of protection and defence of electricity consumer rights and interests; the legislature has the duty to establish, by means of a law, criteria of establishing electricity price limits; these criteria and methods of establishment thereof must be clear, transparent, and reasonable, so that no conditions would be created to persons for abuse in establishing electricity prices and thus violating the rights and interests of electricity consumers.

10. It has been mentioned that the petitioner impugns the legal regulation established in the Law on Nuclear Power Plant inasmuch as the protection of consumer rights is not established therein. Taking account of the formulation and reasoning of the petition of the petitioner, requesting an investigation into the compliance of the provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant with Paragraph 5 of Article 46 of the Constitution, the conclusion should be drawn that the petitioner does not impugn what is provided for in Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, but that it impugns something that is not provided for in Paragraph 1 of Article 10 of this law, which, however, according to the petitioner, should have been provided for therein. Thus, the petitioner impugns legislative omission.

11. In this context, the following provisions of the doctrine of legislative omission, which were formulated in previously adopted acts of the Constitutional Court, should be mentioned:

the non-establishment of certain legal regulation in an investigated legal act (part thereof) may be linked, inter alia, with the legal situations, where non-establishment of explicit legal regulation in that legal act (part thereof), if the corresponding legal regulation is not explicitly or implicitly established in other legal acts (in other parts of the same legal act), either, means that there is a legal gap in the said legal act (part thereof), which, in its turn, may be treated, inter alia, as legislative omission, i.e. as a legal gap prohibited by the Constitution (or another legal act of higher legal force);

the concept of legislative omission encompasses several aspects:

1) the absence of explicit legal norms regulating certain social relations in an investigated legal act (part thereof) of lower legal force, provided the corresponding legal regulation is not explicitly or implicitly established in other legal acts (other parts of the same legal act) and if it is impossible to treat the non-establishment of the said explicit legal regulation in the investigated legal act (part thereof) as the discussed implicit legal regulation supplementing and continuing the legal regulation established explicitly, should be treated as a legal gap which is prohibited by the Constitution (or some other legal act of higher legal force), i.e. as legislative omission;

2) legislative omission means that the corresponding legal regulation which was not established in the investigated legal act (part thereof) must be established in precisely that legal act (precisely that part thereof) when heed is taken to the imperatives of consistency and inner non-contradiction of the legal system, which stem from the Constitution, and when account is taken of the content of those social relations;

3) the corresponding legal regulation must be established in precisely that legal act (precisely that part thereof), since the Constitution (or some other legal act of higher legal force, with whose respect the compliance of the investigated legal act (part thereof) of lower legal force is assessed) requires so;

the “detection” of legislative omission par excellence in a legal act (part thereof) of lower legal force is, if it is necessary because of the logic of the investigated constitutional justice case, sufficient grounds for ruling that legal act (part thereof) to be in conflict (to corresponding extent, i.e. to the extent that the legal act (part thereof) does not consolidate the legal regulation required by legal acts of higher legal force, inter alia (and, first of all), with the Constitution) with the Constitution (another legal act of higher legal force).

12. While deciding whether the provision of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant is not in conflict with the Constitution, it needs to be mentioned that, as it has been held:

the legal regulation of the protection of consumer rights and interests in the electricity sector is established in various laws: the Law on Consumer Rights Protection, the Civil Code, and the Law on Electricity;

the Law on the Nuclear Power Plant, inter alia, the impugned provision of Paragraph 1 (wording of 1 February 2008) of Article 10 thereof, virtually did not amend the content of the norms of the laws of the Republic of Lithuania wherein the protection of the rights of electricity consumers are entrenched;

the relations of protection and defence of consumer rights and interests are virtually not regulated in the Law on the Nuclear Power Plant, with the exception of Item 1 of Paragraph 4 (wording of 1 February 2008) of Article 8 thereof;

the relations of protection of consumer rights and interests are not virtually the matter of regulation of the Law on the Nuclear Power Plant.

It needs to be noted that, as it has been held in this ruling, the aim of the Law on the Nuclear Power Plant and the strategic aim of Lithuania in the area of electricity imply also corresponding aims of founding the national investor, which in their turn determine the aims of the activity of the national investor, inter alia, to fund the project (part thereof) of the new nuclear power plant or to secure such funding; also to participate in implementation the project of building the new nuclear power plant in Lithuania, in constructing the interconnection of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden; to integrate, in a complex manner, the electricity system of the Republic of Lithuania into the electricity transmission systems and internal electricity markets of states of the European Union; to efficiently implement the main task of the electricity system of the Republic of Lithuania—within unlimited period, independently, safely and securely to supply Lithuanian electricity consumers with electricity. Thus, gaining benefits for itself and all its shareholders is not the single aim of the national investor.

It also needs to be noted that the petitioner did not present any arguments or reasons substantiating that upon establishing in Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant the right of the national investor to gain benefits for itself and all its shareholders in a socially responsible manner, the relations in the electricity sector underwent such changes so that there occurred a necessity to establish additional protection of consumer rights, and that such protection must be established precisely in the Law on the Nuclear Power Plant. The petitioner did not indicate, either, any measures of protection of consumer rights which, in its opinion, should be entrenched in this law.

13. Thus, there are not any legal arguments permitting asserting that the provision “the national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that, according to the petitioner, the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of consumer rights is not legislatively established, is not in line with the imperatives arising from Paragraph 5 of Article 46 of the Constitution.

14. Taking account of the arguments set forth, the conclusion should be drawn that the provision “the national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of consumer rights is not legislatively established, is not in conflict with Paragraph 5 of Article 46 of the Constitution.

15. The fact that it has been held in the constitutional justice case at issue that the provision “the national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the single aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that the protection of consumer rights is not legislatively established, is not in conflict with Paragraph 5 of Article 46 of the Constitution, in itself does not mean that in the sphere of the protection and defence of the rights and interests of electricity consumers the legal regulation cannot be corrected by taking account of the changes in the electricity sector in order to secure efficient protection and defence of consumer rights and interests.

IV

On the compliance of the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the national investor is created, which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution.

1. It has been mentioned that Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant provides:

The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner and taking part in implementing the strategic goal of Lithuania provided for in Paragraph 3 of Article 8 of this Law. The legal form of the national investor shall be a joint-stock company; the registered office of the national investor shall be located in the Republic of Lithuania. The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden.”

2. While construing the said provision (which is impugned by the petitioner) of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant in the aspect specified by the petitioner, account should be taken of the other provisions of the Law on the Nuclear Power Plant, which entrench the model of the national investor, the bases of the activity of the national investor as a parent company and that of subsidiaries thereof and their interrelations, as well as the relation of the national investor with the company implementing the project as the organisation which will operate the new nuclear power plant. In this context, the following provisions of the Law on the Nuclear Power Plant (wording of 28 June 2007 with the 1 February 2008 amendments and supplements) should be mentioned:

– “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner and taking part in implementing the strategic goal of Lithuania provided for in Paragraph 3 of Article 8 of this Law. The legal form of the national investor shall be a joint-stock company; the registered office of the national investor shall be located in the Republic of Lithuania. <…>” (Paragraph 1 (wording of 1 February 2008) of Article 10);

– “The Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor. The other part of the authorised capital of the national investor may consist of private national capital and foreign capital meeting the criteria of European and transatlantic integration according to the conditions and procedure established in the Law on Enterprises and Facilities of Strategic Importance to National Security and other Enterprises Important to Ensuring National Security as well as other laws and legal acts of the Republic of Lithuania” (Paragraph 2 (wording of 1 February 2008) of Article 10);

– “The national investor and its subsidiaries shall make a group of companies of the national investor. The major activity of the national investor must be that of the parent company of the group of companies of the national investor. The national investor may also engage in other activities that do not contradict the purpose of activities of the national investor” (Paragraph 3 (wording of 28 June 2007) of Article 10);

– “The Government of the Republic of Lithuania and the national investor, managing the main part of the Lithuanian power system through its subsidiaries, shall implement the strategic goal of Lithuania, namely, integrate in a complex manner the power system of the Republic of Lithuania into the power transmission systems of the states of the European Union and internal power markets” (Paragraph 3 (wording of 1 February 2008) of Article 8); implementing the strategic goal provided for in Paragraph 3 of this article, the Government of the Republic of Lithuania and the state institutions, taking resolutions and decisions and concluding agreements, as well as the managers of state shares, taking decisions, concluding agreements and exercising the rights of shareholders in the company of the national investor or successor to its rights, owned by the state, also in the subsidiaries established by these companies, shall ensure, inter alia, that the activity of the national investor and its subsidiaries would be organised in such a manner that it would comply with the requirements of legal acts of the Republic of Lithuania and the European Union and the best business practice of electricity companies of the European Union member states (Paragraph 4 (wording of 1 February 2008) of Article 8);

– “Companies from the group of companies of the national investor shall carry out the activities of electricity generation, transmission, distribution, supply, market operator and other activities unbundled in accordance with the procedure laid down by means of legal acts. A company from the group of companies of the national investor may also engage in other activities that do not contradict the purpose of activities of that company” (Paragraph 4 (wording of 28 June 2007) of Article 10);

– “The national investor and the bodies of the national investor must operate so that the national investor would under any circumstances hold at least 2/3 of shares and votes of the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ at the general meeting of shareholders of each company. Where the activities pursued by the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ are separated, transferred or conveyed when reorganising, transforming the companies or otherwise, the national investor must, directly or indirectly, hold at least 2/3 of shares and votes at the general meeting of shareholders in the companies holding by the right of ownership the electricity transmission network of the Republic of Lithuania, electricity distribution networks, also in the companies pursuing the activities of electricity transmission, the electricity market operator, electricity distribution and the public electricity supplier” (Paragraph 8 (wording of 1 February 2008) of Article 10);

– “‘Project implementing company’ shall mean a private legal subject established for implementing the project” (Paragraph 5 of Article 3 (wording of 28 June 2007)); “A project implementing company shall be established, registered and operated in accordance with the procedure laid down by means of laws of the Republic of Lithuania. Its registered office shall be situated in the Republic of Lithuania” (Paragraph 1 (wording of 28 June 2007) of Article 5).

– “The project implementing company may be established on the initiative of the national investor, with the opportunity being provided for strategic partners to participate in it” (Paragraph 1 (wording of 28 June 2007) of Article 6); “The national investor shall own a block of at least 34 percent of shares in the project implementing company carrying at least 34 percent of votes at the general shareholders’ meeting of the project implementing company” (Paragraph 2 (wording of 28 June 2007) of Article 8); “The rights and duties of the national investor in the management of the project implementing company shall be established by taking into account the vital national interests” (Paragraph 5 (wording of 28 June 2007) of Article 6);

– “The project implementing company shall be responsible for carrying out project implementation activities in compliance with the safety requirements imposed on nuclear activities. Having fulfilled the requirements laid down in legal acts and having received authorisations and licences, the project implementing company shall become the operator of the nuclear power plant and expand electricity generating capacities in accordance with the procedure laid down by means of legal acts” (Paragraph 2 (wording of 28 June 2007) of Article 5);

– “Each investor shall finance or ensure the financing of that portion of the project costs (including costs associated with the project implementation, the operation of the project implementing company, the decommissioning of the nuclear power plant and radioactive waste management) which is proportionate to its stake in the capital of the project implementing company” (Paragraph 4 (wording of 28 June 2007) of Article 6).

3. Summing up the specified provisions of the Law on the Nuclear Power Plant, the following conclusions should be drawn as regards the impugned legal regulation:

the Law on the Nuclear Plant created preconditions for forming such a model of the national investor in which the national electricity company, which is newly founded on the basis of state and private capital, comprises, together with existing companies, a group of companies of the national investor, which is composed of the parent company—the national investor—and subsidiaries (inter alia, the joint-stock company “Lietuvos energija”, which is the operator of the transmission system, and the joint-stock companies Rytų skirstomieji tinklai and “VST”, which are operators of distribution networks), which, as separate legal persons conduct separated activities of electricity generation, transmission, distribution, supply, the activity of the market operator, and other activities under procedure established by means of legal acts;

the law establishes a minimum mandatory portion (not less than 1/2) of shares of the national investor, which must be held by the state by right of ownership, and that of votes at the general meeting of shareholders, as well as a minimum mandatory portion (not less than 2/3) of shares of the subsidiaries of the national investor, which are the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai and “VST”, which must be held by the national investor by right of ownership, and that of votes at the general meeting of shareholders;

the law created the legal preconditions for consolidating the management of the group of companies of the national investor in the newly founded national electricity company (the national investor);

the law does not provide that the national investor conducts the activities conducted by its subsidiaries, i.e. the law provides that the separated activities of electricity generation, transmission, and distribution are conducted by subsidiaries of the national investor;

the law did not create any legal preconditions for either reducing or increasing the number of the economic subjects which either conducted or were able to conduct the activities of electricity transmission and distribution;

the model of the national investor entrenched in the Law on the Nuclear Power Plant also means that the national investor may found a project implementing company (which, upon fulfilling the requirements established in the law, will become the organisation which will operate the new nuclear power plant) and become a shareholder thereof holding at least 34 percent of shares of this company and at least 34 percent of votes at the general shareholders’ meeting of the project implementing company. Thus, the national investor as a founder and shareholder of the parent company will be able to participate to a certain extent not only in the management of electricity transmission and distribution, but also in the management of generation of electricity in the new nuclear power plant.

4. While deciding whether the impugned legal regulation is not in conflict with the Constitution in the aspect that the national investor is created, which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, one is first of all to elucidate in what manner, under legal regulation established in the Law on the Nuclear Power Plant, the group of companies of the national investor is managed, as well the role of the state, as one of the shareholders of the national investor, in the group of electricity companies of the national investor. In this context the following provisions of the Law on the Nuclear Power Plant should be mentioned:

– “The Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor. The other part of the authorised capital of the national investor may consist of private national capital and foreign capital meeting the criteria of European and transatlantic integration according to the conditions and procedure established in the Law on Enterprises and Facilities of Strategic Importance to National Security and other Enterprises Important to Ensuring National Security as well as other laws and legal acts of the Republic of Lithuania” (Paragraph 2 (wording of 1 February 2008) of Article 10);

– “The national investor and the bodies of the national investor must operate so that the national investor would under any circumstances hold at least 2/3 of shares and votes of the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ at the general meeting of shareholders of each company. Where the activities pursued by the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’ are separated, transferred or conveyed when reorganising, transforming the companies or otherwise, the national investor must, directly or indirectly, hold at least 2/3 of shares and votes at the general meeting of shareholders in the companies holding by the right of ownership the electricity transmission network of the Republic of Lithuania, electricity distribution networks, also in the companies pursuing the activities of electricity transmission, the electricity market operator, electricity distribution and the public electricity supplier” (Paragraph 8 (wording of 1 February 2008) of Article 10);

– “The Government of the Republic of Lithuania shall have the right to take a decision on the sale of the State shares in the national investor to other persons that satisfy the criteria of the European and transatlantic integration or on the assignment or waiver for the benefit of other persons of the pre-emption right of the State to acquire newly issued shares in the national investor, in all cases ensuring that the Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor” (Paragraph 3 of Article 11 (wording of 1 February 2008));

– “The rights attached to the shares owned by the State in the national investor company shall be exercised in accordance with the procedure established by the Government of the Republic of Lithuania. The manager of the State shares or persons authorised by the manager shall exercise the property and non-property rights of the State as a shareholder in the national investor company in accordance with the said procedure. The manager of the State shares or persons authorised by the manager may vote in the bodies of the national investor company on the agreement of shareholders in the project implementing company only pursuant to resolutions of the Government of the Republic of Lithuania, with the approval of the Seimas of the Republic of Lithuania to the material terms and conditions of this agreement” (Paragraph 1 (wording of 28 June 2007) of Article 8);

– “Should the Government of the Republic of Lithuania decide to sell a part of the State shares in the national investor, such sale must be carried out publicly, providing non-discriminatory conditions for nationals and legal subjects of the Republic of Lithuania to acquire them, in all cases ensuring that the Republic of Lithuania shall own a block of more than 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor. With the view of ensuring wider and adequate representation of the Republic of Lithuania and other shareholders of the national investor in the bodies of the national investor, the number of members of the supervisory board may be bigger than the one specified in the Law on Companies, but not more than 25” (Paragraph 4 of Article 11 (wording of 28 June 2007)).

5. These provisions of the Law on the Nuclear Power Plant related with the management of the national investor as a joint-stock company should be construed together with the corresponding provisions of the Law on Companies (wordings of 11 December 2003 with subsequent amendments and supplements), as, for instance:

– “A company shall be considered a parent company if it directly and/or indirectly holds a majority of the voting rights in another company which is its subsidiary or if it may directly or indirectly exercise a dominant influence on another company” (Paragraph 1 of Article 5 (wording of 11 December 2003));

– “A company shall be deemed to directly hold a majority of the voting rights in another company if it has acquired shares in the other company granting it more than 1/2 of voting rights at the General Meeting” (Paragraph 2 of Article 5 (wording of 11 December 2003));

– “Each shareholder shall have such rights in the company as are incidental to the shares in the company owned by him. Under identical circumstances all holders of shares of the same class shall have equal rights and duties” (Paragraph 2 of Article 3 (wording of 11 December 2003));

– “The right of initiative to convene the General Meeting shall be vested in the Supervisory Board, the Board (the manager of the company, where the Board is not formed) and the shareholders who have at least 1/10 of all votes, unless the Articles of Association provide for a smaller number of votes” (Paragraph 1 of Article 23 (wording of 11 December 2003));

– “The initiators of the General Meeting shall submit a request to the Board (or, in the cases specified in Paragraph 3 of this Article, the manager) where they must state the reasons for convening the General Meeting and its purposes, submit proposals regarding the agenda, date and venue of the Meeting, drafts of the proposed decisions. <…>” (Paragraph 5 of Article 23 (wording of 11 December 2003)); “If the Board of the company or, in the cases referred to in Paragraph 3 of this Article, the manager of the company fails to take the decision to convene the General Meeting within 10 days from the receipt of the request indicated in Paragraph 5 of this Article, the General Meeting may be convened on the decision of the shareholders whose shares carry more than 1/2 of the votes” (Paragraph 4 of Article 23 (wording of 11 December 2003));

– “A General Meeting may take decisions and shall be held valid if attended by shareholders who hold shares carrying not less than 1/2 of all votes <…>” (Paragraph 1 of Article 27 (wording of 11 December 2003));

– “A decision of the General Meeting shall be considered taken if more votes of the shareholders have been cast for it than against it, unless this Law or the Articles of Association of the company prescribe a larger majority” (Paragraph 8 of Article 27 (wording of 11 December 2003));

under Paragraph 1 of Article 20 and Paragraphs 1 and 2 of Article 28 of the Law on Companies (wording of 11 December 2003), the general meeting has an exclusive right to decide the most important issues of management of the company; some of these issues can be decided by a common majority of votes, which cannot be less than 1/2 of the votes carried by the shares of the shareholders participating in the meeting, while other corresponding issues can be decided by qualified majority of votes, which cannot be less than 2/3 or 3/4 of the votes carried by the shares of the shareholders participating in the meeting. The said 2/3 majority of votes (provided the articles of association of the company do not provide a bigger majority of votes) is necessary in order to adopt these decisions:

1) to amend the Articles of Association of the company, unless otherwise provided for by this Law;

2) to determine the class, number, nominal value and the minimum issue price of the shares issued by the company;

3) to convert the company’s shares of one class into shares of another class, approve the share conversion procedure;

4) to replace private limited-liability company share certificates by shares;

5) on the appropriation of profit/loss;

6) on building up, drawing on, reduction or liquidation of the reserves;

7) to issue convertible debentures;

8) to increase the authorised capital;

9) to reduce the authorised capital except where this Law provides otherwise;

10) on approving the conditions of reorganisation or division and reorganisation, or division of the company;

11) on the transformation of the company;

12) on the restructuring of the company;

13) on the liquidation of the company and cancellation of company liquidation except where otherwise provided by this Law” (Paragraph 1 of Article 28 (wording of 11 December 2003)).

6. Thus, while construing the provisions of the Law on the Nuclear Power Plant (wording of 28 June 2007 with the 1 February 2008 amendments and supplements) together with the provisions of the Law on Companies (wording of 11 December 2003 with subsequent amendments and supplements), it should be held that the legal regulation established in the Law on the Nuclear Power Plant whereby not less 1/2 of shares in the national investor carrying more than 1/2 of votes at the general shareholders’ meeting of the national investor must belong to the state by right of ownership creates preconditions for, inter alia, such a legal situation where the state possess a portion of shares in the national investor carrying a portion of votes in the general meeting of the national investor, which are less than 2/3 of all shares of the national investor and less than 2/3 of votes in the general meeting of the national investor. It has been mentioned that, under the 29 April 2008 Agreement on Creating the National Investor between the Government and the closed-type joint-stock company “NDX energija”, 61.7 percent shares of the national investor LEO LT, AB and 61.7 percent of votes in the general meeting thereof belong to the state, while 38.3 percent shares of the national investor LEO LT, AB and 61.7 percent of votes in the general meeting thereof belong to the closed-type joint-stock company “NDX energija”. Taking account of this, it needs to be noted that:

the state, while possessing the block of shares constituting 61.7 percent shares of the national investor LEO LT, AB and 61.7 percent of votes in the general meeting thereof, i.e. less than 2/3 shares and votes, has the right by its votes alone to call a general meeting of the national investor and adopt decisions on issues specified in the Law on Companies, the adoption of which requires a simple majority of votes (more than 1/2 of votes), provided the articles of association of LEO LT, AB do not provide otherwise;

the state, while possessing the block of shares constituting 61.7 percent shares of the national investor LEO LT, AB and 61.7 percent of votes in the general meeting thereof does not have the right to adopt decisions on issues specified in Paragraphs 1 and 2 of Article 28 of the Law on Companies (wording of 11 December 2003 with subsequent amendments and supplements). Also, the other shareholder (the holder of the controlling block of shares of the joint-stock company “VST”) cannot, by its votes alone, adopt any decisions specified in Paragraphs 1 and 2 of Article 28 of the Law on Companies;

the law establishes a minimum portion (not less than 2/3) of shares of the subsidiaries of the national investor, which are the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST”, which must be held by the national investor by right of ownership, as well as not less than 2/3 of votes in general meetings of shareholders of the said subsidiaries; this also means that the essential issues of management of the said subsidiaries is determined by the national investor.

7. As it has been mentioned, in the constitutional justice case at issue the petitioner impugns the compliance of the said provision of Paragraph 1 (wording of 1 February 2008) of Article 10 the Law on the Nuclear Power Plant in the aspect that the national investor is created, which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import with Paragraphs 3 and 4 of Article 46 of the Constitution.

8. In this context, it needs to be mentioned that, as held before:

– “the right of the state to regulate economic activity which is consolidated in Paragraph 3 of Article 46 of the Constitution creates constitutional pre-conditions for passing laws by means of which one reacts to the state of the national economy, the diversity of and changes in social life”;

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; to seek the welfare of not individual persons but precisely the general welfare of the Nation which cannot be opposed to the welfare, rights and legitimate interests of the economic subject itself the activity of which is regulated, as well as those of other persons who have established and are running the said economic subject or are otherwise related to the said subject;

the Seimas as the institution of legislative power and the Government as an institution of executive power enjoy very broad discretion to form and execute the economic policy of the state;

the fact where in legal acts differentiated legal regulation was established to a certain sector of economy, which is different from the legal regulation of other economic sectors, or the fact that the legal regulation of a certain economic activity is changed in reacting to changes in the market as well as the economic (as well as international) conjuncture in itself cannot serve as a pretext to question the economic policy of the state, which is formed and executed by the Seimas and the Government, since the legal pre-conditions of differentiated legal regulation (when account is taken of the importance and nature of the regulated relations) originate from the Constitution itself (inter alia, Paragraph 2 of Article 46 thereof); the differentiated establishment of the legal situation of separate economic subjects should be related with the objectives raised by the state in a certain sector of economy, the striving to arrange the economy of this country in a corresponding manner, besides, due to a specific character, variety and dynamism of economic activity, regulation of concrete relations in this area cannot be the same all the time, i.e. the ratio of prohibitions and permissions is subject to change, inter alia, while seeking to ensure the public interest;

monopoly is an exclusive right of a person, or a group of persons, or a state to operate in a certain field; monopoly is such a state, a situation when certain person or organisation may act without competition in a certain field;

introduction of a monopoly is an ungrounded granting of privileges to a certain subject of economy (groups thereof) and, alongside, the discrimination of other subjects of economy, the restriction on their freedom of economic activity; granting privileges to a certain group of subjects of economy should also be related with the discrimination of other subjects of economy, the restriction on their freedom of economic activity and initiative; this is incompatible with the requirements of Articles 29 and 46 of the Constitution;

it is not prohibited, under certain circumstances, to state in the law the existence of monopoly in a certain sector of economy or to reflect factual monopolistic relations otherwise and to regulate them accordingly, i.e. to create legal preconditions in order to apply corresponding requirements (including, inter alia, a restriction on establishment of discriminatory prices, the state regulation of the size of prices and tariffs for the goods of the monopolistic market, the establishment of the requirements for the quality of goods for monopolistic subject of economy, as well as control carried out by the state institutions how the economic subjects are following the established requirements) to the monopoly while defending the rights and legitimate interests of other economic subjects and consumers;

protection of fair competition is the main way to ensure the harmony between the interests of a person and the interests of the state while regulating economic activity, to create self-regulation of economy as a system which would encourage distribution of economic resources in an optimal manner, using them efficiently, increasing economic growth and improving the welfare of consumers;

in itself, freedom of economic activity of an individual does not guarantee competition, therefore, the state must protect fair competition; the constitutional guarantee of protection of fair competition obliges the institutions of state power and municipal institutions to ensure freedom of fair competition by legal means; such means—the prohibition against such agreements among economic subjects, whereby one seeks to limit competition and which limit or may limit competition, the prohibition on abusing the dominant position, the control over market concentration and the corresponding prohibitions on concentration, the prohibition on unfair competition, the control over the observance of the rules for the protection of fair competition which are established in laws and the liability for violations thereof ;

the state, while regulating the economic activity so that it serves the general welfare of the Nation, may establish differentiated legal regulation, which is determined by the specificity of the economic activity; thus, the state, while regulating a certain economic activity, can establish various measures;

the possibilities of the legislature to establish the measures while ensuring the general welfare of the Nation in the field of electricity are determined by the particularities of electricity, inter alia, limited resources of electricity, material, financial and other important factors.

9. While deciding whether the impugned provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the national investor is created which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution, it needs to be noted that, as it has been mentioned:

the aim of the Law on the Nuclear Power Plant and the strategic aim of Lithuania in the area of electricity imply also corresponding aims of founding the national investor, which in their turn determine the aims of the activity of the national investor, inter alia, to fund the project (part thereof) of the new nuclear power plant or to secure such funding; also to participate in implementation of the project of building the new nuclear power plant in Lithuania, in constructing the interconnection of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden; to integrate, in a complex manner, the electricity system of the Republic of Lithuania into the electricity transmission systems and internal electricity markets of states of the European Union; to efficiently implement the main task of the electricity system of the Republic of Lithuania—within unlimited period, independently, safely and securely to supply Lithuanian electricity consumers with electricity;

the aim of the Law on the Nuclear Power Plant (wording of 28 June 2007 with the 1 February 2008 amendments and supplements) was in line with the strategic aim of Lithuania in the electricity system;

the State of Lithuania, having assumed the international obligations arising from the accession to the European Union to shut down the Ignalina Nuclear Power Plant till 31 December 2009, made efforts to remain a nuclear energy state;

the Law on the Nuclear Plant created preconditions for forming such a model of the national investor in which the national electricity company, which is newly founded on the basis of state and private capital, comprises, together with existing companies, a group of companies of the national investor, which is composed of the parent company—the national investor—and subsidiaries (inter alia, the joint-stock company “Lietuvos energija”, which is the operator of the transmission system, and the joint-stock companies Rytų skirstomieji tinklai and “VST”, which are operators of distribution networks), which, as separate legal persons conduct separated activities of electricity generation, transmission, distribution, supply, the activity of the market operator, and other activities under procedure established by means of legal acts; such legal regulation created the preconditions for consolidating the management of the group of companies of the national investor in the newly founded national electricity company (the national investor);

the model of the national investor entrenched in the Law on the Nuclear Power Plant also means that the national investor may found a project implementing company (which, upon fulfilling the requirements established in the law, will become the organisation which will operate the new nuclear power plant) and become a shareholder thereof holding at least 34 percent of shares of this company and at least 34 percent of votes at the general shareholders’ meeting of the project implementing company. Thus, the legal preconditions were created to the national investor to participate to a certain extent not only in the management of electricity transmission and distribution, but also in the management of generation of electricity in the new nuclear power plant.

10. It needs to be mentioned that the Constitutional Court noted in its ruling of 4 December 2008 that the state (monopolistic) electricity system which had been formed during the Soviet time was reformed; out of the former centralised monopolistic system one formed the electricity transmission system whose operator was the joint-stock company “Lietuvos energija”, and two distribution networks, which were run by the joint-stock companies Rytų skirstomieji tinklai, and Vakarų skirstomieji tinklai.

11. It was also mentioned that the legal regulation established in the Law on the Nuclear Power Plant did not create any legal preconditions for either reducing or increasing the number of the economic subjects which either conducted or were able to conduct the activities of electricity transmission and distribution, and for either reducing or increasing the portion of the market which fell (or has a potential to fall) under the share of the said economic subjects. Thus, a new monopoly was not created in the electricity sector. This was confirmed by the specialists (V. Miškinis, J. Vilemas, V. Navickas, V. Poderys and T. Suslavičius) who, while speaking at the Constitutional Court’s hearing, noted that the electricity distribution activities were monopolistic in the past and are monopolistic at present.

In addition, it has been mentioned that the Law on the Nuclear Power Plant does not provide that the national investor conduct the activities of its subsidiaries, i.e. the law provides that the separated activities of electricity generation, transmission, and distribution are conducted by the subsidiaries of the national investor; thus, the said law neither reduces nor increases the number of the economic subjects which conducted or were able to conduct the activities of electricity transmission and distribution, and neither reduces nor increases the portion of the market which fell (or has a potential to fall) under the share of the said economic subjects.

As mentioned before, within 24 months of the day of completing the transaction, the Kaunas HP and the Kruonis PSPP, which were branches of the joint-stock company “Lietuvos energija”, must be separated legally and functionally from the said joint-stock company.

Thus, after the law had entrenched a new electricity company—the national investor—whose main activity must be the activity of the parent company of the national investor group of enterprises, no legal preconditions for changing the electricity market in essence from the aspect of monopolisation were created.

In this context, it needs to be mentioned that the legal situation of other economic subjects which operated in the electricity system of this country until the adoption of the Law on the Nuclear Power Plant, and which are not provided in the law as having links with the model of the national investor did not change after the law was adopted and came into force. Thus, other economic subjects, which are not specified in the Law on the Nuclear Power Plant, retain the same rights which they have acquired under the Law on Electricity or another legal act regulating social relations in the area of electricity.

12. Although this law created preconditions for the national investor to become a shareholder of the project implementing company (which, after it has implemented the requirements established by law, will become the organisation operating the nuclear power plant), which has not less than 34 percent of shares of this company and not less than 34 percent of votes in the general meeting of shareholders, and, due to this, legal preconditions were created for the national investor to participate in the future not only in managing the electricity transmission and distribution, but also in managing the generation of electricity in the new nuclear power plant, however, in itself, it does not create any preconditions for monopolising the generation of electricity, all the more so that it is the project implementing company but not the national investor that will be able to be the organisation which will operate the new nuclear power plant.

13. It has been mentioned that it is not prohibited, under certain circumstances, to state in the law the existence of monopoly in a certain sector of economy or to reflect factual monopolistic relations otherwise and to regulate them accordingly, i.e. to create legal preconditions in order to apply corresponding requirements (including, inter alia, a restriction on the establishment of discriminatory prices, the state regulation of the size of prices and tariffs for the goods of the monopolistic market, the establishment of the requirements for the quality of goods for monopolistic subject of economy, as well as control carried out by the state institutions how the economic subjects are following the established requirements) to the monopoly while defending the rights and legitimate interests of other economic subjects and consumers.

Due to the fact that there existed a monopoly (electricity transmission and distribution) in the electricity market, the legal regulation entrenched in the impugned provisions of the Law on the Nuclear Power Plant may not be interpreted as meaning that this legal regulation purportedly created the legal preconditions for creating a new monopoly and thus violating the rights of other economic subjects and consumer interests.

Thus, there are not any legal arguments which would permit asserting that the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the national investor is created, which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, is not in line with the imperatives arising from Paragraph 4 of Article 46 of the Constitution.

14. It has also been mentioned in this constitutional justice case that the possibilities of the legislature to establish the measures while ensuring the general welfare of the Nation in the field of electricity are determined by the particularities of electricity, inter alia, limited resources of electricity, material, financial and other important factors; the constitutional duty of the legislature to establish the legal regulation that, taking account of the resources of the state and society, material and financial possibilities and other important factors, would ensure the general welfare of the Nation stems from the Constitution; the values entrenched in the provisions of Article 46 of the Constitution, inter alia, the general welfare of the Nation, absence of monopolisation of production and the market and fair competition, may not be opposed.

In this context it needs to be noted that the said strategic aims in the electricity sector and the aims of founding the national investor, inter alia, funding the project (part thereof) of the new nuclear power plant, or securing such funding, also participation in implementing the project of construction of the new nuclear power plant in Lithuania, in construction the interconnections of the electricity system of the Republic of Lithuania with the electricity systems of the Republic of Poland and the Kingdom of Sweden, integrating in a complex manner the power system of the Republic of Lithuania into the power transmission systems of the states of the European Union and internal power markets, which are entrenched in the Law on the Nuclear Power Plant, should be regarded as socially important and as being in line with the strategic aims of Lithuania in the area of electricity. Thus, the legal regulation entrenched in the impugned provision of Paragraph 1 (wording of 1 February 2008) of the Law on the Nuclear Power Plant does not deviate from the imperatives which stem from Paragraph 3 of Article 46 of the Constitution.

15. Taking account of the arguments set forth, the conclusion should be drawn that the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008) of Article 10 of the Law on the Nuclear Power Plant, in the aspect that the national investor is created, which, as an owner, will concentrate in its hands the main portion of production of electricity, its transmission, distribution, export and import, is not in conflict with Paragraphs 3 and 4 of Article 46 of the Constitution.

V

On the compliance of the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution.

1. Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant provides:

The Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to:

1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor;

2) participate in establishing the joint-stock company, the authorised capital whereof during the establishment would be built of cash and into the authorised capital whereof all or part of the shares owned by the State in the joint-stock company ‘Lietuvos energija’ and in the joint-stock company Rytų skirstomieji tinklai (Eastern Distribution Networks), amounting to more than 2/3 of shares of each company and carrying more than 2/3 of votes at the general shareholders’ meeting, would be invested, and, if the agreements provided for in subparagraph 1 of this paragraph are reached, the shares of the joint-stock company ‘VST’ amounting to more than 2/3 of shares of the company and carrying more than 2/3 of votes at the general shareholders’ meeting would be invested after the establishment;

3) adopt decisions required for the implementation of provisions of Items 1 and 2 of this Paragraph and conclude respective transactions.”

2. The petitioner impugns the compliance of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution in the aspect that, when creating the national investor, the state, without a tender and failing to apply the legal norms regulating fair competition, chose the only partner—the joint-stock company “VST”—and established exceptional rights of the shareholder of this company, thus, according to the petitioner, this law entrenched unequal legal regulation of the situation of economic subjects.

While construing Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant together with Items 2 and 3 of Paragraph 1 of Article 11 of the same law in the context of the constitutional justice case at issue, it needs to be held that the established legal regulation also means that the Government, while deciding the issues of founding the national investor and of increasing the authorised capital, is authorised: to negotiate with the shareholder of the controlling block of shares in the joint-stock company “VST” on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company “VST”, or part thereof amounting to more than 2/3 of the shares of the joint-stock company “VST” carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor; to participate in establishing the joint-stock company, the authorised capital whereof during the establishment would be built of cash; upon establishing the joint-stock company, to invest into the authorised capital whereof the shares owned by the state in the joint-stock company “Lietuvos energija” and in the joint-stock company Rytų skirstomieji tinklai. As regards these issues, the Government is authorised to adopt corresponding decisions and conclude respective transactions.

3. In the constitutional justice case at issue it needs to be mentioned that Article 19 of the Law on the Nuclear Power Plant (wording of 28 June 2007) provides that when implementing the provisions of Chapter Four (which, inter alia, provides for the establishment of the national investor) of this law, the provisions of the Law on the Privatisation of State-owned and Municipal Property shall not apply.

4. As the Constitutional Court has held in this ruling:

protection of constitutional fair competition is the main way to ensure the harmony between the interests of a person and the interests of the state while regulating economic activity, to create self-regulation of economy as a system which would encourage distribution of economic resources in an optimal manner, using them efficiently, increasing economic growth and improving the welfare of consumers;

in itself, freedom of economic activity of an individual does not guarantee competition, therefore, the state must protect fair competition; the constitutional guarantee of protection of fair competition obliges the institutions of the state power and municipal institutions to ensure freedom of fair competition by legal means;

under the Constitution, the state, while regulating the economic activity, must ensure that state property be managed in the manner so that such management would not be in conflict with the requirement to regulate economic activity so that it serves the general welfare of the Nation which is entrenched in Paragraph 3 of Article 46 of the Constitution;

the state property is not an end in itself, but it should provide benefits to society and should be treasured, subjected to no waste, and managed rationally; laws should protect the rights of ownership of all owners, including the state as the organisation of the entire society;

under the Constitution, no such legal regulation is permissible whereby the property under the ownership of the state is possessed, used, and disposed of in such a way that the interest or needs of only one social group or individual persons were satisfied and this property did not serve the public interest, the needs of society or the welfare of the Nation (which may not be understood only in the material and financial sense);

these constitutional imperatives should also be applied in the situations of the investment of state property;

while regulating the relations of investment of the state property, the legislature must establish such legal regulation that one would not violate the imperative of fair competition which stems from Paragraph 4 of Article 46 of the Constitution or that no preconditions would be created to abuse while investing the state property and administering the invested state property;

the investment of the state property must be grounded on a law, which must establish the criteria, conditions as well as subjects of investment which have the right to adopt decisions regarding the investment of the state property;

establishment of the criteria of investment of the state property is not an end in itself—such criteria must be established which would ensure the public interest and the observance of the imperatives which stem from the Constitution, inter alia, Paragraph 2 of Article 128 thereof; under Paragraph 2 of Article 128 of the Constitution, the duty arises for the legislature to establish such criteria of investment of the state property which would permit, inter alia, differentiating the investment of the state property by taking account of the particularity of the invested property and its significance for the general welfare of the Nation, as well as of other constitutionally important circumstances;

the fact that the criteria, conditions as well as subjects of investment which have the right to adopt decisions regarding the investment of the state property must be established only by means of a law does not mean that the Government and other law-making subjects, under their competence, may not regulate the relations of the state property also by means of substatutory legal acts (for example, to establish the procedure and proceedings of the investment of the state property) which are grounded on the law and do not compete with it;

the legislature may establish various ways of investment of the state property; the Constitution also does not prohibit establishing such way of the investment of the state property, when state property is invested together with other persons (person), inter alia, with a private person; when choosing the ways of investment of the state property, the state must take account of the fact, whether upon choosing a certain way, the important and constitutionally grounded needs and interests of society will be satisfied; the investment of the state property would be constitutionally unjustifiable, if by such investment one would obviously harm society or if the rights of other persons would be violated.

5. While deciding whether the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant with Paragraph 1 of Article 29 and Paragraph 4 of Article 46 of the Constitution, one has to elucidate first of all whether the fact that the state chose the way of investment where in the course of founding the national investor the state property is invested jointly with one private person, which is indicated in the law, i.e. with the shareholder having the controlling stake of shares in the joint-stock company “VST”.

6. In this context, first of all one has to take account of the aim of founding the national investor.

6.1. It has been mentioned that the aim of the Law on the Nuclear Power Plant and the strategic aim of Lithuania in the area of electricity imply also corresponding aims of founding the national investor, which in their turn determine the aims of the activity of the national investor.

6.2. It has also been mentioned that the aim of the national investor, inter alia, is: to fund the project (part thereof) of the new nuclear power plant or to secure such funding; also to participate in implementation of the project of building a new nuclear power plant in Lithuania, in constructing the interconnection of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden; to integrate, in a complex manner, the electricity system of the Republic of Lithuania into the electricity transmission systems and internal electricity markets of states of the European Union; to efficiently implement the main task of the electricity system of the Republic of Lithuania—within unlimited period, independently, safely and securely to supply Lithuanian electricity consumers with electricity.

6.3. Thus, in the course of founding the national investor by the state, where state property was invested jointly with the property of a private person, it was necessary to choose such a private person so that the implementation of the said aim would be secured.

6.4. Attention should be drawn to the fact that, as it is obvious from the aims of founding the national investor, these aims are inseparable from the area of electricity.

6.5. In this context it needs to be noted that, as mentioned before, the joint-stock company “VST” is a specific economic subject which operates in the area of electricity—the joint-stock company “VST” is a big electricity company of this country. It was privatised in 2003 and it possesses one of the biggest distribution networks in this country, i.e. it is the operator of the main electricity distribution network of the western part of this country; not counting the joint-stock company Rytų skirstomieji tinklai, the joint-stock company “VST” is the only economic subject in Lithuania, which has a big market of electricity consumers and which constantly generates big flows of money in the area of electricity.

6.6. It needs to be noted that the joint-stock company “VST” is one of the electricity companies the activity of which in the capacity as operators of distribution networks is related with the activity of the joint-stock company “Lietuvos energija”, the operator of the transmission system. These joint-stock companies together with the joint-stock company Rytų skirstomieji tinklai are enterprises of the national investor group of enterprises.

In this context, it needs to be noted that, as mentioned in this ruling of the Constitutional Court:

until the privatisation of the joint-stock company “VST”, which took place in 2003, the said company had been a constituent part of the electricity system, and it continued to be a part of this system after the privatisation;

the Law on the Nuclear Power Plant attempted to create, inter alia, financial preconditions for implementation of the project of the new nuclear power plant. It was also mentioned that the joint-stock company “VST” conducts such activity in the area of electricity, which constantly generates big flows of money in the area of electricity;

by its Resolution (No. 332) “On Dividends of the Joint-Stock Company ‘Lietuvos energija’ and Those of the Joint-Stock Company Rytų skirstomieji tinklai” of 15 April 2008, the Government commissioned “the Ministry of Economy as the manager of the shares (which belong to the state by right of ownership) of the joint-stock company ‘Lietuvos energija’ and the joint-stock company Rytų skirstomieji tinklai to adopt decisions not to allot the distributable the year 2007 profits of these companies for dividends”. As mentioned before, the closed-type joint-stock company “NDX energija”—the shareholder of the controlling block of shares in the joint-stock company “VST”—also adopted the same decision.

7. While assessing the impugned legal regulation in the aspect specified by the petitioner, heed should be paid to the intentions of the Government, which submitted the draft Law on the Nuclear Power Plant, and those of the legislature, which are recorded in the travaux préparatoires, from which it is clear that the holder of the controlling block of shares of the joint-stock company “VST” is provided for in the Law on the Nuclear Power Plant precisely because of the fact that the aim to legally establish and to form the national investor implies that it was necessary to consolidate the management of the main electricity companies (the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST”) of this country, which would continue to operate as separate legal persons. The joint-stock company “VST” is a big electricity company of this country. It was privatised in 2003 and possesses one of the biggest distribution networks in this country, i.e. it is the operator of the main electricity distribution network of the western part of this country; not counting the joint-stock company Rytų skirstomieji tinklai, the joint-stock company “VST” is the only economic subject in Lithuania, which has a big market of electricity consumers and which constantly generates big flows of money in the area of electricity.

8. While deciding whether Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant to the extent specified by the petitioner is not in conflict with the Constitution, it is necessary to elucidate also the fact whether in the course of choosing the model of the national investor, inter alia, when choosing the joint-stock company “VST” as one of the participants of the enterprises of the group of the national investor, an assessment was made whether such model of the national investor would create preconditions in reality to implement the said aim of the national investor.

8.1. In this context, it needs to be noted that until the preparation of the draft Law on the Nuclear Power Plant the conception of a draft law on building the new nuclear power plant and the conception of founding the Lithuanian national investor company (which will participate in implementing the project of the new nuclear power plant) were prepared. As mentioned before, these conceptions were prepared by a working group for drafting essential provisions of the conception of a draft law on building the new nuclear power plant formed by the Ordinance of the Prime Minister (No. 4) “On Forming a Working Group” of 5 January 2007, and a working group for drafting essential provisions of the conception of founding the Lithuanian national investor company (which will participate in implementation of the project of the new nuclear power plant), which was formed by the Ordinance of the Prime Minister (No. 62) “On Forming a Working Group” of 19 February 2007. The second working group was composed of six persons, out of whom two were representatives of private legal persons, one of them was a representative of the closed-type joint-stock company “NDX energija”, and the other was a representative of the joint-stock company “Lietuvos energija”. The said working group proposed that the Lithuanian national investor company be founded on the basis of the joint-stock company “Lietuvos energija”, by increasing the authorised capital of this company and by paying by means of non-monetary contributions—shares of the joint-stock company Rytų skirstomieji tinklai and of the joint-stock company “VST”—for this increase.

8.2. It has also been mentioned that an independent expert—the company “Deloitte Lietuva” UAB—presented a legal and economic assessment of the provisions of the Republic of Lithuania’s Draft Law on the Nuclear Power Plant (No. XP-2144) regarding the national investor, and, while assessing the alternatives of formation of the national investor from the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST”, the said expert pointed out that “in the stage of the national investor the incorporation of other economic subjects would be inefficient and not expedient”, since this virtually would not change the rights of the economic subjects “in running the national investor, however, it might create additional difficulties related with co-ordination of legal and economic conditions for formation of the national investor capital with a lot of persons at the same time. The joining of the processes of forming (creation) of the national investor and of the investment of other economic subjects into the national investor would be unreasonable from the economic point of view (since investment would be made into a subject, which has not been created yet) and from the organisational point of view (due to the organisational complexity of the process)”; the national investor will be financially able to receive borrowed funds and to generate flows of money, which, if added together, might be a sufficient source of funds to finance the project; the national investor will have realistic financial possibilities of funding the project both by its own and borrowed funds also when state guarantees are not granted to the received loans.

It also needs to be mentioned that the assessment of the company “Deloitte Lietuva” UAB submitted a number of examples of joint partnership of the state and private capital in big investment projects in the main energy companies of European countries.

Thus, according to the assessment of the company “Deloitte Lietuva” UAB, the chosen alternative is the best from the standpoint of the considered criteria of retaining the state control and the financial capability of the national investor to secure the funding of the project.

8.3. It needs to be noted that in the course of the implementation of the provision “when newly issued shares of the joint-stock company ‘Lietuvos energija’ are paid for by non-monetary contribution, the shares of the joint-stock company ‘Lietuvos energija’, the joint-stock company Rytų skirstomieji tinklai and the joint-stock company ‘VST’, respectively, must be evaluated by an independent property assessor in accordance with the procedure laid down by means of legal acts, as well as an opinion on the valuation of shares must be received from a financial institution having the long-term borrowing rating not lower than ‘A-’ according to the rating assigned by the international rating agency Fitch Ratings, or ‘A3’ according to the rating assigned by the international rating agency Moody’s, or ‘A-’ according to the rating assigned by the international rating agency Standard & Poor’s” of Paragraph 4 of Article 11 of the Law on the Nuclear Power Plant (wording of 28 June 2007), the assessment of the national investor group of companies, which are the joint-stock companies “Lietuvos energija”, Rytų skirstomieji tinklai, and “VST” was performed by “KPMG Baltics” UAB and “HSBC Bank plc”.

9. It also needs to be noted that, as mentioned before, the Seimas as the institution of legislative power and the Government as an institution of executive power enjoy very broad discretion to form and execute the economic policy of the state. The Constitutional Court has construed that “the assessment of the content, measures and methods of the state economic policy (inter alia, priorities) (no matter who assesses them), also with regard to their reasonableness and expediency, even if it turns out later that there were better alternatives for choosing its economic policies (thus, also that the formerly formed and executed economic policy could be assessed negatively with regard to its reasonableness and expediency) in itself cannot be the reason to question the compliance of the legal regulation of the economic activity conforming to the economic policy (formed and executed before) with the legislation of higher legal force, inter alia, with the Constitution (also with regard to constitutional justice cases initiated at the Constitutional Court), unless the said legal regulation is clearly in conflict with the general welfare of the Nation, with the interests of society and the State of Lithuania, or unless it denies the values entrenched in and defended as well as protected by the Constitution” (the Constitutional Court’s rulings of 31 May 2006, 26 September 2006, and 21 December 2006, as well as its decision of 13 November 2007).

10. It has been mentioned in this ruling of the Constitutional Court that:

under Article 1 of Protocol No. 4 “On the Ignalina Nuclear Power Plant in Lithuania” of the Act Concerning the Conditions of Accession of Lithuania to the European Union, Lithuania committed to the closure of Unit 1 of the Ignalina Nuclear Power Plant before 2005 and of Unit 2 of this plant by 31 December 2009 at the latest and to the subsequent decommissioning of these units;

by its Resolution “On Approving the National Energy Strategy” of 18 January 2007, the Seimas approved the National Energy Strategy, which stipulates, inter alia, that the shutdown of the Ignalina Nuclear Power Plant in 2009 is among the main factors which exert influence on stable energy activity in Lithuania, which will have a big negative impact on the structure of the sources of electricity, the primary energy balance and electricity price in 2010–2015;

by Item 3.1 of the Resolution (No. 1426) “On Assenting to the Results of the Negotiations for Founding the National Investor and Submitting the Republic of Lithuania’s Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant and on Assenting to the Results of the Negotiations for Founding the National Investor” of 27 December 2007, the Government requested that the Seimas consider the Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant under an urgent procedure; in the 1 February 2008 sitting, the Seimas decided to consider the Draft Law on Amending Articles 10 and 11 of the Law on the Nuclear Power Plant under an urgent procedure and, on the same day, the said law was adopted.

11. Taking account of the circumstances set forth it needs to be held that there are not any legal grounds for asserting that in the course of choosing a model of the national investor and entrenching it in the Law on the Nuclear Power Plant one did not take sufficient measures in order to ascertain whether such national investor would be capable of fulfilling the objectives raised to this investor by the Law on the Nuclear Power Plant.

12. Such legal regulation entrenched in Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant, which establishes a concrete case of the investment of state property into the established private legal person (national investor) and one economic subject (the shareholder holding the controlling block of shares in the joint-stock company “VST”) with which the Government is entitled to negotiate on founding the said private legal person cannot be interpreted as meaning an exception to the general legal regulation, since, under the Law on State Property, which regulates, inter alia, the issues of state property investment, does not prohibit investing state property in the manner established in the Law on the Nuclear Power Plant.

13. Thus, taking account of the said circumstances, it needs to be held that there are not sufficient grounds for asserting that the legal regulation established in Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant whereby the Government is granted the right to negotiate with the shareholder of the controlling block of shares in the joint-stock company “VST” on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company “VST”, or part thereof amounting to more than 2/3 of the shares of the joint-stock company “VST” carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor, created preconditions for either inflicting damage on society or violating the rights of other persons.

14. As mentioned before, the legislature may establish various ways of investment of the state property; the Constitution also does not prohibit establishing such way of the investment of state property, when state property is invested together with other persons (person), inter alia, with a private person; when choosing the ways of investment of the state property, the state must take account of the fact whether upon choosing a certain way, the important and constitutionally grounded needs and interests of society will be satisfied; the investment of the state property would be constitutionally unjustifiable, if by such investment one would obviously harm society or if the rights of other persons would be violated.

15. Thus, there are not any legal arguments which would permit asserting that the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant is not in line with the imperatives arising from Paragraph 4 of Article 46 of the Constitution.

16. Taking account of this, the conclusion should be drawn that the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant is not in conflict with Paragraph 4 of Article 46 of the Constitution.

17. While deciding whether the impugned provision of Item 1 of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant is not in conflict with Paragraph 1 of Article 29 of the Constitution, it needs to be noted that, as mentioned before, the joint-stock company “VST” is a specific economic subject which operates in the area of electricity—the joint-stock company “VST” is a big electricity company of this country. It was privatised in 2003 and possesses one of the biggest distribution networks in this country, i.e. it is the operator of the main electricity distribution network of the western part of this country; not counting the joint-stock company Rytų skirstomieji tinklai, the joint-stock company “VST” is the only economic subject in Lithuania, which has a big market of electricity consumers and which constantly generates big flows of money in the area of electricity. It was also mentioned that when the national investor was being formed under the Law on the Nuclear Power Plant, one chose the shareholder holding the controlling block of shares in the joint-stock company “VST” in order to implement the aims raised to this investor by the Law on the Nuclear Power Plant.

18. It has been held in this ruling of the Constitutional Court that the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant is not in conflict with Paragraph 4 of Article 46 of the Constitution.

Taking account of this, it should also be held that the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: 1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant is not in conflict with Paragraph 1 of Article 29 of the Constitution.

19. Alongside, it needs to be noted that when the said relations (inter alia, the relations linked with formation of the national investor) are regulated by means of legal acts, the expediency considerations would sometimes overshadow the legal imperatives, including those arising from the Constitution. For instance, the Ordinance of the Prime Minister (No. 62) “On Forming a Working Group” of 19 February 2007 included representatives of the closed-type joint-stock company “NDX energija” and of the joint-stock company “Lietuvos energija” in the working group for drafting essential provisions of the conception of founding the Lithuanian national investor company (which will participate in implementation of the project of the new nuclear power plant). The closed-type joint-stock company “NDX energija” subsequently participated in founding the national investor, while the joint-stock company “Lietuvos energija” became one of the enterprises of the national investor group of enterprises. Such legal regulation of the relations is lacking the constitutional grounds, however, the said ordinance of the Prime Minister is not a matter of investigation in the constitutional justice case at issue.

20. In the context of the constitutional justice case at issue it needs to be noted that the legislature, having entrenched a respective model of the national investor so that the legal, financial and organisational preconditions would be created for the strategic aim of Lithuania to integrate, in a complex manner, the electricity system of the Republic of Lithuania into the electricity transmission systems and internal electricity markets of European states, alongside had to provide such regulation of the activity of the national investor after it has been founded, which would secure the creation of the said preconditions.

It has been mentioned that the Law on the Nuclear Plant created the preconditions for forming such a model of the national investor in which the national electricity company, which is newly founded on the basis of state and private capital, comprises, together with the existing companies, a group of companies of the national investor, which is composed of the parent company—the national investor—and subsidiaries (inter alia, the joint-stock company “Lietuvos energija”, which is the operator of the transmission system, and the joint-stock companies Rytų skirstomieji tinklai and “VST”, which are operators of distribution networks), which, as separate legal persons conduct separated activities of electricity generation, transmission, distribution, supply, the activity of the market operator, and other activities under procedure established by means of legal acts. Such legal regulation created the preconditions for consolidating the management of the group of companies of the national investor in the newly founded national electricity company (the national investor).

Thus, the essential importance in deciding on whether the legal regulation established in the law secured the legal, financial and organisational preconditions for implementing the aim of the law—to create financial preconditions for construction of the new nuclear power plant—is determined by the fact how, under the Law on the Nuclear Power Plant, the management of the national investor is organised and whether the legal regulation establishing such management is sufficient in order to create the said financial preconditions. The management of the national investor is regulated by Article 8 (wording of 1 February 2008) titled “Management” of the Law on the Nuclear Power Plant wherein it is prescribed:

1. The rights attached to the shares owned by the State in the national investor company shall be exercised in accordance with the procedure established by the Government of the Republic of Lithuania. The manager of the State shares or persons authorised by the manager shall exercise the property and non-property rights of the State as a shareholder in the national investor company in accordance with the said procedure. The manager of the State shares or persons authorised by the manager may vote in the bodies of the national investor company on the agreement of shareholders in the project implementing company only pursuant to resolutions of the Government of the Republic of Lithuania, with the approval of the Seimas of the Republic of Lithuania to the material terms and conditions of this agreement.

2. The national investor shall own a block of at least 34 percent of shares in the project implementing company carrying at least 34 percent of votes at the general shareholders’ meeting of the project implementing company.

3. The Government of the Republic of Lithuania and the national investor, managing the main part of the Lithuanian power system through its subsidiaries, shall implement the strategic goal of Lithuania, namely, integrate in a complex manner the power system of the Republic of Lithuania into the power transmission systems of the states of the European Union and internal power markets.

4. Implementing the strategic goal provided for in Paragraph 3 of this Article, the Government of the Republic of Lithuania and the state institutions, taking resolutions and decisions and concluding agreements, as well as the managers of state shares, taking decisions, concluding agreements and exercising the rights of shareholders in the company of the national investor or successor to its rights, owned by the State, also in the subsidiaries established by these companies, shall ensure that:

1) in seeking to attain the goal of its activity (gaining benefits for itself and all its shareholders in a socially responsible manner), the national investor would effectively implement the principal task of the power system of the Republic of Lithuania—to provide Lithuanian consumers with power for an unlimited period of time in an independent, safe and reliable manner;

2) the activity of the national investor and its subsidiaries would be organised in such a manner that it would comply with the requirements of legal acts of the Republic of Lithuania and the European Union and the best business practice of electricity companies of the European Union member states;

3) the strategic objects provided for in the National Energy Strategy—the new nuclear power plant, power transmission interconnections to the Republic of Poland and the Kingdom of Sweden, ensuring efficient power exchanges of the required volume between the power system of the Republic of Lithuania and the systems belonging to the Union for the Coordination of Transmission of Electricity (UCTE) as well as to the Organisation for the Nordic System Operators (NORDEL)—would be constructed without delay;

4) technical solutions and parameters of the new nuclear power plant and power transmission interconnections to the Kingdom of Sweden and the Republic of Poland would be chosen so that the majority of the power resources required from the nuclear power plant would be received from the European Union Member States and the conditions for the synchronous operation of the power system of the Republic of Lithuania with the UCTE system would be met;

5) the power system of the Republic of Lithuania would be prepared for prompt interconnection with the UCTE system for synchronous operation as soon as construction of power networks interconnections is completed, the technical measures are implemented and the actions required for Lithuania to join the UCTE are performed;

6) with the Lithuanian and foreign investors participating in the company capital for implementing the project of the new nuclear power plant, the vital interests of national security and the State of the Republic of Lithuania would be protected and, when selecting participants in the implementation of the project of the nuclear power plant, the criteria of the European and transatlantic integration would be applied.”

Paragraph 1 of this article which regulates the relations of the implementation of the rights (which are attached by the shares belonging to the state by rights of ownership) in the national investor company provides that the manager of the shares which belong to the state by right of ownership or persons authorised by the manager shall exercise the property and non-property rights of the state as a shareholder in accordance with the procedure established by the Government. This paragraph does not establish by what principles securing efficient representation of the state as a possessor of the shares in implementing the goal of the law—to create financial preconditions for constructing the new nuclear power plant—one should be guided in choosing the persons who represent the state shares in this company. Nor does it establish how the management should be organised (while implementing the property and non-property rights by shareholders of the national investor) so that monetary funds might be accumulated for the construction of the nuclear power plant.

It has been held in the constitutional justice case at issue that, while regulating the relations of investment of the state property, the legislature must establish such legal regulation that one would not violate the requirement to regulate economic activity so that it serves the general welfare of the Nation, which stems from Paragraph 3 of Article 46 of the Constitution, and that no preconditions would be created for abuse while managing the invested state property.

The said legal regulation is not sufficient so that financial preconditions would be created to implement the goal of the law—to create preconditions for the construction of the new nuclear power plant; thus, the requirement entrenched in Paragraph 3 of Article 46 of the Constitution to regulate economic activity so that it serves the general welfare of the Nation is deviated from.

Thus, taking account of the arguments set forth, the conclusion should be drawn that Paragraph 1 of Article 8 (wording of 28 June 2007) of the Law on the Nuclear Power Plant to the extent that it did not establish any legal regulation securing the implementation of the goal of the law, which is creation of preconditions for construction of the new nuclear power plant, is in conflict with Paragraph 3 of Article 46 of the Constitution.

21. As mentioned before, Paragraph 1 of Article 11 (wording of 1 February 2008) of the Law on the Nuclear Power Plant provides that after the national investor has been founded the state invests into the authorised capital thereof the shares of the aforesaid electricity companies which belong to the state by right of ownership. Thus, the legal regulation should be construed by taking account of the Law on State Property as well, which, inter alia, regulates the relations of the investment of state property.

21.1. In this context, the following provisions of the Law on State Property (wording of 23 May 2002 with subsequent amendments and/or supplements) should be mentioned:

state financial property shall be securities belonging to the state by right of ownership and the property rights arising from the securities (Item 3 of Paragraph 4 (wording of 18 July 2006) of Article 3);

the functions of the owner of state property shall be implemented by the Seimas and the Government under procedure established by means of laws and other legal acts (Paragraph 1 of Article 7 (wording of 18 July 2006));

state and municipal property must be possessed, used and disposed of while following these principles: benefit of society—this principle means that state and municipal property must be possessed, used and disposed of in a careful manner and seeking to secure the satisfaction of interests of society; efficiency—this principle means that decisions related with possession, use and disposal of state and municipal property must seek to gain maximum benefit to society; rationality—this principle means that state and municipal property must be treasured, not wasted, and managed in a rational manner; public law—this principle means that transactions regarding state and municipal property must be concluded only in cases and by ways established in legal acts regulating disposal of state and/or municipal property (Item 4 of Article 81 (wording of 18 July 2006));

– “the investment of state <…> property shall be a transfer of property, which belongs to the state <…> by right of ownership, as a contribution to <…> a public establishment, a joint-stock company or a closed-type joint-stock company by executing the property obligations undertaken by the founder in the founding agreement; <…> by increasing the authorised capital of <…> the joint-stock company provided the state <…> is a participant thereof” (Items 1 and 2 of Paragraph 1 (wording of 18 July 2006) of Article 19);

– “decisions regarding investment of property which belongs to the state by right of ownership shall be adopted by the Government. <…> Prior to adopting such a decision, it must be reasoned economically and socially. Decisions regarding the investment of state and municipal property shall be adopted by following the criteria and procedure established by the Government (Paragraph 2 (wording of 18 July 2006) of Article 19);

– “the state or a municipality may invest property by acquiring shares of the founded joint-stock company or the founded closed-type joint-stock company or those of the joint-stock company or the closed-type joint-stock company which increase their authorised capital, which grant the state or the municipality (municipalities) (or to both of them) more than 50 percent of votes in the general meeting of shareholders” (Paragraph 4 (wording of 27 May 2003) of Article 19).

21.2. In this context it needs to be noted that Paragraph 3 (wording of 27 May 2003) of Article 19 of the Law on State Property provides: “State or municipal property may not be invested in order to acquire an enterprise or securities from natural and private legal persons, as well as to found a private legal person, save in the cases established by this and other laws.”

21.3. Summing up the aforementioned provisions of the Law on State Property, in the context of the constitutional justice case at issue, the conclusion should be drawn that this law establishes the cases of the investment of state property, when investment is made into a private legal person at the time of foundation thereof and when investment is made into the founded company, which is increasing the authorised capital thereof. While making the investment, the state must be guided the principles of benefit of society, efficiency, rationality and public law, and has to follow certain requirements, inter alia, to present an advance economic and social reasoning for investment of state property, to secure that the state be a participant in the companies into which the investment is made and that the state have not less than 50 percent of votes in the general meeting of the shareholders of those companies, into which the investment is made, and follow the criteria of state property investment established by the Government.

Under the said law, the cases when state property is invested by founding a private legal person may also be established in other laws, thus, in the Law on the Nuclear Power as well.

It also needs to be noted that Article 19 (which is designed to regulate the relations of investment of state and municipal property) of the Law on State Property does not establish any criteria of the investment of state property, which would allow differentiating the investment of state property by taking account, inter alia, of the specific character and significance of the invested property for the general welfare of the Nation, as well as by taking account of other important circumstances.

22. The Description for the Criteria for Adopting the Decision to Invest State and Municipal Property and of the Procedure for Adopting Decisions, which was approved by the Government Resolution (No. 758) “On Approving the Description for the Criteria for Adopting the Decision to Invest State and Municipal Property and of the Procedure for Adopting Decisions” of 4 July 2007, inter alia, provides:

– “by means of the criteria of a decision to invest state <…> property (hereinafter referred to as the investment criteria) one seeks to establish the economic and social reasoning for transfer of the property, which belongs to the state <…> by right of ownership, as a contribution” (Item 5);

while investing state and municipal property, not less than two criteria must be satisfied from among these investment criteria (Item 6): upon making the investment the international obligations of the state will be fulfilled (Subitem 6.1); the investment will implement the goals of the policies pursued by the state and municipalities (Subitem 6.2); the aim of the investment and the result sought are established in legal acts (Subitem 6.3); the investment of state and/or municipal property (a contribution by the state or the municipality) will create value added (Subitem 6.4); benefits (income) will be received from the investment object, a social result (in the areas of education, culture, science, healthcare and social security, as well as in similar areas) will be received or performance of functions of the state or the municipality which are established in laws and Government resolutions will be secured (Subitem 6.5); there is a need of society to make investment, and, upon making investment, there will be benefits for society (Subitem 6.6); upon making investment, a more efficient activity of state institutions and establishments will be secured (Subitem 6.7).

While construing this legal regulation, which is established in the aforesaid Government resolution, it needs to be noted that when investing state property it is sufficient that at least two of the seven listed criteria be satisfied.

23. As mentioned before, Article 19 of the Law on State Property does not establish any criteria of the investment of state property, which would permit differentiating the investment of state property by taking account, inter alia, of the specific character and significance of the invested property for the general welfare of the Nation, as well as by taking account of other important circumstances.

Thus, under Paragraph 2 of Article 128 of the Constitution, the duty arises to the legislature to establish, precisely in Article 19 (which is designed to regulate the relations of investment of state and municipal property) of the Law on State Property, such criteria of state property investment, which would permit, inter alia, differentiating the investment of state property by taking account of the specific character and significance of the invested property for the general welfare of the Nation, as well as by taking account of other important circumstances.

In this context it needs to be noted that, as it has been noted more than once, the Constitutional Court, having established that the provisions of a law the compliance with the Constitution of which is not impugned by the petitioner but by which the social relations regulated by the impugned law are interfered with conflict with the Constitution, must state so.

Taking account of the arguments set forth, the conclusion should be drawn that Article 19 of the Law on the Possession, Use and Disposal of State and Municipal Property does not establish any criteria of the investment of state property, which would permit, inter alia, differentiating the investment of state property by taking account of the specific character and significance of the invested property for the general welfare of the Nation, as well as by taking account of other important circumstances, is in conflict with Paragraph 2 of Article 128 of the Constitution.

24. As mentioned before, Paragraph 2 of Article 19 of the Law on State Property entrenches the provision “Decisions regarding the investment of state and municipal property shall be adopted by following the criteria and procedure established by the Government”.

It has been mentioned that, under the Constitution, the criteria regarding the investment of state property must be established only by means of a law; that if the legal regulation is established whereby the powers of the state institutions specified in Paragraph 1 of Article 5 of the Constitution or those of any other state institution are broadened in a constitutionally unreasonable manner, it should be held that the provision “the scope of power shall be limited by the Constitution” of Paragraph 2 of Article 5 of the Constitution is violated; the constitutional principle of the separation of powers and the constitutional principle of a state under the rule of law, which are entrenched, inter alia, in Paragraph 2 of Article 5 of the Constitution, mean that after the powers to a concrete institution of state power have been directly established in the Constitution, no institution of state power may either take over or transfer or refuse such powers; and that such powers may neither be changed nor restricted by law, while the Seimas does not have the right to commission the Government or any other institution to implement the constitutional competence of the Seimas.

Therefore, the conclusion should be drawn that the provision “Decisions regarding the investment of state and municipal property shall be adopted by following the criteria and procedure established by the Government” of Paragraph 2 (wording of 18 July 2006) of Article 19 of the Law on the Possession, Use and Disposal of State and Municipal Property to the extent that the Government is commissioned to establish the criteria for investment of state and municipal property is in conflict with Paragraph 2 of Article 5 of the Constitution and the constitutional principle of a state under the rule of law.

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 gives the following

ruling:

1. To recognise that Paragraph 1 of Article 8 (wording of 28 June 2007; Official Gazette Valstybės žinios, 2007, No. 76-3004) of the Republic of Lithuania’s Law on the Nuclear Power Plant to the extent that it did not establish any legal regulation securing the implementation of the goal of the law, which is creation of preconditions for construction of the new nuclear power plant, is in conflict with Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania.

2. To recognise that the provision “The national investor shall be an independent private legal subject registered in the Republic of Lithuania, established for an indefinite period of time and operating under the laws of the Republic of Lithuania, the aim of whose activity shall be gaining benefits for itself and all its shareholders in a socially responsible manner” of Paragraph 1 (wording of 1 February 2008; Official Gazette Valstybės žinios, 2008, No. 19-674) of Article 10 of the Republic of Lithuania’s Law on the Nuclear Power Plant in the aspect that the aim of the national investor is gaining benefits for itself and all its shareholders in a socially responsible manner and that protection of consumer rights are not legislatively established therein is not in conflict with the Constitution of the Republic of Lithuania.

3. To recognise that the provision “The national investor shall be the national power company managing through its subsidiaries the main part of the Lithuanian power system—the electricity transmission and distribution networks. Seeking to attain the goal of its activity, the national investor shall participate, on the basis of private initiative, in implementing in Lithuania the project of construction of a new nuclear power plant, as well as constructing, according to the procedure established by the Law on Electricity and other legal acts, the interconnections of the power system of the Republic of Lithuania with the power systems of the Republic of Poland and the Kingdom of Sweden” of Paragraph 1 (wording of 1 February 2008; Official Gazette Valstybės žinios, 2008, No. 19-674) of Article 10 of the Law on the Nuclear Power Plant is not in conflict with the Constitution of the Republic of Lithuania.

4. To recognise that the provision “the Government of the Republic of Lithuania implementing the provisions of Article 10 of this Law shall have the right to: (1) negotiate with the shareholder of the controlling block of shares in the joint-stock company ‘VST’ on the establishment of the national investor and on the investment of all the shares owned by that shareholder in the joint-stock company ‘VST’, or part thereof amounting to more than 2/3 of the shares of the joint-stock company ‘VST’ carrying more than 2/3 of votes at the general shareholders’ meeting, as well as on the acquisition of newly issued shares of the national investor <…>” of Paragraph 1 of Article 11 (wording of 1 February 2008; Official Gazette Valstybės žinios, 2008, No. 19-674) of the Republic of Lithuania’s Law on the Nuclear Power Plant is not in conflict with the Constitution of the Republic of Lithuania.

5. To recognise that Article 19 (Official Gazette Valstybės žinios, 2003, No. 57-2534; 2006, No. 87-3397; 2008, No. 19-673) of the Republic of Lithuania’s Law on the Possession, Use and Disposal of State and Municipal Property to the extent that it does not establish any criteria of the investment of state property, which would allow, inter alia, differentiating the investment of state property by taking account of the specific character and significance of the invested property for the general welfare of the Nation, as well as by taking account of other important circumstances, is in conflict with Paragraph 2 of Article 128 of the Constitution of the Republic of Lithuania.

6. To recognise that the provision “Decisions regarding the investment of state and municipal property shall be adopted by following the criteria and procedure established by the Government” of Paragraph 2 (wording of 18 July 2006; Official Gazette Valstybės žinios, 2006, No. 87-3397) of Article 19 of the Republic of Lithuania’s Law on the Possession, Use and Disposal of State and Municipal Property to the extent that the Government is commissioned to establish the criteria for investment of state and municipal property is in conflict with Paragraph 2 of Article 5 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

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: Armanas Abramavičius
                                                                      Toma Birmontienė
                                                                      Pranas Kuconis
                                                                      Kęstutis Lapinskas
                                                                      Zenonas Namavičius
                                                                      Ramutė Ruškytė
                                                                      Egidijus Šileikis
                                                                      Algirdas Taminskas
                                                                      Romualdas Kęstutis Urbaitis