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On recovering a state loan

Case No. 38/06

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF PARAGRAPH 2 (WORDING OF 18 DECEMBER 2003) OF ARTICLE 9 OF THE REPUBLIC OF LITHUANIA’S LAW ON STATE DEBT WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

30 June 2008
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

Seimas member Raimundas Palaitis and Sigita Krutkevičienė, a senior advisor of the Legal Department of the Office of the Seimas, acting as the representatives 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 10 June 2008, considered constitutional justice case No. 38/06 subsequent to the petition of the Vilnius Regional Administrative Court, the petitioner, requesting an investigation into whether the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Republic of Lithuania’s Law on State Debt is not in conflict with Paragraph 1 of Article 29, Paragraph 1 of Article 30 and Paragraphs 1 and 3 of Article 46 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

The Vilnius Regional Court, the petitioner, considered a civil case. By its ruling, the said court suspended the consideration of the case and applied to the Constitutional Court with the petition requesting an investigation into whether the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law on State Debt (hereinafter also referred to as the Law) is not in conflict with Paragraph 1 of Article 29, Paragraph 1 of Article 30 and Paragraphs 1 and 3 of Article 46 of the Constitution.

II

The petition of the petitioner is grounded on the following arguments.

1. Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law on State Debt consolidates the provision that the decisions of the Ministry of Finance regarding the recovery of the debt from the debtor, or from the debtor the fulfilment of obligations whereof is guaranteed by the state, shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure of the Republic of Lithuania (hereinafter also referred to as the CCP). In the opinion of the petitioner, when the Ministry of Finance adopts a decision to recover a debt “under non-judicial procedure”, the right of a person to apply to court is violated. Such provision, according to which the decision of the Ministry of Finance regarding the recovery of a debt from the debtor is executed under the execution procedure established in the CCP, is in conflict with Paragraph 1 of Article 30 of the Constitution.

2. While grounding its doubts regarding the compliance of the provision consolidated in Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law on State Debt with the principle of equality of all persons before the law, the court, and other state institutions or officials, and with Paragraph 3 of Article 46 of the Constitution, the petitioner refers to the official constitutional doctrine formulated in the Constitutional Court’s ruling of 28 February 1996: “The principle that all persons shall be equal before the law, the court, and other state institutions and officials is one of the primary principles which in its own turn is closely linked with the remaining constitutional principles and provisions. When interpreting the contents of the provision of Paragraph 1 of Article 29 of the Constitution, it is impossible not to consider the provision of Paragraph 3 of Article 46 of the Constitution which stipulates that the state shall regulate economic activity so that it serves the general welfare of the nation. The aforementioned provisions by determining each other form constitutional pre-conditions for passing laws which respond to the conditions of national economy, the diversity and change of economic and social life. <…> Assessing whether an established different legal regulation is a grounded one, particular legal circumstances must be taken into account. First of all differences of legal situation of subjects and objects to which different legal regulation is applied must be considered; secondly, one has to take into account the conformity of legal acts to their hierarchy, scope of regulation, etc.; thirdly, one must assess whether the legal norms that establish special conditions answer the purpose and aim of the legal act. The validity of individual legal norms may be convincing only in the case that all aforementioned circumstances were taken into account. Should at least one condition be ignored, doubts might arise concerning the compliance of a special legal norm with constitutional provisions.”

3. The petitioner did not submit any arguments regarding the incompliance of the provision consolidated in Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law on State Debt with Paragraph 1 of Article 46 of the Constitution.

III

In the course of preparation of the case for the Constitutional Court’s hearing, written explanations were received from the representatives of the Seimas, the party concerned, who was Seimas member R. Palaitis, chief specialist S. Krutkevičienė, and V. Račkauskienė, a senior advisor of the Legal Department of the Office of the Seimas, in which it is stated that the impugned provision of the Law is not in conflict with the Constitution. The position of the representatives of the Seimas, the party concerned, is based on the following arguments.

1. The legislature, seeking to implement the purposes of borrowing on behalf of the state and provision of state guarantees, also provided for the sanctions for the belated repayment of loan or debt and the corresponding legal means of the control over and returning of the lent funds. One of such means of control and financial supervision is the impugned provision of the Law on State Debt, permitting the Ministry of Finance to pass decisions regarding the recovery of debts from debtors, or from the debtors the fulfilment of obligations whereof is guaranteed by the state, to court bailiffs for execution in accordance with the procedure laid down by the CCP. In this case, the state, as one of the participants of financial legal relations, is provided with bigger powers and rights than other participants of these financial legal relations. This happens because of the fact that the state, which, in these relations, is represented by the competent institutions, must ensure not only the interests of single persons, but also the interests of the entire society. Therefore, “the legislature consolidated the application of non-judicial procedure while recovering the amounts of debts which are unpaid or paid not on time”. While consolidating the impugned legal regulation, the legislature implemented the provisions of Article 46 of the Constitution which grant to the state the right to regulate the economic activity so that it serves the general welfare of the Nation and that the interests of the members of society (including the consumers) are defended.

If the debtors do not return the loans to the state which were granted to them from the funds borrowed on behalf of the state, or if the debtors, the fulfilment of obligations whereof is guaranteed by the state, do not return the debt, the state must cover its obligations to the creditors from its own financial resources by correspondingly reducing the financing from the state budget to other spheres. Therefore, if the debtors do not fulfil their obligations to the state, the interests of the entire society are violated.

2. The debtor has the right to apply to court and to lodge a complaint against each decision on the recovery of debt adopted by the Ministry of Finance, if he thinks that such decision is groundless and unlawful.

IV

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from R. Šadžius, Vice-Minister of the Ministry of Finance of the Republic of Lithuania, and P. Koverovas, State Secretary of the Ministry of Justice of the Republic of Lithuania.

V

At the Constitutional Court’s hearing, the representatives of the Seimas, the party concerned, who were Seimas member R. Palaitis and S. Krutkevičienė, virtually reiterated the arguments set forth in their written explanations and presented additional explanations.

The Constitutional Court

holds that:

1. The Vilnius Regional Court, the petitioner, requests an investigation into whether the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law on State Debt is not in conflict with Paragraph 1 of Article 29, Paragraph 1 of Article 30 and Paragraphs 1 and 3 of Article 46 of the Constitution.

The Vilnius Regional Court, the petitioner, did not present the arguments which would ground the position that the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law may be in conflict with Paragraph 1 of Article 46 of the Constitution, therefore, it needs to be held that the petitioner does not impugn the compliance of this provision of the Law with Paragraph 1 of Article 46 of the Constitution.

2. On 22 August 1996, the Seimas adopted the Law on State Debt which came into force on 13 September 1996.

On 7 July 1999, the Seimas adopted the Republic of Lithuania’s Law on Amending the Law on State Debt, by Article 1 of which the Law on State Debt (wording of 22 August 1996 with subsequent amendments and supplements) was set forth in its new wording. The Law on State Debt with the new wording came into force on 30 July 1999.

When the Seimas adopted the Republic of Lithuania’s Law on Amending and Supplementing the Law on State Debt on 17 April 2001, which came into force on 9 May 2001, Paragraph 2 (wording of 17 April 2001) of Article 10 of the Law on State Debt, inter alia, consolidated such provision: “The decisions of the Ministry of Finance regarding the recovery of the debt from the debtor, or from the debtor the fulfilment of obligations whereof is guaranteed by the State, shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure of the Republic of Lithuania.”

2.1. By Article 1 of the Republic of Lithuania’s Law on Amending the Law on State Debt which was adopted by the Seimas on 18 December 2003, the Law on State Debt (wording of 7 July 1999 with subsequent amendments and supplements) was set forth in its new wording. The Law on State Debt with the new wording came into force on 7 January 2004.

2.2. Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law, in which, inter alia, the provision impugned by the petitioner is consolidated, established the following: “The Ministry of Finance shall have the right to recover a loan or debt or part thereof, which has not been returned on time, unpaid interest, late payment interest or other payments provided for in agreements as well as the expenses incurred by the State, from the debtor or the debtor the fulfilment of obligations whereof is guaranteed by the State, because of the non-fulfilment of property obligations by the debtor. Where the debtor, the fulfilment of obligations whereof is guaranteed by the State, defaults on contractual obligations, as a result whereof the State, as the guarantor, has to fulfil them, the Ministry of Finance shall acquire the right of recourse against the debtor the fulfilment of obligations whereof is guaranteed by the State to recover all the direct and indirect expenses linked to the fulfilment of the said obligations. Decisions of the Ministry of Finance regarding the recovery of the debt from the debtor, or from the debtor the fulfilment of obligations whereof is guaranteed by the State, shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure.”

2.3. By Article 1 of the Republic of Lithuania’s Law on Amending the Law on State Debt which was adopted by the Seimas on 16 June 2005, the Law on State Debt (wording of 18 December 2003) was set forth in its new wording. The Law on State Debt with the new wording came into force on 1 September 2005 (Article 2 of the Law on Amending the Law on State Debt). Paragraph 2 (wording of 16 June 2005) of Article 10 of the Law, inter alia, consolidates the provision: “Decisions of the Ministry of Finance regarding the recovery of the debt from the debtor, or from the debtor the fulfilment of obligations whereof is guaranteed by the State, shall be passed to bailiffs in accordance with the procedure laid down by the Code of Civil Procedure”.

2.4. It needs to be held that after the Law on State Debt was set forth in its new wording, Paragraph 2 (wording of 16 June 2005) of Article 10 thereof consolidated the provision which was virtually analogous to the provision (of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law) which is impugned by the petitioner. Paragraph 2 (wording of 16 June 2005) of Article 10 of the Law has not been amended or supplemented.

3. In this constitutional justice case, the petitioner impugns the compliance of the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law with Paragraph 1 of Article 29, Paragraph 1 of Article 30 and Paragraph 3 of Article 46 of the Constitution.

3.1. The provisions of all paragraphs of Article 46 of the Constitution, which consolidates the constitutional basis of the economic activity, are interrelated and supplement one another. The principles established therein are coordinated, there is a balance among them, and each of these constitutional principles must be construed without denying another constitutional principle (the Constitutional Court’s rulings of 6 October 1999, 17 March 2003, and 13 May 2005).

The provision of Paragraph 3 of Article 46 of the Constitution that the state shall regulate economic activity so that it serves the general welfare of the Nation implies the duty of the state as well as state institutions which exercise state power and other state institutions, while heeding the norms and principles of the Constitution and taking account of the situation of the national economy, the variety and changes in the economy and social life, to establish such legal regulation of the economic activity which would serve the general welfare of the Nation. The Constitutional Court has held in its acts more than once that Paragraph 3 of Article 46 of the Constitution consolidates the constitutional principle which outlines the directions, ways and boundaries of the regulation of economic activity. 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 the society.

The Constitution consolidates the obligation of the state to seek the general welfare of the Nation (the Constitutional Court’s ruling of 13 May 2005). The general welfare of the Nation is a rather general and broad criterion and in its application it is possible to invoke, inter alia, the arguments of expediency; the content of the notion “general welfare of the Nation” is revealed in each concrete case by taking account of economic, social and other important factors; by means of regulation of economic activity the state must seek the welfare of not individual persons but precisely the general welfare of the Nation; the general welfare of the Nation indicated in Paragraph 3 of Article 46 of the Constitution may neither substantiate nor justify any such regulation by which the rights and legitimate interests of a certain economic subject are limited more than necessary in order to ensure the public interest and to protect constitutional values (the Constitutional Court’s rulings of 13 February 1997, 6 October 1999, 18 October 2000, 9 April 2002, 26 January 2004, 13 May 2005, and 30 March 2006).

In the jurisprudence of the Constitutional Court it has been held that the implementation of the interest of society which is recognised by the state and is protected by law is one of the most important conditions of existence and evolution of society itself (the Constitutional Court’s rulings of 6 May 1997, 13 May 2005, and 21 September 2007). The public interest is dynamic and subject to change (the Constitutional Court’s rulings of 8 July 2005, 21 September 2006, and 15 May 2007), therefore, the state may, and in certain cases, must change (expand, abridge or correct otherwise) the regulation of the economic activity.

It needs to be emphasised that, under the Constitution, 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 (each within its competence) and to correspondingly regulate economic activities by means of legal acts, of course, by not violating the Constitution and laws, inter alia, by not exceeding the powers established in them to the said institutions of state power and by following the principles of a state under the rule of law, the separation of powers, responsible governance, the protection of legitimate expectations and the principles of legal clarity, certainty and security as entrenched in the Constitution, and the requirements of the due process of law which stem from the Constitution.

The regulation of economic activity is linked with the establishment of conditions for economic activity, the regulation of certain procedures, the control over economic activity, as well as with certain limitations and prohibitions on this activity (the Constitutional Court’s rulings of 13 May 2005 and 5 March 2008). The legal regulation of economic activity is not an end in itself; it is a means of social engineering and a way of seeking welfare for the Nation through law—it is a guideline for the legal regulation of economic activity (the Constitutional Court’s ruling of 13 May 2005).

3.2. While construing the legal regulation entrenched in Paragraph 2 of Article 46 of the Constitution, the Constitutional Court has held that the provision “the State shall support economic efforts and initiatives that are useful to the society” of this paragraph means that the Constitution provides for an opportunity of state institutions to assess areas of economic activity according to their use to society, that it is permitted to support certain areas of economic activity or certain economic efforts only upon such assessment, also that that such assessment of economic activity creates necessary preconditions for the state to regulate economic activity so that is serves the general welfare of the Nation (the Constitutional Court’s rulings of 13 February 1997 and 13 May 2005).

It needs to be noted that under the Constitution, while satisfying the public interest, the state may choose various forms of supporting economic efforts and initiatives. One of them may be the support provided by the state for economic subjects, inter alia, the state loan. The purpose of providing such support for economic subjects is to satisfy the public interest.

The state support for economic subjects is determined by various factors, inter alia, the economic situation of the state, the priorities of the development of state’s economy, the necessity to support certain social projects which are useful for the society while seeking for the general welfare of the Nation.

Under the Constitution, the state support provided to economic subjects, inter alia, a state loan, must be grounded on the law. The laws must establish, inter alia, the state institutions which have the right to adopt decisions regarding granting the loan, as well as the grounds of such provision of support. While regulating the support of economic efforts and initiative useful for society, as well as provision of the state loan, the legislature is bound by the requirements which stem from the Constitution, inter alia, the principles of responsible governance, transparency, lawfulness, equality of rights and fair competition.

While regulating the provision of the state support, inter alia, the state loan, to economic subjects, one may not establish any such legal regulation, whereby the economic subjects would be granted privileges or their initiative would be restricted.

In this context, account should be taken of the fact that, as the Constitutional Court held in its rulings of 30 September 2003, 8 July 2005, 5 July 2007, and 20 March 2008, it is not permitted to establish any such legal regulation, according to which, the property that belongs to the state by right of ownership would be possessed, used or disposed of in such a manner so that the interests or needs of only one social group or individual persons are satisfied and that this property does not serve the public interest, the need of society, and the welfare of the Nation.

The relations regarding the loan which emerge between the state and a person (an economic subject) must be based, inter alia, on the principle of freedom to make agreements, which should be assessed as a guarantee of the constitutional level. The freedom to make an agreement is, first of all, free expression of will of its parties in an attempt to make the agreement (the Constitutional Court’s ruling of 30 November 1996). It is the right of the parties to independently decide the questions of the content of an agreement by not violating the requirements which stem from the Constitution, the corresponding provisions of the laws which are not in conflict with the Constitution and by not restricting the rights and freedoms of other persons.

It also needs to be noted that a person (an economic subject), while making use of the support of the state, inter alia, the state loan, must follow the assumed obligations by not abusing law; one must ensure the control over a proper use of such support and its returning in time.

In the context of the constitutional justice case at issue, it needs to be noted that in those cases, when a person (an economic subject), after having received the state loan, does not fulfil the obligations which stem from the agreement and laws, one must establish the means for ensuring the fulfilment of such obligations, inter alia, the returning of the loan (and the expenses of the state linked to that loan). One of them may be execution of the decision of the state institution established by the legislature regarding the recovery of the state loan (and the expenses of the state linked to that loan). Peculiarities of the execution of the decision regarding the recovery of the state loan (and the expenses of the state linked to that loan) must be established by means of a law. It needs to be noted that in general, no prohibition stems from the Constitution against establishing any such legal regulation whereby the execution procedure would be instituted not only on the grounds of court decisions, but also on the grounds of decisions of other state institutions (officials) provided for in laws. By regulating the execution procedure by means of a law, one must seek its expedition, efficiency, and no preconditions should be created for procrastination of execution of decisions and abuse of law. In all cases when the legislature establishes the peculiarities of execution of the decision regarding the recovery of the state loan (and the expenses of the state linked to that loan), one must not deny the right of a person to apply to court regarding the defence of violated (in his opinion) rights, and one must not deny the constitutional purpose of the court to administer justice. In order to ensure the lawfulness of the execution procedure, one must consolidate an effective judicial control over the execution procedure (there may be various forms of such control), by exercising which the court could decide all the questions (disputes) arising during the execution procedure. The main purpose of such control is to ensure the lawfulness, efficiency of the execution procedure and the defence of violated rights of a person.

When regulating the execution of the decision regarding the recovery of the state loan (and the expenses of the state linked to that loan), the legislature must heed the imperatives which stem from the Constitution, inter alia, the provisions of Articles 29 and 30 of the Constitution.

3.3. Paragraph 1 of Article 30 of the Constitution provides: “The person whose constitutional rights or freedoms are violated shall have the right to apply to court”. In its rulings, the Constitutional Court has held more than once that the right to apply to court is absolute and it is not permitted either to restrict or deny it; under the Constitution, the legislature has the duty to establish such legal regulation, whereby all disputes regarding violation of rights or freedoms of a person could be decided in court; the rights of the person must be protected not formally, but in reality and in an effective manner against unlawful actions of private persons as well as against those of state institutions or officials. The right to apply to court also implies, inter alia, the requirements of the due process of law which is one of the essential elements of the constitutional principle of a state under the rule of law.

In the context of the constitutional justice case at issue, it needs to be noted that the right of a person, who thinks that his rights are violated, to apply to court also includes the right of a person (an economic subject) who received the state loan, to appeal to court against a decision of the state institution established by the legislature regarding the recovery of the state loan (and the expenses of the state linked to that loan) and the execution of such decision.

3.4. Paragraph 1 of Article 29 of the Constitution provides: “All persons shall be equal before the law, the court, and other State institutions and officials”. The principle of equality of persons before the law which is consolidated in the Constitution, inter alia, in Paragraph 1 of its Article 29, is one of the main constitutional principles which, as it has been held by the Constitutional Court in its rulings, must also be followed while passing laws and applying them, and while administering justice; it also needs to be noted that the principle of equality of all persons before the law does not deny the fact that the law may establish a different legal regulation with regard to categories of certain persons which are in different situations. The constitutional principle of equality of all persons before the law, inter alia, would not be violated, 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 and 23 October 2002).

Under the Constitution, while regulating the economic activity, inter alia, the provision of state support to economic subjects, the state must heed the constitutional principle of the equality of rights of economic subjects which is directly related to the principle of equality of persons before the law which is consolidated in the Constitution, inter alia, in Paragraph 1 of Article 29 thereof; otherwise, the legal regulation of the economic activity would not be regarded as serving the general welfare of the Nation.

4. The provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law which is impugned in this constitutional justice case, should be construed in the context of the provisions of the Law, the CCP and the Republic of Lithuania’s Law on the Proceedings of Administrative Cases.

4.1. Under Article 1 (wording of 18 December 2003) of the Law, this law shall regulate: borrowing by the Government on behalf of the state; the relations linked to the state’s right of claim in respect of debtors; and the relations linked to the state’s right of claim in respect of debtors the fulfilment of obligations whereof is guaranteed by the state.

In this context it needs to be noted that a debtor means a legal or a natural person of the Republic of Lithuania, who has received a loan from the funds borrowed on behalf of the state under a loan agreement concluded with the state or under other debt instruments and who assumes the obligation to the state regarding the use and returning thereof (Paragraph 12 (wording of 18 December 2003) of Article 2 of the Law). A debtor, the fulfilment of obligations whereof is guaranteed by the state, means a legal or a natural person of the Republic of Lithuania, who has received a loan under an agreement concluded with a domestic or foreign creditor or under other debt instruments the meeting of terms and conditions whereof is guaranteed by the state (Paragraph 13 (wording of 18 December 2003) of Article 2 of the Law).

4.2. The powers of the Ministry of Finance, as the institution empowered by the state, in the relations of provision of the state loan were consolidated in the Law (wording of 18 December 2003), inter alia, in Paragraphs 3 and 4 of Article 3, Paragraph 7 of Article 5, Paragraphs 2, 4 and 5 of Article 9, etc. Article 9 (wording of 18 December 2003) of the Law provides for the measures (actions) which are applied (taken) by the Ministry of Finance, if the corresponding obligations are not fulfilled or they are fulfilled improperly.

Under Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law, which includes the provision impugned by the petitioner, the Ministry of Finance had the powers to recover, from the debtor, a loan or debt or part thereof which has not been returned on time, unpaid interest, late payment interest or other payments provided for under agreements as well as the expenses incurred by the state because of the non-fulfilment of an obligation by the debtor. Where the debtor, the fulfilment of obligations whereof is guaranteed by the state, defaulted on contractual obligations, as a result whereof the state, as the guarantor, had to fulfil them, the Ministry of Finance acquired the right of recourse against the debtor, the fulfilment of obligations whereof is guaranteed by the state, to recover all the direct and indirect expenses linked to the fulfilment of the said obligations. In these cases, the Ministry of Finance had the powers to adopt decisions regarding the recovery of the debt from the debtor, or from the debtor the fulfilment of obligations whereof is guaranteed by the state, which had to be passed to court bailiffs in accordance with the procedure laid down by the CCP.

Therefore, under the provisions of the Law, the state loan could be provided only on the grounds of the agreement concluded by the person (an economic subject) and the institution empowered by the state (inter alia, the Ministry of Finance). By concluding the agreement regarding the loan, an economic subject (debtor) assumed the obligations and agreed with certain conditions of provision of the loan, inter alia, those provided for in the Law, as, for instance, with the fact that if he does not return the loan in time, the decision of the Ministry of Finance regarding the recovery of a debt will be implemented under the procedure established by the CCP.

4.3. In this constitutional justice case, the Vilnius Regional Court, the petitioner, doubts whether after the legislature consolidates the provision that the decisions of the Ministry of Finance regarding the recovery of a debt from the debtor shall be passed to court bailiffs in accordance with the procedure laid down by the CCP, the constitutional right of a person to apply to court is not restricted. In this context, it needs to be noted that the decisions of the Ministry of Finance are administrative acts adopted by a subject of public administration which may be appealed against under the procedure established in the Law on the Proceedings of Administrative Cases. Item 1 (wording of 19 September 2000) of Paragraph 1 of Article 15 of the Law on the Proceedings of Administrative Cases provides that administrative courts shall decide cases regarding the lawfulness and reasonableness of the legal acts and actions adopted by subjects of public administration, as well as regarding the lawfulness and reasonableness of refusals of these subjects to perform the actions which are assigned to their competence or the procrastination to perform such actions; under Paragraph 1 (wording of 19 September 2000) of Article 22 of this law, the persons may lodge a complaint (request) regarding administrative acts adopted by administrative subjects of public or internal administration or their action (inaction) when they think that their rights or interests which are protected by law are violated. It also needs to be noted that Paragraph 1 (wording of 19 September 2000) of Article 71 of the Law on the Proceedings of Administrative Cases provides, inter alia, that either courts or judges may take up measures to ensure the requirement on the grounds of reasoned requests of the participants of the procedure or on their own initiative. Under Paragraph 2 (wording of 19 September 2000) of Article 71 of this law, the measures for ensuring the requirement may be, inter alia, the suspension of recovery according to the writ of execution (Item 2) and temporary suspension of the validity of the impugned act (Item 3).

The decisions of the Ministry of Finance regarding the recovery of a debt from the debtor under Item 2 of Paragraph 2 of Article 584 and Item 4 of Article 587 of the CCP should be considered to be decisions of institutions which, at the same time, are both the writs to be enforced and writs of execution on the grounds of which the coercive execution actions provided in the CCP are performed. According to the provisions of the CCP, the rights of a person which were violated during the execution procedure may be defended, inter alia, by lodging a complaint to court against the actions of bailiffs under procedure established in the CCP (Article 510). Even though lodging a complaint does not in itself suspend the execution of the actions, the court, after it has recognised it to be necessary, has the right to suspend the execution actions under the procedure established in the CCP (Item 10 of Paragraph 1 of Article 145, and Article 510 of the CCP).

4.4. In the context of the constitutional justice case at issue, it needs to be noted that, under the CCP, the execution procedure may be started not only after the court has adopted a decision, but also—in the cases provided for by law and in the absence of such a decision—on the grounds of decisions of the state institutions (officials) specified in laws. The execution procedure of such writs of execution is linked to expeditious enforcement of the said writs in order to prevent procrastination of execution procedure. The execution procedure instituted both on the grounds of a court decision and on the grounds of writs of execution—decisions of the state institutions (officials)—implemented according to the same rules established in the CCP and the same principles.

While regulating the relations linked to execution procedure, the subjects of law-making must heed the constitutional requirement for the due process of law, inter alia, one must ensure the judicial control over the execution procedure, as well as the imperative of the constitutional right of a person to judicial defence.

Institution of the execution procedure on the ground of decisions of the state institutions (officials) established in laws is not a novel of the Lithuanian legal system—it is also typical of the law of certain Member States of the European Union (as for instance, Austria, the Netherlands, Italy, France, etc.).

5. Summing up, it needs to be held that the provision which is impugned by the petitioner, whereby the decisions of the Ministry of Finance regarding the recovery of a debt from the debtor shall be passed to the court bailiffs for execution under the procedure established in the CCP, does not prevent persons, who think that by the decision of the Ministry of Finance their rights are violated, from applying to court. Such persons can lodge complaints against such decisions of the Ministry of Finance with a court. If necessary, a court may (by a reasoned decision) temporarily suspend the validity of such decisions of the Ministry of Finance. Persons may also lodge complaints against the execution procedure (recovery) instituted on the grounds of the decision of the Ministry of Finance with a court, while a court, in such a case, may, if necessary, suspend the actions (recovery) of such execution. By the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law, which is impugned in this constitutional justice case, one does not restrict the right of a person (an economic subject) who has received the state loan to apply to court, inter alia, to dispute the decision of the Ministry of Finance regarding the recovery of the debt and the execution procedure instituted on such ground, therefore, such legal regulation does not deviate from the constitutional right of a person to apply to court which is consolidated in Paragraph 1 of Article 30 of the Constitution.

It also needs to be noted that the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law should be applied to all debtors who have not returned the loan on time or who have not fulfilled other property obligations established in the loan agreements. Therefore, by the impugned legal regulation one does not create any preconditions for discriminating or granting privileges to the persons of the same legal status, therefore, one does not deviate from the principle of equality of all persons which is consolidated in the Constitution, inter alia, Paragraph 1 of Article 29 thereof, either.

Also, there are not enough legal arguments which would ground the position of the petitioner that, purportedly, by the impugned legal regulation, one denies the principle consolidated in Paragraph 3 of Article 46 of the Constitution that the state shall regulate economic activity so that it serves the general welfare of the Nation.

6. Taking account of the arguments set forth, the conclusion should be drawn that the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003) of Article 9 of the Law was not in conflict with Paragraph 1 of Article 29, Paragraph 1 of Article 30 and Paragraph 3 of Article 46 of the Constitution.

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

ruling:

To recognise that the provision “decisions of the Ministry of Finance regarding the recovery of a debt from the debtor <...> shall be passed to court bailiffs in accordance with the procedure laid down by the Code of Civil Procedure” of Paragraph 2 (wording of 18 December 2003, Official Gazette Valstybės žinios, 2004, No. 4-31) of Article 9 of the Republic of Lithuania’s Law on State Debt was not in conflict with the Constitution of the Republic of Lithuania.

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

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

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