2002/03/11 - Pl. ÚS 19/02: Equality of Rights

11 March 2002

HEADNOTES

Art.

96 para. 1 of the Constitution of the CR enshrines, as one of the key

principles of the functioning and implementation of the judicial power

in the CR, the procedural principle of the equality of rights in parties

before the court. This constitutional principle thus guarantees the

equal procedural status of parties in judicial proceedings concerning

rights which are granted to parties of a particular type of proceedings

by the legal order. One can conclude form this principle, among other

things, that a particular type of proceedings must have a single court

jurisdiction, understood in the substantive and functional dimension,

and that framework must be implemented by statute.

It is evident that the legislature can set varying degrees of

procedural rights and obligations for various types of proceedings with

different subject matter. In other words, the equality of parties to

proceedings must be interpreted so that the same scope of procedural

rights and obligations must be observed in proceedings which match the

same subject of proceedings. However, it is impermissible for the

distinguishing criterion to be, instead of the subject matter of the

proceedings, the party himself – even if, for example, defined by his

procedural status in any previous proceedings.

Art. 37 para. 3 of the Charter of Fundamental Rights and Freedoms

provides that all parties to proceedings are equal. This provision of

the Charter must be interpreted to the effect that this is a principle

which guarantees the equal procedural rights and obligations of

particular parties in particular proceedings. In this, this provision of

the Charter differs from Art. 96 para. 1 of the Constitution, which

generally foresees the equality of parties in proceedings with the same

subject matter.

 



CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC

 


The

Plenum of the Constitutional Court decided on a petition from the High

Court in Olomouc to annul § 24 para. 4 of Act no. 328/1991 Coll., on

Bankruptcy and Settlement, as amended by later regulations, with the

participation of the Chamber of Deputies of the Parliament of the CR and

of the Senate of the Parliament of the CR as parties to the

proceedings, as follows:


The provision of § 24 para. 4 of Act no. 328/1991 Coll., on Bankruptcy

and Settlement, as amended by later regulations, is annulled.


 

REASONING

I.
 

On

15 August 2002, the Constitutional Court received, under Art. 95 para. 2

of the Constitution of the CR and § 64 para. 4 of Act no. 182/1993

Coll., on the Constitutional Court, a petition from the High Court in

Olomouc to annul § 24 para. 4 of Act no. 328/1991 Coll., on Bankruptcy

and Settlement, in the valid wording.
 

Under

§ 104a of the Civil Procedure Code, the High Court in Olomouc receives

for decision matters in which the parties to the proceedings, regional

courts, or district courts, believe that the bankruptcy court lacks

substantive jurisdiction to decide on a creditor’s complaint to

determine a claim or the district court lacks jurisdiction to decide on a

creditor’s complaint in proceedings opened at the district court before

bankruptcy filings were made. In these cases the High Court in Olomouc

is to decide on the substantive jurisdiction under the contested § 24

para. 4 of the Bankruptcy and Settlement Act.
 

The

petitioner justified its petition on the grounds that Act no. 105/2000

Coll., which amends Act no. 328/1991 Coll., on Bankruptcy and

Settlement, as Amended by Later Regulations, and Certain Other Acts,

effective as of 1 May 2000, inserted in the newly formulated § 24 of the

Bankruptcy and Settlement Act a fourth paragraph which provides that

if, before bankruptcy filings were made, proceedings were opened on a

denied claim and these proceedings were suspended [§ 14 para. 1 let.

c)], the denied claim shall be determined in the proceedings already

opened; new proceedings on the denied claim are not opened [§ 14 para. 1

let. d)]. The petition to continue the suspended proceedings must be

filed by the deadlines provided by the Act (§ 23 para. 4 and 5 and § 24

para. 1 and 2); those whom the Act identifies as parties (§ 23 para. 2 a

3 a § 24 para. 1 a 2) become parties to the proceedings.
 

In

the petitioner’s opinion the legislature did not adequately consider

the range of cases which this provision affects. By application of this

provision in various procedural situations bankruptcy creditors whose

non-executable claims were denied in the review proceedings are placed

in an unequal position. In some cases they find themselves in an

unsolvable procedural situation, in other cases, on the contrary, they

are at an advantage compared to other bankruptcy creditors.
 

In

its petition, the High Court in Olomouc further stated that § 24 para. 4

of the Bankruptcy and Settlement Act applies if proceedings on a denied

claim were opened before bankruptcy filings were made ant those

proceedings were suspended through the filing for bankruptcy. In the

petitioner’s opinion,  § 24 para. 4 does not take into account cases

where a decision was already made in the proceedings before the court of

the first level and the decision has not yet gone into legal effect,

not has it been contested by an appeal, by a protest, or by objections.

In these cases, the court is bound by the announced decision under § 156

para. 3 and § 170 para. 1 of the Civil Procedure Code In that

situation, in the petitioner’s opinion neither the parties nor the

petition can be changed, as the matter has already been decided. On the

other hand, however, the contested provision prohibits opening new

proceedings on the denied claim. Therefore, the petitioner believes that

in this case a creditor with a non-executable claim does not have a

procedural opportunity to obtain a decision in his dispute over the

denied claim in bankruptcy proceedings.
 

The

petitioner also believes that § 24 para. 4 of the Bankruptcy and

Settlement Act can, however, lead to violation of the equality of

bankruptcy creditors, not only to the disadvantage of the creditor whose

claim was at issue in proceedings before the filing for bankruptcy, but

also by giving him an advantage over the other bankruptcy creditors.

This is because § 24 para. 4 of the Bankruptcy and Settlement Act gives

the court an obligation to specify the circle of parties to the

proceedings and issue the judgment verdict even without a petition.

Therefore, in cases where the bankruptcy creditor imprecisely or

incorrectly formulates a petition to continue already opened

proceedings, § 24 para. 4 of the Bankruptcy and Settlement Act gives him

an advantage compared to other bankruptcy creditors whose claims were

also denied during the review proceedings.
 

The

petitioner sees the abovementioned facts as grounds for the

unconstitutionality of the contested provision of the Bankruptcy and

Settlement Act, and it therefore petitioned for a judgment which will

annul § 24 para. 4 of the Bankruptcy and Settlement Act in the presently

valid wording.
 


II.
 

The

reporting judge requested, in accordance with § 42 para. 4 and § 69

para. 1 of Act no. 182/1993 Coll., on the Constitutional Court, as

amended by later regulations, position statements from both houses of

the Parliament of the CR.

A) The Chamber of Deputies, represented

by its chairman, PhDr. Lubomír Zaorálek, in its position statement of

10 October 2002, stated that the legislature’s motive for including § 24

para. 4 of the Bankruptcy and Settlement Act on determination of a

disputed claim within the already opened proceedings suspended by the

filing for bankruptcy was to simplify and make more economical the

manner of addressing the disputed claim for purposes of bankruptcy. In

his opinion, this provision is supposed to make possible a reduction in

the number of incidental disputes where it would otherwise be necessary

to open new proceedings through a separate complaint to determine the

disputed claim. As a rule, a number of items of evidence which were

already presented in the suspended proceedings on the same claim can be

used. In discussion the Act, the legislature began with the purposes of

the Act and the aims of bankruptcy proceedings, and was convinced that

it was meeting the requirements of the Constitution of the CR a of the

Charter of Fundamental Rights and Freedoms.
 

In

the conclusion of his statement, the chairman of the Chamber of

Deputies of the Parliament of the CR stated that Act no. 105/2000 Coll.,

which amends and supplements Act no. 328/1991 Coll., on Bankruptcy and

Settlement, as amended by later regulations, was approved by the Chamber

of Deputies at its 21st session on 28 January 2000; 128 out of 152

present voted in favor or it. The Senate of the Parliament of the CR

approved the draft act submitted by the Chamber of Deputies as amended

by amending proposals at its 16th session on 1 March 2000, and the

Chamber of Deputies subsequently approved the draft act in the version

approved by the Senate; out of 181 deputies present, 98 voted in favor

and 81 against. The Act was thus approved by the necessary majority of

deputies in the legislative assembly, was signed by the appropriate

constitutional representatives, and was duly promulgated. In the opinion

of the Chamber of Deputies, the legislative assembly acted in the

conviction that the passed act was consistent with the Constitution of

the CR and the constitutional order, and that it is solely up to the

Constitutional Court to evaluate the constitutionality of the contested

provision in connection with the filed petition and to issue an

appropriate decision.

B) The Senate of the Parliament of the CR,

in its position statement of 16 October 2002, signed by its chairman,

doc. JUDr. Petr Pithart, stated that the draft act was submitted to the

Senate on 7 February 2000. The Senate discussed the draft at its 16th

session of its second term of office, held on 1 March 2000, and by

resolution no. 302 returned the draft act to the Chamber of Deputies

with amending proposals. Out of a total of 53 senators present, 52 voted

to return the draft act and 1 senator abstained from voting. The

Chamber of Deputies again discussed the draft act on 4 April 2000 at its

24th session. The draft act, as amended by amending proposals, was

approved by Chamber of Deputies resolution no. 902; out of 181 deputies

present 98 deputies voted in favor and 81 deputies were against.
 

In

Senate committees, the issues of § 24 para. 4 of the Act were

extensively discussed in connection with the aim that “incidental”

disputes always be decided by a court, even though otherwise these were

claims which a court did not have the authority to decide, which does

not correspond to § 7 para. 1 of the Civil Procedure Code. The

conception under which bankruptcy courts should decided incidental

disputes, including, for example also administrative and tax claims,

appeared inconsistent in relation to § 24 para. 4 of the amendment to

the Act, because, in the opinion of some, this overlooked the fact that,

under § 14 para. 1 let. c), not only judicial, but also other

proceedings, are suspended. Thus, continuing in the proceedings would

take place not before the court, but before the body (administrative,

tax) at which the proceedings were opened.
 

According

to the Senate’s statement, the committees concluded that the party

proposing the Act apparently did not take into account the fact that any

outcome of a dispute on the authenticity, amount, or order of claims

does not establish the obstacle of pending litigation for claims applied

in proceedings which were suspended by the filing for bankruptcy. This

consequence appeared particularly important in a situation where, under §

45 para. 2 of the Bankruptcy and Settlement Act, claims which were

considered ascertained for purposes of bankruptcy, but which the

bankrupt party denied after the cancellation of bankruptcy proceedings,

would not be grounds for execution. It was also pointed out in

discussion that the wording of § 23 para. 2 last sentence may be in

direct conflict with § 24 para. 4 of the Act, because in the

abovementioned opinions the order of a claim should be decided by a

court in proceedings which are being continued, and which need not be

judicial proceedings.
 

As the

chairman of the Senate stated further in his statement, despite the

abovementioned discussions and proposals to delete § 24 para. 4 from the

draft act, subsequently the inclination to retain the submitted wording

of this provision prevailed in the committees. The Senate session did

not consider the issues further.
 


III.
 

Under

§ 44 para. 2 of Act no. 182/1993 Coll., on the Constitutional Court, as

amended by later regulations, the Constitutional Court can, with the

consent of the parties, omit oral proceedings if they can not be expect

to clarify the matter further. Therefore, in accordance with this

provision, the Constitutional Court asked the parties to the proceedings

for a statement as to whether they agreed with omitting oral

proceedings. By a filing of 5 March 2003, the High Court in Olomouc, and

by filings of 4 March 2003, likewise the Chamber of Deputies of the

Parliament of the Czech Republic and of 7 March 2003, the Senate of the

Parliament of the Czech Republic, gave their consent to omit oral

proceedings in the adjudicated matter.
 


IV.
 

Before

the Constitutional Court turned to evaluating the content of the

contested statutory provision in the aspects defined by § 68 para. 2 of

Act no. 182/1993 Coll., on the Constitutional Court, i.e. in terms of

the consistency of § 24 para. 4 of the Bankruptcy and Settlement Act

with constitutional statutes, it reviewed whether the formal

requirements for passing the relevant legal norm had been met.
 

The

draft act which amends and supplements Act no. 328/1991 Coll., on

Bankruptcy and Settlement, as amended by later regulations, was

submitted to the Chamber of Deputies as a proposal from deputies on 29

April 1999. From the stenographic record of the 21st session of the

Chamber of Deputies, 3rd election term, the Constitutional Court

determined that on 28 January 2000 the Chamber of Deputies, according to

Chamber of Deputies document 219, as amended by approved amending

proposals, agreed with this draft; out of 152 deputies present 128 voted

for the draft and one deputy voted against it.
 

The

stenographic report on the 16th session of the Senate, 2nd election

term, showed that on 1 March 2000, the draft act, together with passed

amending proposals, was returned to the Chamber of Deputies; out of 53

senators present, 52 voted in favor and one senator abstained from

voting.
 

From the

stenographic record of the 24th session of the Chamber of Deputies, 3rd

election term, the Constitutional Court determined that the Chamber of

Deputies, on 4 April 2000, passed the draft act which amends Act no.

328/1991 Coll., on Bankruptcy and Settlement, as Amended by Later

Regulations, and Certain Other Acts, in the version approved by the

Senate; out of 181 deputies present 98 voted in favor and 81 against.
 

After

being passed, Act no. 105/2000 Coll., which amends Act no. 328/1991

Coll., on Bankruptcy and Settlement, as Amended by Later Regulations,

and Certain Other Acts, was signed by the appropriate constitutional

representatives and published in part 32 of the Collection of Laws,

which was distributed on 25 April 2000. The Act went into effect, in

accordance with Art. VIII., on 1 May 2000.
 

Therefore,

the Constitutional Court, under § 68 para. 2 of the Act on the

Constitutional Court, found that Act no. 105/2000 Coll., which inserted §

24 para. 4 into the Bankruptcy and Settlement Act, was passed and

issued within the bounds of the legislative jurisdiction of the

Parliament of the CR prescribed by the Constitution of the CR and in a

constitutionally prescribed manner, as, in any case, the Constitutional

Court already stated in the matter Pl. ÚS 36/01.
 


V. - A
 

The

provision of § 24 para. 4 was inserted into the Bankruptcy and

Settlement Act when it was amended by Act no. 105/2000 Coll., which

amends Act no. 328/1991 Coll., on Bankruptcy and Settlement, as Amended

by Later Regulations, and Certain Other Acts, with effect as of 1 May

2000. The contested § 24 para. 4 affects situations where a bankruptcy

trustee or bankruptcy creditor, in review proceedings, denied a

non-executable claim of a creditor, arising from a claim which was

registered in the bankruptcy proceedings. If the bankruptcy creditor,

before the bankruptcy filing was made, applied any part of this claim in

proceedings which were suspended by the bankruptcy proceedings, it is

impermissible to open new incidental proceedings, but proceedings to

determine the authenticity, amount or order of the registered claim are

to be conducted before the court which conducted the proceedings which

were suspended by law by the bankruptcy filing.
 

As

indicated by the background report to Act no. 105/2000 Coll., in this

case it was the intent of the legislature to rationalize and make more

economical incidental proceedings caused by bankruptcy proceedings. The

legislature’s aim was to reduce the number of incidental proceedings so

that the Act would permit making use of the outcomes of proceedings

which were suspended as a result of a bankruptcy filing, and thus

continue on from the proceedings on the claim which were conducted

before the bankruptcy filing.
  It is also evident from the

background report to the Act and from the statements of the parties to

the proceedings that the legislature constructed § 24 para. 4 of the

Bankruptcy and Settlement Act in the conviction that in the future it

would not be necessary to open new proceedings to determine the denied

claim, but that the original proceedings would continue on from their

current position, and, in particular, all factual and other judgments

would be used.
 

The

Constitutional Court agrees with the petitioner’s opinion that the

legislature did not sufficiently consider the range of all procedural

situations to which the provision can apply, the practical consequences

of that concept, but also its constitutional law dimension.
 


V. - B
 

Art.

96 para. 1 of the Constitution of the CR enshrines, as one of the key

principles of the functioning and implementation of the judicial power

in the CR, the procedural principle of the equality of rights in parties

before the court. This constitutional principle thus guarantees the

equal procedural status of parties in judicial proceedings concerning

rights which are granted to parties of a particular type of proceedings

by the legal order. One can conclude form this principle, among other

things, that a particular type of proceedings must have a single court

jurisdiction, understood in the substantive and functional dimension,

and that framework must be implemented by statute.
 

The

constitutional provision is supposed to guarantee the institution of

equality in its procedural form, which, of course, has substantive law

effects. The role of ordinary statutes, procedural regulations, is to

transfer the constitutionally protected institution of equality, thus

understood, into procedural guarantees which will ensure the fulfillment

of this equality.
 

It is

evident that the legislature can set varying degrees of procedural

rights and obligations for various types of proceedings with different

subject matter. In other words, the equality of parties to proceedings

must be interpreted so that the same scope of procedural rights and

obligations must be observed in proceedings which match the same subject

of proceedings. However, it is impermissible for the distinguishing

criterion to be, instead of the subject matter of the proceedings, the

party himself – even if, for example, defined by his procedural status

in any previous proceedings.
 

The

interpretation of Art. 38 para. 1 of the Charter of Fundamental Rights

and Freedoms also develops from this interpretation of Art. 96 para. 1

of the Constitution of the CR, because determining the statutory judge

must be preceded by the constitutional statutory setting of court

jurisdiction. The principle under which the legal regulation of court

jurisdiction is reserved to statute includes not only the postulate

under which only a statute may set the powers and jurisdiction of a

court to review a particular matter, but also the requirement that the

statute define such power and jurisdiction equally for all cases of the

same type and not make unjustified differences in the jurisdiction of

courts, understood substantively and functionally.
 

The

substantive jurisdiction of courts to review disputes caused by

bankruptcy or settlement is governed by § 9 para. 3 of the Civil

Procedure Code so that it is entrusted to regional courts as courts of

the first level. These disputes are, among other things, disputes to

determine the authenticity, amount and order of registered claims which

were denied during bankruptcy proceedings. In these cases the bankruptcy

creditor is forced to exercise his claim by prescribed deadlines and to

observe other formal requisites in special (incidental) proceedings

which were caused by the bankruptcy. In these cases, under the

abovementioned § 9 para. 3 of the Civil Procedure Code and § 23 para. 2

of the Bankruptcy and Settlement Act, the court of substantive

jurisdiction is the bankruptcy court, i.e. basically the regional court.
 

However,

§ 24 para. 4 of the Bankruptcy and Settlement Act, contested by the

petition, represents a special definition of the substantive

jurisdiction of a court, as it limits the conduct of special incidental

proceedings before the bankruptcy court and constructs for the given

type of disputes, i.e. disputes to determine the authenticity, amount

and order of a claim, the special substantive jurisdiction of the court

which previously conducted proceedings opened on the claim of the

current creditor with the denied claim, the subject of which was

connected to the denied non-executable claim.
 

The

consequence of § 24 para. 4 is the fact that it constructs a double

regime for substantive jurisdiction of courts. One can conclude that the

relationship between § 9 para. 3 of the Civil Procedure Code, § 23

para. 2 and § 24 para. 4 of the Bankruptcy and Settlement Act is a

relationship between a general regulation (lex generalis) and a special

regulation (lex specialis), and that the constitutional requirement of

statutory establishment of court jurisdiction was observed. However, as

was already state above, it is impermissible for a statute to create an

unjustified difference n defining substantive jurisdiction for cases

which have identical subject matter. The conception of the legal

framework of § 24 para. 4 of the Bankruptcy and Settlement Act creates a

duality of substantive jurisdiction in disputes to determine the

authenticity, amount and order of claims denied in bankruptcy

proceedings. Yet, in terms of the subject matter of proceedings, these

disputes are the same. Application of § 24 para. 4 of the Bankruptcy and

Settlement Act thus causes a difference in the substantive, and

possibly functional jurisdiction, where in one case the regional court,

as the bankruptcy court, decides in incidental proceedings, and in

another the district court decides, if it conducted proceedings opened

on a complaint from the current creditor with a denied claim, the

subject of which was related to the denied claim and which were

suspended by the bankruptcy filing. In that case, the decision making to

determine the authenticity, amount and order of the denied claim is

concentrated at the court which had subject matter and territorial

jurisdiction in the original, suspended proceedings, i.e. at a court

which is not the bankruptcy court. Subject matter and territorial

jurisdiction established under § 24 para. 4 of the Bankruptcy and

Settlement Act thus derives from the subject matter and territorial, or

sometimes functional, jurisdiction of the court in the preceding

proceedings, which were suspended by the bankruptcy filing under § 14

para. 1 let. c) of the Bankruptcy and Settlement Act; in fact, however,

it derives from the status of the creditor as plaintiff in the original

proceedings.
 

This conception

leads to inequality in the procedural position of individual creditors

who exercise in court their denied, non-executable claims under

different procedural regimes.
 

This

is because § 24 para. 4 sets the circle of parties to the proceedings

ex lege (i.e. those persons whom the Act identifies as parties to the

proceedings become parties to the proceedings), and the court thus has

the obligation itself to newly identify parties to the proceedings, and

itself to remove defects in the petition to continue the proceedings if

it does not contain the appropriate requisites (e.g. identification of

the parties, a proposed judgment, etc.), in a situation where the

original petition to open proceedings on the claim which was related to

the denied claim suffered from defects which the plaintiff did not

remove. In contrast, in incidental proceedings the creditor has the

obligation, under § 23 of the Bankruptcy and Settlement Act, to

precisely identify the parties to the proceedings and precisely specify

the entire claim by a specified deadline. It is evident from this that a

party to the proceedings (creditor), who filed a petition to continue

proceedings under § 24 para. 4 of the Bankruptcy and Settlement Act

finds himself in an advantaged position in comparison with a party to

the proceedings (creditor), who files a petition to open special

(incidental) proceedings before the bankruptcy court under § 23 para. 2

of the Bankruptcy and Settlement Act.
 

The

procedural inequality of creditors who exercise their denied,

non-executable claims under different procedural regimes is also caused

by the fee obligations under the regimes. If the original proceedings

were suspended in a situation where the creditor, as a party to the

proceedings, had not yet met his statutory fee obligation, and then

filed a petition to continue the proceedings under § 24 para. 4 of the

Bankruptcy and Settlement Act, he will be unjustifiably advantaged in

comparison to a creditor on whose claim incidental proceedings are being

opened. This is because a petition to continue suspended proceedings

does not, under Act no. 549/1991 Coll., on Court Fees, as amended by

later regulations, create a fee obligation for the party, and despite

the fact that the fee was not paid in the original proceedings, the

court will be required to decide the matter. The consequence of not

paying the court fee in the incidental proceedings, in contrast, will be

that the proceedings will be stopped. In a situation where the party

paid a higher court fee in the original proceedings than he would be

required to pay in incidental proceedings, this discrepancy can not be

removed, because it is impossible to perform acts in proceedings which

are suspended by law.
 

This

conception, with the consequences of unequal rights and obligations of

parties to proceedings to determine the authenticity, amount and order

of a denied claims, is inconsistent with Art. 96 para. 1 of the

Constitution of the CR, whose content, concerning the extent of its

effect, was laid out above. The legislature impermissibly assigns

different procedural rights and obligations to parties to proceedings

with the same subject matter, which sometimes leads to advantages,

sometimes to disadvantages, for various parties. Yet, the different

procedural regime derives solely from the procedural status of a

creditor in preceding proceedings, the subject matter of which was only

related to the denied claim.
 

The

current decision making practice of courts when applying § 24 para. 4

of the Bankruptcy and Settlement Act shows that the unconstitutionality

of this provision can not be overcome by an interpretation which would

be constitutional.
 

The

unconstitutional consequences of the framework are not removed by the

interpretation applied by some general courts (see, for example,

Resolution of the High Court in Olomouc of 10 September 2002, file no. 4

Cmo 305/2002), under which § 24 para. 4 of the Bankruptcy and

Settlement Act establishes a special type of “proceedings within

proceedings,” that is, proceedings which differ from the original

proceedings in their subject matter and circle of parties and which are

connected to the original proceedings only ex lege, while the subject of

the previous proceedings is not subsumed in the proceedings under § 24

para. 4 of the Bankruptcy and Settlement Act, and they can be continued

after the bankruptcy is finished. This interpretation does not remove

the abovementioned discrepancy in rights and obligations of the parties

to “proceedings within proceedings” and incidental proceedings.
 


V. - C
 

Art.

37 para. 3 of the Charter of Fundamental Rights and Freedoms provides

that all parties to proceedings are equal. This provision of the Charter

must be interpreted to the effect that this is a principle which

guarantees the equal procedural rights and obligations of particular

parties in particular proceedings. In this, this provision of the

Charter differs from Art. 96 para. 1 of the Constitution, which

generally foresees the equality of parties in proceedings with the same

subject matter, as laid out above.
 

The

ultimate effect of applying § 24 para. 4, compared to applying § 23

para. 2 of the Bankruptcy and Settlement Act (incidental proceedings) is

to establish the unequal status of creditors falling under these two

procedural regimes when satisfying their claims within schedule

proceedings (§ 30 of the Bankruptcy and Settlement Act). If an

incidental dispute is understood as formalized evidentiary proceedings,

the results of which are binding on the bankruptcy court, then it is

evident that the original procedural duality established by the Act also

has effects, in terms of equality, on the procedural status of

creditors in the particular bankruptcy proceedings.
 


VI.
 

Therefore,

the Plenum of the Constitutional Court, with regard to the foregoing

situation, decided, under § 70 para. 1 of Act no. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations, to annul § 24

para. 4 of the Bankruptcy and Settlement Act, in its present wording,

due to inconsistency with Art. 96 para. 1 of the Constitution of the CR

and Art. 37 para. 3 of the Charter of Fundamental Rights and Freedoms;

this judgment shall become executable on the day it is published in the

Collection of Law.
 

However,

in this regard, the Constitutional Court also had to deal with the

question of what influence the annulment of this provision would have on

proceedings conducted by courts whose jurisdiction was established by

the contested provision.
 

If

already opened proceedings conducted by courts whose jurisdiction was

established by the contested provision were to continue in the current

regime, even after the Constitutional Court judgment which annuls § 24

para. 4 of the Bankruptcy and Settlement Act became executable, this

would lead to a continuation of the unconstitutional inequality created

by that provision. Therefore, the Constitutional Court states that, when

the judgment becomes executable, the substantive jurisdiction of courts

established by § 24 para. 4 of the Bankruptcy and Settlement Act ceases

to have a statutory basis.
 

However,

at the same time the Constitutional Court emphasizes that the general

courts, in resolving this procedural situation must act so that their

procedure does not permit justice to be denied (denegationis iustitiae).

A procedure whereby a court would prevent a party of proceedings in

progress from exercising the opportunity to exercise his rights before

an independent and impartial court, as guaranteed by Art. 36 para. 1 of

the Charter of Fundamental Rights and Freedoms, would mean a violation

of a party’s right to a fair trial, and in its consequences would

violate the principles of a state governed by the rule of law (Art. 1

para. 1 of the Constitution of the CR). Such a procedure would thus lead

to further unconstitutional consequences.

Notice: Decisions of the Constitutional Court can not be appealed.

Brno, 11 March 2003