2002/06/25 - Pl. ÚS 36/01: Bankruptcy Trustee

25 June 2002

HEADNOTES

1)

The public purpose of the institution of the bankruptcy trustee must be

seen in the acceptance of limited public interference into resolving

property rights which have reached a critical state. The manner of the

trustee’s appointment is provided by a decision by a state body (court).

His powers, which are established in a number of provisions in the

Bankruptcy and Settlement Act (§ 14, § 17 to 20, § 24, § 26 to 29), in

view of their heteronomous nature (the trustee can not be considered the

representative of the creditors or the bankrupt), are an exercise of

authority (in contrast to the heteronomous nature of public law acts,

private law acts – legal acts – are of an autonomous nature). From a

constitutional viewpoint, performance of the office of bankruptcy

trustee on the basis of court appointment can not be classified as labor

or service imposed by law for the protection the rights of others under

Art. 9 para. 2 let. d) of the Charter of Fundamental Rights and

Freedoms (the “Charter”). Performance of the office of bankruptcy

trustee is not part of an employment relationship, and thus does not

fall within the content, purpose or meaning of Art. 26 of the Charter.

It is not the conduct of business or the conduct of other economic

activity, and thus, in constitutional terms it can not be classified in

the framework defined by Art. 26 of the Charter.
    In view of the

diversity of purposes of public offices, no safeguards automatically

arise from the constitutional order concerning the source of

remuneration and compensation of expenses related to their performance,

nor do safeguards, concerning their structure and amount. Nonetheless,

the maxim of proportionality arises for remuneration and compensation of

expenses related to the performance of public offices from the

constitutional principle of non-accessory equality, whose function is

ruling out arbitrariness on the part of the legislature in

differentiating subjects of law and rights.

2) The constitutional

basis of a general incorporative norm, and thereby the overcoming of

the dualistic concept of the relationship between international and

domestic law, can not be interpreted in terms of removing the reference

point of ratified and promulgated international agreements on human

rights and fundamental freedoms for the evaluation of domestic law by

the Constitutional Court with derogative results. The scope of the

constitutional order concept can not be interpreted only with regard to §

112 para. 1 of the Constitution, but must be interpreted in view of

Art. 1 para. 2 of the Constitution and must include ratified and

promulgated international agreements on human rights and fundamental

freedoms.
  For these reasons Art. 95 para. 2 of the Constitution

must be interpreted to the effect that a general court has an obligation

to present to the Constitutional Court for interpretation a matter in

which it concludes that a law which is to be used in resolving the

matter is in conflict with a ratified and promulgated international

agreement on human rights and fundamental freedoms.



CZECH REPUBLIC

CONSTITUTIONAL COURT
JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC


The

Plenum of the Constitutional Court, without a hearing, decided on 25

June 2002 in the matter of the petition from the Prague High Court to

annul § 5 para. 1 second sentence and § 8 para. 3 second sentence of Act

No. 328/1991 Coll., on Bankruptcy and Settlement, as amended by later

regulations, as follows:
 

Section

5 para. 1 second sentence and § 8 para. 3 second sentence of Act No.

328/1991 Coll., on Bankruptcy and Settlement, as amended by later

regulations, are annulled as of 31 March 2003.



REASONING


I.
 

On

23 November 2001 the Constitutional Court received a petition from the

Prague High Court to annul § 5 para. 1 second sentence and § 8 para. 3

second sentence of Act No. 328/1991 Coll., on Bankruptcy and Settlement,

as amended by later regulations, (the “Bankruptcy and Settlement Act”).

A Panel of the Prague High Court, in proceedings concerning the appeal

of a bankruptcy trustee, JUDr. V. L., an attorney with his registered

office in Prague, against the decision of the Prague City Court of 17

April 2001, file no. 99 K 76/2000-28, in the matter of bankruptcy of the

company Bohemia Enterprises, s. r. o., with its registered office in

Prague (the “bankrupt”), conducted at the Prague City Court, concluded,

under Art. 95 para. 2 of the Constitution of the Czech Republic (the

“Constitution”), that § 5 para. 1 second sentence and § 8 para. 3 second

sentence of the Bankruptcy and Settlement Act are in conflict with Art.

9, Art. 26 and Art. 28 of the Charter of Fundamental Rights and

Freedoms (the “Charter”), due to which, under § 109 para. 1 let. c) of

the Civil Procedure Code  it interrupted the proceedings and, under 95

para. 2 of the Constitution and § 64 para. 4 Act No. 182/1993 Coll., on

the Constitutional Court, as amended by later regulations, submitted the

matter to the Constitutional Court. Together with the petition to annul

the cited provisions, Prague City Court file no. 99 K 76/2000 was

submitted to the Constitutional Court.

The reporting judge

determined the following from the submitted file and petition: By

decision of 6 February 2001, file no. 99 K 76/2000-11, the Prague City

Court opened bankruptcy proceedings against the bankrupt, and appointed

JUDr. V. L., an attorney with his registered office in Prague as the

trustee (the “trustee”). A decision by the same court of 17 April 2001,

file no. 99 K 76/2000-28, approved the trustee’s excluding from the

bankruptcy estate the bankrupt’s non-collectible receivable and three

telephone cards (verdict I.) and cancelled the bankruptcy proceedings

due to insufficient assets under § 44 para. 1 let. d) of the Bankruptcy

and Settlement Act (verdict II). The court also approved the accounting

of the trustee’s cash expenses in the amount of CZK 1,193.60 and his

remuneration in the amount of CZK 10,000, and stated that these

receivables of the trustee would not be met, as the bankruptcy estate

were not sufficient to pay the expenses of the bankruptcy proceedings

(verdict III.), and charged the trustee to inform the court within

thirty days whether he had closed the accounting records and compiled

closing accounting statements (verdict IV.). In the reasoning of its

decision, concerning verdict III., it stated that the trustee’s claims

for payment of his cash expenses and remuneration, although they had

been awarded by the court, could not be satisfied, as no assets from the

bankruptcy estate had been converted to money and, on the contrary, the

only assets had been excluded from the inventory of the bankruptcy

estate. The trustee’s claims also could not be satisfied from the

deposit for bankruptcy expenses, because it had not been paid in the

matter, as the petitioner seeking bankruptcy proceedings, as a creditor

of the bankrupt seeking satisfaction of a wage claim, was exempt from

that obligation under § 5 para. 1 of the Bankruptcy and Settlement Act.

The trustee filed an appeal against verdict III of the Prague City

Court’s decision of 17 April 2001, file no. 99 K 76/2000-28, in which he

pointed to the fact that the decision in the verdict is not executable,

as the trustee’s claim will not, nor can it, be paid by anyone,

although the trustee fulfilled all the obligations imposed on him by law

and imposed on him by the court. He objected that the decision is in

conflict with Art. 26 of the Charter and proposed that the appeals court

change the decision of the court of the first level in the contested

scope, and decide that the Czech Republic is required to pay the

trustee’s expenses and remuneration.

The Prague High Court, as

the appeals court, reviewed the appealed decision and the proceedings

preceding it under § 212 Civil Procedure Code (the matter is conducted

at that court under file no. 1 Ko 257/2001) and found, as already

stated, that it is appropriate to proceed under § 109 para. 1 let. c) of

the Civil Procedure Code.

In the opinion of the petitioner in

the proceedings before the Constitutional Court, in this case there is

no dispute that the trustee is entitled, under § 8 para. 3 first

sentence of the Bankruptcy and Settlement Act, to remuneration and

compensation of cash expenses, which, in constitutional terms, is

justified by Art. 9, Art. 26 and Art. 28 of the Charter. The petitioner

points out in this regard that the trustee did not raise any objections

against that part of the Prague City Court’s decision which is based on

the cited provision of the Bankruptcy and Settlement Act and § 8a of

Decree no. 476/1991 Coll., which implements certain provisions of the

Bankruptcy and Settlement Act, as amended by later regulations, by which

the court approved the accounting of the trustee’s cash expenses and

his remuneration. The petitioner considers the question of whether the

trustee in such a situation can be completely denied compensation which

he would certainly have received in a case where there were funds from

which to satisfy the claim as fundamental for evaluating the

justification of the appeal, given the undisputed factual state of the

matter, where there are no resources in the bankruptcy estate and the

deposit for bankruptcy expenses was not paid.

Section § 8 para. 3

second sentence of the Bankruptcy and Settlement Act merely sets an

exclusive range of resources from which the trustee’s lawful claims can

be satisfied, which, in the petitioner’s opinion, can be accepted only

in the event that at least one of these resources contains means which

can be used to pay the trustee’s claims. According to the Prague High

Court, in order that fundamental rights arising from Art. 9, Art. 26 and

Art. 28 of the Charter not be affected, it is necessary to require that

nobody be exempt a priori from the obligation to pay a deposit for

bankruptcy expenses. The existence of this situation is made possible by

§ 5 para. 1 second sentence of the Bankruptcy and Settlement Act. Aware

of the need for an instrument to remove harshness, the petitioner notes

in this regard that the court need not require the deposit (or need not

stop proceedings due to the deposit not being paid) in those cases

where there are funds in the bankruptcy estate from which bankruptcy

expenses can be paid.

The Prague High Court believes that a

legal regulation which exempts some persons from paying a deposit and

does not permit satisfying the trustee’s lawful and justified claims

even from the funds of the state, a body of which appointed the

thus-injured person to the position of trustee, is in conflict with Art.

9, Art. 26 and Art. 28 of the Charter. Therefore, the court proceeded

in this matter under § 109 para. 1 let. c) of the Civil Procedure Code, §

66a para. 1 and 66b para. 3 of the Bankruptcy and Settlement Act, and

filed with the Constitutional Court, under Art. 95 para. 2 of the

Constitution and § 64 para. 4 Act No. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations, a petition to

annul § 5 para 1 second sentence and § 8 para. 3 second sentence of the

Bankruptcy and Settlement Act.
 


II.
 

Under

§ 42 para. 3 and § 69 of Act No. 182/1993 Coll., as amended by later

regulations, the Chamber of Deputies and the Senate of the Parliament of

the CR, as parties to the proceedings, presented their positions on the

petition.
 


III.
 

Under

§ 44 para. 2 of Act No. 182/1993 Coll., as amended by later

regulations, the Constitutional Court may, with the consent of the

parties, dispense with a hearing, if no further clarification of the

matter can be expected from one. In view of the fact that this provision

could be applied to evaluation of the present matter, the

Constitutional Court, after the statements from the parties, dispensed

with a hearing.
…..
 

IV.
 

The

Constitutional Court first considered, under § 68 para. 2 of Act No.

182/1993 Coll., as amended by later regulations, whether 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

passed and issued within the bounds of constitutionally prescribed

jurisdiction and in a constitutionally prescribed manner. The

Constitutional Court stated that the Act was passed and issued within

the bounds of constitutionally prescribed jurisdiction and in a

constitutionally prescribed manner.
 


V.
 

The text of the contested statutory provisions is the following:
 

Under

§ 5 para. 1 second sentence of the Bankruptcy and Settlement Act: “If

the petitioner’s claim arises from wage claims, the petitioner is exempt

from paying the deposit, with the exception of employees stated in §

67b.“
 

Under § 8 para. 3

second sentence of the same Act: “The trustee’s claims are satisfied out

of the bankruptcy estate, and if it is not sufficient, from the deposit

for bankruptcy expenses paid by the petitioner.”
 


VI.
 

The

purpose of the Bankruptcy and Settlement Act, under § 1 of Act No.

328/1991 Coll., as amended by later regulations, is the regulation of

the property relationships of a debtor who is bankrupt. A debtor is

bankrupt if he has multiple creditors and is not able, over a lengthier

period, to meet his obligations when they come due. A natural person, if

an entrepreneur, or a legal entity is bankrupt if it is over-indebted.

Thus, bankruptcy proceedings are a special procedure, involving a

certain public law interference for purposes of regulating the property

relationships of all entities affected by the debtor’s bankruptcy.

A mandatory component of bankruptcy proceedings is the appointment of a

bankruptcy trustee (§ 8 of the Bankruptcy and Settlement Act). The

opinions of case law and doctrine agree that the bankruptcy trustee is

not a party to the bankruptcy proceedings; however, as a special

procedural subject he has an independent status both vis-à-vis the

bankrupt and vis-à-vis the creditors, and he can not be considered to be

the representative of the creditors or the representative of the

bankrupt (see the position of the Supreme Court file no. Cpjn 19/98,

published in the Collection of Court Decision. no. 7/1998; K. Eliáš,

Bankruptcy. Lawyer, no. 2/1995, p. 123; F. Zoulík, The Bankruptcy and

Settlement Act. Commentary. 3rd ed., Prague 1998, p. 63-70; J. Zelenka,

J. Maršíková, The Bankruptcy and Settlement Act and Related Regulations.

Commentary. Prague 2002, p. 159).

Doctrine categorizes the

bankruptcy trustee among special public law bodies, and his task is to

ensure the proper conduct of the bankruptcy proceedings (see K. Eliáš,

Bankruptcy. Lawyer, no. 2/1995, p. 123; H. Hrstková, R. Tománek, Some

Basic Issues of the Bankruptcy and Settlement Act. Law and Business, no.

10/1994, p. 27 et seq.; Fr. Štajgr, Bankruptcy Law. Prague 1947, p.

71).

The Constitutional Court agrees with the doctrinal

definition, taking as a starting point the aspects defining the concept

of a public law body: They are a public purpose, manner of

establishment, and authorization. The public purpose of the institution

of the bankruptcy trustee must be seen in the acceptance of limited

public interference into resolving property rights which have reached a

critical state. The manner of the trustee’s appointment is provided by a

decision by a state body (court). His powers, which are established in a

number of provisions in the Bankruptcy and Settlement Act (§ 14, § 17

to 20, § 24, § 26 to 29), in view of their heteronomous nature (the

trustee can not be considered the representative of the creditors or the

bankrupt), are an exercise of authority (in contrast to the

heteronomous nature of public law acts, private law acts – legal acts –

are of an autonomous nature).

The trustee is a natural person

or legal entity, registered in the list of trustees, appointed by a

court (§ 8 of the Bankruptcy and Settlement Act). A trustee is entitled

to remuneration and compensation of cash expenses (§ 8 para. 3 of the

Act). These are then part of the bankruptcy expenses. Under § 8 para. 3

of the Bankruptcy and Settlement Act the trustee’s claims are satisfied

from the bankruptcy estate, and, if that is not sufficient, from the

deposit for bankruptcy expenses paid by the petitioner.

The Act

establishes an exception to the petitioner’s general obligation to pay a

deposit for bankruptcy expenses, under which, if the petitioner’s claim

is based on wage claims, the petitioner is exempt from paying the

deposit, with the exception of the debtor’s management employees and

related persons (§ 5 para. 1 of the Bankruptcy and Settlement Act). The

purpose of this exception, as pointed out by the Senate’s position, was

the need for increased protection for employees’ wage claims (which was

also reflect in § 32 of the Bankruptcy and Settlement Act). In this

regard, the Constitutional Court shares the legislature’s conviction,

that exemption from paying the deposit for bankruptcy expenses in the

cited cases, and the purpose which the legislature pursued with this

provision, is not in conflict with the constitutional order, in view of

the petitioner’s arguments particularly with Art. 9, Art. 26 and Art. 28

of the Charter.

The cited legal construction makes it possible

for a situation to arise where no assets from the bankruptcy estate are

converted to money and the deposit for bankruptcy expenses was not paid,

as the petitioner seeking the opening of bankruptcy proceedings, as a

creditor of the bankrupt seeking satisfaction of a wage claim, was

exempt from this obligation under § 5 para. 1 of the Bankruptcy and

Settlement Act. In these circumstances § 8 para. 3 second sentence of

the Act does not establish another alternative source from which the

trustee’s claims can be satisfied.

In this regard we must point

to the developments in legal regulation of bankruptcy and settlement,

which in the amendment of Act No. 328/1991 Coll., enacted by Act No.

94/1996 Coll., abandoned the finding principle in bankruptcy proceedings

in determining the debtor’s assets before opening bankruptcy

proceedings. According to the explanatory report to § 12a, newly

inserted by the amendment “in the future the court will not have the

obligation, before opening bankruptcy proceedings, to determine the

extent of assets, but shall deny the petition only if there is an

evident lack of necessary assets”. The purpose of this amendment was not

only to speed up bankruptcy proceedings, but in particular to eliminate

having the office of bankruptcy trustee filled by the court.

The first question which must be answered in this matter is whether

performance of the position of a bankruptcy trustee constitutionally

falls within the framework defined in Art. 9 para. 2 of the Charter, or

Art. 4 para. 3 of the Convention for the Protection of Human Rights and

Fundamental Freedoms (the “Convention”).

If the grounds under

Art. 9 para. 2 of the Charter have not been met, under paragraph 1 of

the same provision of the Charter no one may be subjected to forced

labor or service. Analogously, under Art. 4 para. 2 of the Convention,

no one shall be required to perform forced or compulsory labor, and

“forced or compulsory labor” are, under Art. 4 para. 3 of the

Convention, not considered to be precisely defined areas of labor and

services.

The Constitutional Court expressed a position for the

interpretation of the provisions concerned, in a matter the subject of

which was the issue of determining remuneration and compensation of cash

expenses of defense counsel appointed under § 39 of the Criminal

Procedure Code, in file no. Pl. US-st.-1/96. It stated that Art. 40

para. 3 of the Charter represents a special constitutional guarantee of

the right to defense counsel, and Art. 9 para. 2 let. d) of the Charter

enshrines the constitutional mechanism for ensuring it. According to it,

the case of conduct imposed by the law to protect the rights of others

does not involve forced labor or service. In the case of compulsory

defense, there is thus not forced labor, because the grounds for

compulsory defense, as well as the procedure for appointing defense

counsel in fulfilling them, are provided by law (§ 36 et seq. Criminal

Procedure Code), for the protection of the right to a defense (Art. 40

para. 3 of the Charter). Art. 9 para. 2 of the Charter represents an

instrument for protection an entire range of very diverse values (for

example, an instrument for protecting national defense, removing the

consequences of natural disasters, accidents, protection of life, health

or property). One can imagine situations under Art. 9 para. 2 of the

Charter in which no compensation would be provided (for example, in

removing the consequences of natural disasters). Thus, the criterion by

which the legislature should be guided in setting compensation for

actions under Art. 9 para. 2 of the Charter is not the principle of

equivalence, but the principle of proportionality. The decisive aspect

from a constitutional viewpoint is whether any inconsistency between the

scope of work and services and the compensation affects Art. 9 para. 2

let. d) of the Charter with an intensity that violates the principle of

proportionality, i.e. in a manner connecting a disproportionate burden

of labor with the level of compensation and compensation of cash

expenses. In this regard, the Constitutional Court also pointed to the

analogous legal opinion stated by the European Court of Human Rights in

the matter of Van der Mussele v. Belgium (1983). Based on the nature of

the matter, the Constitutional Court ruled out application of Art. 28 of

the Charter to evaluation of the present matter.

In the

Constitutional Court’s opinion, the legal opinion expressed in file no.

Pl. US-st.-1/96 does not apply to the matter of the constitutionality of

§ 5 para. 1 second sentence and § 8 para. 3 second sentence of the

Bankruptcy and Settlement Act. From a constitutional viewpoint,

performance of the office of bankruptcy trustee on the basis of court

appointment can not be classified as labor or service imposed by law for

the protection the rights of others under Art. 9 para. 2 let. d) of the

Charter.

Under § 8 para. 1 of the Bankruptcy and Settlement

Act, the trustee is chosen from a list of trustees maintained by the

court of jurisdiction, and a natural person or company can be entered in

the list only if he/it agrees to be listed. A person registered on the

list may refuse appointment as a trustee only if there are important

reasons for doing so. In exceptional cases a court may also appoint as

trustee a person who is not on the list of trustees, if he/it agrees.

This mechanism ensures either the implicit, prior general consent to

perform the position of trustee, or specific consent for a given case.

For these reasons performance of the position does not meet the element

of lack of consent as a condition for performance of labor or services

under Art. 9 para. 2 of the Charter, or Art. 4 para. 3 of the

Convention.

Performance of the office of bankruptcy trustee is

not part of an employment relationship, and thus does not fall within

the content, purpose or meaning of Art. 26 of the Charter. It is not the

conduct of business or the conduct of other economic activity, and

thus, in constitutional terms it can not be classified in the framework

defined by Art. 26 of the Charter.

If we take as a starting

point the proposition that a bankruptcy trustee can be categorized as a

special public law body, then from a constitutional law viewpoint the

question of constitutional safeguards of remuneration and compensation

of expenses related to the performance of public positions is a key

question for the matter.

These safeguareds are given by the

substance of laws arising from the constitutional principle of equality

(Art. 1 and Art. 3 para. 1 of the Charter). In interpreting the

constitutional principle of equality the Constitutional Court agreed

(particularly in judgments in matters under file nos. Pl. US 16/93, Pl.

US 36/93, Pl. US 5/95 and Pl. US 9/95) with the interpretation of the

constitutional principle of equality as it was expressed by the

Constitutional Court of the CSFR (R 11, 1992): “It is a matter for the

state to decide, in the interest of securing its functions, that it will

provide fewer advantages to a particular group than to another. Even

here, however, it may not proceed arbitrarily. ... If the law determines

the success of one group and thereby simultaneously imposes

disproportionate obligations on another, this may happen only with

reference to public values.” The Constitutional Court thereby rejected

an absolute interpretation of the principle of equality, and further

stated: “the equality of citizens can not be understood as an abstract

category, but as relative equality, as all modern constitutions

understand it” (Pl. US 36/93). Thus, it shifted the substance of the

principle of equality into the area of constitutional admissibility of

ground for differentiating subjects of law and rights. It thus sees the

first ground in ruling out arbitrariness. The second ground arises from

the legal opinion expressing in the judgment in the matter under file

no. Pl. US 4/95: “inequality in social relationships, if it is to affect

fundamental human rights, must reach an intensity which casts doubt

upon, at least in a particular aspect, the very substance of equality.

As a rule, this happens when the violation of equality is connected to

the violation of another fundamental right, e.g. the right to own

property under Art. 11 of the Charter, one of the political rights under

Art. 17 et seq. of the Charter, and so on.” (likewise Pl. US 5/95). The

second ground in evaluating the unconstitutionality of a legal

regulation which establishes inequality is whether it affects one of the

fundamental rights and freedoms. In other words, in its case law the

Constitutional Court interprets the constitutional principle of equality

in the sense of accessory and non-accessory equality.

In view

of the diversity of purposes of public offices, no safeguards

automatically arise from the constitutional order concerning the source

of remuneration and compensation of expenses related to their

performance, nor do safeguards, concerning their structure and amount.

(e.g. under § 108 of the Notarial Code, in connection with § 11 to 14 of

Decree no. 106/2001 Coll., on Remuneration and Compensation of Notaries

and Estate Administrators, as amended by later regulations, the

remuneration of a notary, as a court commissioner, is paid by the person

who requests the performance of a notarial act; the state does so

exceptionally, in cases of death). Nonetheless, the maxim of

proportionality arises for remuneration and compensation of expenses

related to the performance of public offices from the constitutional

principle of non-accessory equality, whose function is ruling out

arbitrariness on the part of the legislature in differentiating subjects

of law and rights.

Insofar as there is a constitutional

purpose for the legal regulation permitting bankruptcy proceedings in a

case where no assets from the bankruptcy estate are converted to money

in the proceedings and the deposit for bankruptcy expenses has not been

paid, because the petitioner seeking bankruptcy proceedings was exempt

from that obligation, then the situation which this creates in the legal

regulation of compensation of cash expenses and remuneration for the

trustee must be considered to be violation of the constitutional

principle of non-accessory equality. In comparison with cases where, in

bankruptcy proceedings, assets were converted to money or the deposit

for bankruptcy expenses was paid and the funds used to pay trustees’

cash expenses and remuneration, the trustee’s claims (compensation of

cash expenses and remuneration), in cases of an insolvent bankrupt and a

petitioner exempt from the obligation to pay the deposit for bankruptcy

expenses, will not be satisfied, as the assets in the bankruptcy estate

are not sufficient to pay the bankruptcy expenses. The resulting

inequality in remuneration and compensation of expenses related to the

performance of a public office is an inequality which is, for one thing,

extreme (as it permits the non-payment of remuneration and compensation

of cash expenses for one group) and, for another, an inequality which

lacks and purpose (here, we must distinguish from a purpose justifying

inequality of subjects of law and rights the causes of such inequality).

Only as obiter dictum we can state here that, similarly as in

comparable matters (§ 23 of Act No. 85/1996 Coll., on Attorneys, as

amended by later regulations), in these cases payment of the trustee’s

remuneration and cash expenses by the state would be appropriate.

If, in view of the cited reasons, § 5 para. 1 second sentence and § 8

para. 3 second sentence of the Bankruptcy and Settlement Act are in

conflict with Art. 1 and Art. 3 para. 1 of the Charter and with Art. 26

of the International Covenant on Civil and Political Rights (the

“Covenant”), it is not due to their text, but to the gap in the law

which they create. What is unconstitutional is the legislature’s

omission, which results in a constitutionally inadmissible inequality

(on the doctrinal interpretation of the concept of legislative omission

see V. Šimíček, Legislative Omission as Violation of Fundamental Rights.

In: Ten Years of the Charter of Fundamental Rights and Freedoms in the

Legal Order of the Czech Republic and Slovak Republic. Eds. B. Dančák,

V. Šimíček, Brno 2001, pp. 144-159).

The present matter

concerns an apparent gap, which is the incompleteness of written law

(its absence) in comparison with the explicit regulation of analogous

cases, i.e. an incompleteness in terms of the principle of equality, or

in terms of general legal principles. An illustration of resolving such a

gap is the judgment in the matter under file no. Pl. US 48/95, in which

the Constitutional Court prescriptively filled the gap created by

inequality in legal regulation with the help of a constitutional

interpretation of the relevant legal regulation (the argument a minori

ad maius), and denied the petition to annul it because its text was not

in conflict with the constitutional order.

That method can not

be used in the adjudicated matter. The provision whose absence in the

Bankruptcy and Settlement Act establishes an unjustified inequality is

the provision of an entity that would pay, or resources from which the

trustee’s remuneration and cash expenses would be paid in the case of an

insolvent bankrupt and a petitioner exempt from paying the deposit for

bankruptcy expenses. However, a norm which would be the substance of

such a provision cannot be derived by interpretation from the test of

the Bankruptcy and Settlement Act.

Based on all the cited

reasons, the Constitutional Court concluded that § 5 para. 1 second

sentence and § 8 para. 3 second sentence of the Bankruptcy and

Settlement Act are in conflict with Art. 1 and Art. 3 para. 1 of the

Charter and with Art. 26 of the Covenant, wherefore the Plenum of the

Constitutional Court decide to annul them. Under § 70 para. 1 Act No.

182/1993 Coll., as amended by later regulations, the Constitutional

Court postponed the effect of this derogative judgment until 31 March

2003, to permit the legislature to remove the existing

unconstitutionality.
 


VII.
 

The

constitutional maxim in Art. 9 para. 2 of the Constitution has

consequences not only for the framers of the constitution, but also for

the Constitutional Court. The inadmissibility of changing the

substantive requirements of a democratic state based on the rule of law

also contains an instruction to the Constitutional Court, that no

amendment to the Constitution can e interpreted in such a way that it

would result in limiting an already achieved procedural level of

protection for fundamental rights and freedoms.

This must be a

basis for evaluating the changes brought by the amendment to the

Constitution, implemented by constitutional Act No. 395/2001 Coll., in

Art. 1 para. 2, Art. 10, Art. 39 para. 4, Art. 49, Art. 87 para. 1 let.

a), b) and Art. 95 of the Constitution. The enshrining in the

Constitution of a general incorporative norm, and the overcoming thereby

of a dualistic concept of the relationship between international and

domestic law, can not be interpreted to mean that ratified and

promulgated international agreements on human rights and fundamental

freedoms are removed as a reference point for purposes of the evaluation

of domestic law by the Constitutional Court with derogative results.

Therefore, the scope of the concept of constitutional order can not be

interpreted only with regard to § 112 para. 1 of the Constitution, but

also in view of Art. 1 para. 2 of the Constitution, and ratified and

promulgated international agreements on human rights and fundamental

freedoms must be included within it.

This is also indirectly

supported by Art. 95 para. 2 of the Constitution, as otherwise it would

have to be interpreted to the effect that, in the event a statue is in

conflict with a constitutional act, a general court judge is not

qualified to evaluate the matter and is required to submit it to the

Constitutional Court, in the event of conflict between a statute and an

agreement on human rights which is of the same nature and quality in

constitutional law, under Art. 10 of the Constitution he is required to

proceed according to the internal agreement. Even if such a decision

were taken by a court of any level, in a legal system which does not

contain judicial precedent with the quality and binding nature of a

source of law it could never have even de facto derogative consequences.

The Constitution would thus create an unjustified procedural inequality

for two situations identical in their constitutional nature, which, on

the basis of the argument reductionis ad absurdum, can not be ascribed

to the framers of the constitution as a purpose of a constitutional

amendment.

The cited interpretation of Art. 1 para. 2, Art. 10,

Art. 87 para. 1 let. a), b), Art. 95 and Art. 112 para. 1 of the

Constitution is also supported by the fact that even after passing

constitutional Act No. 395/2001 Coll. the legislature did not change §

109 para. 1 let. c) Civil Procedure Code and § 224 para. 5 Criminal

Procedure Code, which impose on the general courts the obligation to

interrupt proceedings and submit a matter for evaluation to the

Constitutional Court not only if a statue or its individual provision is

in conflict with a constitutional act, but also if they are in conflict

with an international agreement which has precedence over statues.

For these reasons, Art. 95 para. 2 of the Constitution must be

interpreted to the effect that a general court has an obligation to

submit to the Constitutional Court for evaluation a matter in which it

concludes that the statute which is to be used in resolving the matter

is in conflict with a ratified and promulgated international agreement

on human rights and fundamental freedoms.
 

Guided

by these considerations, in the present matter the Constitutional Court

did not limit evaluation of constitutionality of the provisions of the

Bankruptcy and Settlement Act contested by the petitioner only to

reviewing their consistency with constitutional acts, but also with

ratified and promulgated international agreement on human rights and

fundamental freedoms.

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

Brno 25 June 2002