2003/06/24 - Pl. ÚS 44/02: Inequality within Bankruptcy Act

24 June 2003

HEADNOTES


One

can not a priori assume that the legislature, in passing § 12a par. 5,

second sentence, of the Bankruptcy and Settlement Act, intended to

violate Art. 96 par. 1 of the Constitution. Therefore, one also can not

assume that by providing protection for the property of a group of

creditors who, on its basis, file an appeal against a decision to deny

bankruptcy due to insufficient assets and document that they have a

monetary receivable against the debtor, it also intended to give an

unjustifiably different procedural position as compared to the group of

other creditors-parties.


Although

in the case of the contested sentence the statute does not expressly

state that a creditor making use of the right to appeal is limited by

the state of the proceedings at the time he joined them, one can not

conclude, merely because of that, that he is not limited by that state.

On the contrary, in accordance with the requirement of a constitutional

interpretation, it is necessary to assume that the creditor filing an

appeal under § 12a par. 5, second sentence of the Bankruptcy and

Settlement Act by filing an appeal, enters into already on-going

proceedings analogously to “additional applicants” who also enter the

proceedings after they have begun.
The proceedings must be taken as a

whole, including the proceedings on the appeal. If it is possible to

reach the constitutional conclusion that the appellant is entering the

on-going proceedings as a party with equal rights, he must be given a

deadline to file an appeal only until such time as the proceedings on

the bankruptcy application are still continuing. Thus, he can file an

appeal only within a period calculated from the delivery of the decision

by the first level court to the (last) party.


As

the Constitutional Court concluded in its judgment file no. Pl. ÚS

36/01, published as no. 403/2002 Coll., the enshrining in the

Constitution of a general incorporative norm, and thereby overcoming a

dualistic concept of the relationship between international law and

domestic law (constitutional Act no. 395/2001 Coll.), can not be

interpreted to the effect that it would remove 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 possible derogative consequences. The scope

of the concept of the constitutional order can not be interpreted only

with regard to Art. 112 par. 1 of the Constitution, but also in view of

Art. 1 par. 2 of the Constitution. The Constitutional Court also

confirmed this conclusion in its further decision-making (cf. judgment

file no. I. ÚS 752/02).

The

inception of insolvency (§ 1 par. 2) is connected without

differentiation with the debtor’s obligations or the receivables of

creditors, monetary or non-monetary. The only requirement is that the

obligations/receivables be “due.” A due receivable is a property value

under Art. 1 of the Additional Protocol, as it meets the conditions

imposed by the ECHR case law on the concept of “legitimate expectation,”

which the creditor must have that his receivable against the debtor

will be realized, and is in effect transformed into the effective

exercise of the property right (a receivable made fully specific,

current, and enforceable). The contested sentence, which expressly

recognizes the right to appeal against a decision to deny the

application for bankruptcy due to insufficient assets only to creditors

with receivables of a monetary nature, disadvantages creditors who can

document only a non-monetary receivable. This introduces an inequality

between the creditors under the contested provision, an inequality which

is not reasonably justified and is discriminatory, which is

inconsistent with the ban on discrimination imposed by Art. 14 of the

Convention on the Protection of Human Rights and Fundamental Freedoms.

In view of the explicitly stated condition of a receivable being

monetary, there is no room for a constitutional interpretation of the

contested sentence.



CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC


The

Plenum of the Constitutional Court, composed of JUDr. Vojtěch Cepl,

JUDr. František Duchoň, JUDr. Miloš Holeček, JUDr. Pavel Holländer,

JUDr. Vladimír Jurka, JUDr. Vladimír Klokočka, JUDr. Jiří Malenovský,

JUDr. Jiří Mucha, JUDr. Antonín Procházka, JUDr. Pavel Varvařovský,

JUDr. Vlastimil Výborný, JUDr. Eliška Wagnerová and JUDr. Eva Zarembová,

ruled on a petition from the Supreme Court of the Czech Republic, panel

no. 29, represented by the Panel Chairman, JUDr. Zdeňek Krčmář, seeking

the annulment of § 12a par. 5, second sentence, of Act no. 328/1991

Coll., on Bankruptcy and Settlement, as amended by later regulations, as

follows:


1.§ 12a

par. 5 second sentence of Act no. 328/1991 Coll., on Bankruptcy and

Settlement, as amended by later regulations, expressed by the word

“monetary,” is annulled as of the day this judgment is promulgated in

the Collection of Laws.

2.The remaining part of the petition is denied.

 


REASONING
 

I.
 

On

2 December 2002 the Constitutional Court received a petition from panel

no. 29 of the Supreme Court of the Czech Republic, in which the

petitioner seeks the annulment of § 12a par. 5, second sentence, Act no.

328/1991 Coll., on Bankruptcy and Settlement, as amended by Act no.

122/1993 Coll., no. 42/1994 Coll., no. 74/1994 Coll., no. 117/1994

Coll., no. 156/1994 Coll., no. 224/1994 Coll., no. 84/1995 Coll., no.

94/1996 Coll., no. 151/1997 Coll., no. 12/1998 Coll., no. 27/2000 Coll.,

no. 30/2000 Coll., no. 105/2000 Coll., no. 214/2000 Coll., no. 368/2000

Coll., no. 370/2000 Coll., and no. 120/2001 Coll. (also the “Bankruptcy

and Settlement Act”), expressed by the words : “A decision to deny the

application to declare bankruptcy due to insufficient assets may also be

appealed by a creditor who proves that he has a monetary receivable

against the debtor.”
 

The

petitioner stated that it is reviewing , under file no. 29 Odo 184/2001,

a creditor’s appeal on a point of law against a resolution of the High

Court in Prague of 26 January 2001, file no. 2 Ko 172/2000-32, in the

matter conducted at the Regional Court in Pilsen under file no. 26 K

72/2000 [application by the debtor Golf and Country Club, a.s. in

liquidation, with its registered office in Karlovy Vary, Petřín 3/1165,

postal code 360 01, Company ID no. 61 05 88 23 (the “debtor”), for a

declaration of bankruptcy]. In reviewing this appeal on a point of law,

the petitioner concluded that the Act which is to be applied to the

matter is inconsistent with the Constitution of the Czech Republic.

Therefore, it seeks annulment of that Act under Art. 95 par. 2 of the

Constitution and § 64 par. 4 Act no. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations.
 

The

Supreme Court was led to this petition by the following reasons. The

debtor’s liquidator filed an application for bankruptcy with the

Regional Court in Pilsen on 27 September 2000, on the grounds that the

company was over-indebted and had no assets. The Regional Court, by

decision of 4 October 2000, file no. 26 K 72/2000-12, denied the

application for bankruptcy. That decision was contested by an appeal

from the creditor, Československá obchodní banka, a.s., with its

registered office in Prague 1 – Nové Město, Na Příkopě 854/14, Company

ID no. 00 00 13 50. The High Court in Prague denied the appeal by

decision of 26 January 2001, file no. 2 Ko 172/2000-32, considering the

bank, under § 218 par. 1 let. b) of Act no. 99/1963 Coll., the Civil

Procedure Code, as in effect before 1 January 2001 (the “CPC”), an

entity which is not authorized to file an appeal.
 

The

petitioner states that § 12a par. 5 of the Bankruptcy and Settlement

Act gives standing to file an appeal against a decision to deny an

application for bankruptcy due to insufficient assets to the existing

parties to the proceedings, if these are the petitioner and other

petitioners, as well as to a creditor who proves that he has a monetary

receivable against the debtor. It thus relies on the standard

interpretation of participation in the first phase of bankruptcy

proceedings presented by court practice on the basis of the opinion of

the civil law and commercial collegium of the Supreme Court, published

as no. 52/1998 in the Collection of Court Decisions and Opinions.

According to the cited opinion, § 90 of the CPC is not applicable in

bankruptcy proceedings, even proportionately. The Bankruptcy and

Settlement Act has an independent provision which defines the parties to

proceedings, and the circle of parties to proceedings is further

defined by defining the persons authorized to file an application

(another application). Therefore, it is not appropriate to define a

party to bankruptcy proceedings differently. However, neither § 12a par.

5, second sentence, of the Bankruptcy and Settlement Act (also referred

to as the “contested sentence” nor other provisions of the Act provide

an answer to certain fundamental questions in this regard. Primarily, it

is not possible to determine at what time the period for filing an

appeal  begins to run for the persons defined in that provision. The

decision against which they are to appeal is not delivered to them. It

is also not clear when that period expires. Further, there can be doubts

as to whether the status of the proceedings applicable to such

appellants is the status at the time when their appeal reaches the

court. This is expressly provided for other applicants by the Bankruptcy

and Settlement Act in § 4 par. 4. This allegedly creates room for the

proceedings before the appeals court (in conflict with the principle of

two-level proceedings) to become proceedings of the first level. The Act

does not accord the right to appeal to everyone who claims to be a

creditor of the debtor, but only to a person who proves his receivable

against the debtor. It is evident that by filing an appeal the relevant

person becomes a party to the appeals proceedings. However, if he does

not at the same time file another application (§ 4 par. 4 of the

Bankruptcy and Settlement Act), it is not clear in what manner and with

what procedural rights and obligations he will take part in the new

proceedings before the court of the first level in the event that his

appeal is successful, the decision to deny is reversed, and the matter

is returned to the court of the first level for further proceedings.
 

The

petitioner claims that the contested provision is therefore

inconsistent with Art. 1 of the Constitution and Art. 37 par. 3 of the

Charter of Fundamental Rights and Freedoms (the “Charter”). The

abovementioned questions lead the petitioner to conclude that the

contested sentence is inconsistent with the principle of legal

certainty. According to the petitioner, the principle of equality of the

parties is violated because the contested sentence results in different

treatment of the parties to the bankruptcy proceedings. However, the

different treatment is not supported by any statutory viewpoint which

would justify it. Finally, the petitioner also claims that a person who,

as a creditor with a financial receivable against the debtor, enters

the proceedings only by filing an appeal against the decision to deny

the application for bankruptcy, under the contested sentence, either

becomes a party to the bankruptcy proceedings only in the appeal stage,

or becomes the same type of party to the proceedings as an additional

applicant under § 4 par. 4 of the Bankruptcy and Settlement Act

(including for proceedings before the court of the first level after

reversal of the first level court’s decision as a result of the appeal).

In both cases, however, compared to an appellant who is an additional

applicant, the appellant under the contested sentence must document his

standing to appeal by “documenting” (verifying) the monetary receivable

against the debtor. The appeals court is thereby also placed in the role

of a court of the first instance (it reviews, acting as a court of

first instance, whether the appellant is the debtor’s creditor,

regardless of the fact that the only substantive argument on the basis

of which a decision to deny a bankruptcy application can be reversed in

appeal proceedings can consist of refuting the conclusion that the

debtor clearly has insufficient assets). Unlike an appellant who is an

additional applicant, an appellant under the contested sentence is not

limited in his procedural rights by the state of the proceedings at the

time when his appeal reached the court (the law does not impose this

limitation on him, although the need for it may become important after

reversal of the first level court’s decision by the appeals court, in

the new proceedings before the court of the first level).
 


II.
 

The

Constitutional Court, under § 69 par. 1 of Act no. 182/1993 Coll., on

the Constitutional Court, as amended by later regulations, requested

opinions on the petition from the Chamber of Deputies and the Senate of

the Parliament of the Czech Republic, as parties to the proceedings. The

Chamber of Deputies and the Senate provided opinions on the petition.
…..
 


III.
 

The

Constitutional Court first, in accordance with § 68 par. 2 of the Act

on the Constitutional Court, reviewed whether the statute whose

provision the petitioner claims to be unconstitutional was passed and

issued within the bounds of constitutionally provided jurisdiction and

in a constitutionally prescribed manner.
 

The

Constitutional Court determined that the statute was passed and issued

in a constitutionally prescribed manner and within the bounds of

constitutionally provided jurisdiction, and that the rules provided in

Art. 39 par. 1 and 2 of the Constitution were observed.
 

In

view of the fact that further clarification of the matter could not be

expected from oral proceedings, the court asked the parties to the

proceedings whether they agreed to waive them (§ 44 par. 2 Act no.

182/1993 Coll., on the Constitutional Court), with the provision that if

they did not send an express statement to the Constitutional Court by

the stated deadline, the court would assume that they agreed to waive

oral proceedings.
 

The

Chairman of the Chamber of Deputies informed the Constitutional Court in

his opinion on the petition, that he agreed with handling the matter

without oral proceedings. The Chairman of the Senate also stated, by

letter of 13 June 2003, that he agreed to waive oral proceedings. In

view of the fact that before setting the date for issuing this judgment

it was not whether the petitioner actually received the query from the

Constitutional Court under § 44 par. 2 Act no. 182/1993 Coll., on the

Constitutional Court, this was verified by telephone on 24 June 2003.

The petitioner informed the Constitutional Court that it agreed to waive

oral proceedings (cf. official record of 24 June 2003, p. 30 of the

file). It then did not respond to the query in writing.
 

In

this situation, the Constitutional Court believed that the conditions

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

met, and waived oral proceedings.
 


IV.
 

In

the petition, the petitioner seeks the annulment of § 12a par. 5,

second sentence, of the Bankruptcy and Settlement Act, under which “A

decision to deny the application to declare bankruptcy due to

insufficient assets may also be appealed by a creditor who proves that

he has a monetary receivable against the debtor.”
 

Under

§ 1 par. 1 of the Bankruptcy and Settlement Act the purpose of this Act

is to arrange the property relationships of a debtor who is insolvent.

Arranging the debtor’s property relationship must be understood to mean

settling the claims of the debtor’s creditors under conditions set by

the Act. Likewise the amendment of the Bankruptcy and Settlement Act

(Act no. 105/2000 Coll.), according to the background report, is aimed

at, among other things, strengthening the position of creditors. The

contested sentence also does not deviate from this legitimate aim of

providing increased protection to creditors’ property, as it strengthens

the procedural position of creditors who were not yet parties to the

bankruptcy proceedings and could not appeal the decision to deny the

bankruptcy application due to insufficient assets.
 

The

petitioner primarily sees the contested sentence as inconsistent with

Art. 37 par. 3 of the Charter of Fundamental Rights and Freedoms, under

which all parties to proceedings are equal. As the Constitutional Court

said in a recent judgment, file no. Pl. ÚS 19/02, in which it also

considered the issue of equality of parties in bankruptcy proceedings,

in a different context, this provision of the Charter is supposed to

guarantee equal procedural rights and obligations of the specific

parties in particular proceedings. The petitioner’s petition of course

seeks abstract inspection of the contested norm, though with the

background of a particular case. That case is known to the

Constitutional Court only from reports and it is naturally not its task

to consider it in any way in these proceedings. Therefore, the

Constitutional Court reviewed the present petition through the prism of

Article 96 par. 1 of the Constitution, which sets forth the general

principle of equality of the parties in proceedings with the same

subject matter.
 

In the

cited judgment, file no. Pl. ÚS 19/02, the Constitutional Court granted

the petition, as it found that the legislature impermissibly recognized

different procedural rights and obligations for parties to proceedings

with the same subject matter. The Constitutional Court also did not find

a possibility for overcoming the unconstitutionality of the contested

provision (§ 24 par. 4 of the Bankruptcy and Settlement Act) through an

interpretation which would be constitutional.
 

The

petitioner claims that the contested sentence is uncertain and violates

the principle of legal certainty, and that it leads to different

treatment of parties to bankruptcy proceedings. It does not define the

beginning of the period for filing an appeal against a court decision

denying the application for bankruptcy due to insufficient assets, and

does not determine what position persons authorized to file an appeal

will have in proceedings after such a decision is reversed. In contrast

to an appellant who is an additional applicant, appellants under § 12a

par. 5, second sentence, of the Bankruptcy and Settlement Act must

document their standing to file an appeal by “documenting” their

monetary receivable against the debtor. The contested sentence also does

not mention whether and in what way the rights of these persons are

limited by the fact that they are only entering the proceedings in this

part. According to the petitioner appellants under § 12a par. 5, second

sentence, of the Bankruptcy and Settlement Act are not limited in their

procedural rights by the state of the proceedings at the time when their

appeal reaches the court, as the Act does not impose such limitation on

them (in contrast to “additional applicants”).
 


V.
 

The

objection relating to the indefiniteness of the contested sentence is

related to the requirement that a statute be foreseeable. It can be said

generally that the indefiniteness of a provision in a legal regulation

must be considered in conflict with the requirement of legal certainty,

and thus also with a state governed by the rule of law (Art. 1 par. 1 of

the Constitution of the CR), only if the intensity of that uncertainty

rules out the possibility of determining its normative content with the

help of the usual interpretational steps (cf. Constitutional Court

judgment file no. Pl. ÚS 9/95). In other words, a certain degree of

uncertainty in a legal regulation is a logical consequence of the nature

of a legal norm, being a general scale regulating the behavior of

subjects of law. The Constitutional Court points to the settled case law

of the European Court of Human Rights (the “ECHR”), under which the

required degree of precision in a statute depends primarily on the

nature of the relationships which it governs, but also on the number and

nature of the persons at whom it is aimed. It is considered natural

that courts “finish shaping” legal norms which can not expressly take

into account the wealth of relationships and situations for which they

are to be used. The degree of precision and foreseeability of a statute

must, of course, be considerably higher where the statute specifically

permits the public power to interfere in the rights and freedoms of the

individual and opens up room for impermissible arbitrariness, and

especially where the public power is applied secretly, without the

supervision of the public (see ECHR judgment in the matter Kruslin v.

France, 1990, § 30).
 

The

wider subject governed by the contested sentence (the course of

bankruptcy proceedings) does not, in terms of the foregoing, place any

increased demands on the degree of precision, and so it can legitimately

be expected that the court will remove possible unclear points through

its interpretation.
 

The

Constitutional Court believes that the petitioner’s objections can, to a

large extent, be overcome by a constitutional interpretation. The basis

for its interpretative deliberations was the following starting point.

One can not a priori assume that the legislature, in passing § 12a par.

5, second sentence, of the Bankruptcy and Settlement Act, intended to

violate Art. 96 par. 1 of the Constitution. Therefore, one can not

assume that by providing protection for the property of a group of

creditors who, on its basis, file an appeal against a decision to deny

bankruptcy due to insufficient assets and document that they have a

monetary receivable against the debtor, it also intended to give an

unjustifiably different procedural position as compared to the group of

other creditors-parties. This constitutionally consistent assumption is

also borne out by other parts of the Act’s text. For example, a creditor

who files an application for bankruptcy must also document that he has a

(due) receivable against the debtor (§ 4 par. 2 of the Bankruptcy and

Settlement Act). The same condition must be met by an additional

applicant, joining the proceedings and filing an application for

bankruptcy concerning the same debtor before the court rules on the

bankruptcy application (§ 4 par. 4 in conjunction with § 4 par. 2 of the

Bankruptcy and Settlement Act).
 

Therefore,

we can not, without anything further, agree with the petitioner’s

claim, based on the logical interpretive argument a contrario, under

which the unconstitutionality of the contested sentence lies in, among

other things, the fact that it does not determine the position of a

person authorized to file an appeal in the proceedings after reversal of

a decision by which a court denies an application for bankruptcy due to

insufficient assets, and does not determine in what way the rights of

these person are limited by the fact that they are not entering the

proceedings until this phase, unlike the explicit regulation of these

issues in relation to “additional applicants.” This argument can not

succeed in competition with the legitimate assumption that the

legislature did not intend to legislate in an unconstitutional manner,

and reach a constitutional interpretation within proceedings through the

obligations of the courts. In the past the Constitutional Court has

repeatedly ruled that in a situation where a certain provision of a

legal regulation permits various interpretations, one of which is

consistent with the constitutional laws of the Czech Republic, whereas

others are inconsistent with them, there are no grounds to annul that

provision. In that situation, it is the task of all state bodies to

interpret the provision in question in a constitutional manner (cf.

judgment file no. Pl. ÚS 5/96). Although in the case of the contested

sentence the statute does not expressly state that a creditor making use

of the right to appeal is limited by the state of the proceedings at

the time he joined them, one can not conclude, merely because of that,

that he is not limited by that state. On the contrary, in accordance

with the requirement of a constitutional interpretation, it is necessary

to assume that the creditor filing an appeal under § 12a par. 5, second

sentence of the Bankruptcy and Settlement Act by filing an appeal,

enters into already on-going proceedings analogously to “additional

applicants” who also enter the proceedings after they have begun.

Therefore, it is necessary to analogously apply to him § 4 par. 4, the

part of the sentence after the semi-colon, under which the state of the

proceedings when an additional applicant joins is decisive for that

applicant.
 

A constitutional

interpretation can also remove doubts concerning the deadline for filing

an appeal. The proceedings must be taken as a whole, including the

proceedings on the appeal. If it is possible to reach the constitutional

conclusion that the appellant is entering the on-going proceedings as a

party with equal rights, he must be given a deadline to file an appeal

only until such time as the proceedings on the bankruptcy application

are still continuing. Thus, he can file an appeal only within a period

calculated from the delivery of the decision by the first level court to

the (last) party. The same conclusions are basically reached by both Z.

Krčmář, in his commentary to the Bankruptcy and Settlement Act (IFEC

Praha, 2000, p. 38), and by commentary authors JUDr. Ing. Jaroslav

Zelenka, Ph.D., and JUDr. Jolana Maršíková (The Bankruptcy and

Settlement Act, Commentary, LINDE Praha, a.s., 2002, p. 316).
 

The

petitioner further states that creditors who joined proceedings may,

under the first sentence of § 12a par. 5, of the Bankruptcy and

Settlement Act, file an appeal without regard to whether they have

documented their receivable. If the petitioner is trying to use this

argument to support its conclusions on the unconstitutional

disadvantaging of creditors who have not joined the proceedings and who,

in contrast, must document their receivables during the appeal (§ 12

par. 5 second sentence), we can not agree. Every creditor who files an

application for bankruptcy has an obligation to document his receivable

(§ 4 par. 2 of the Bankruptcy and Settlement Act ). If the contested

sentence also imposes the same obligation on a particular category of

creditors, this is not evidence of inequality, but, on the contrary,

equality among creditors. The petitioner’s objection evidently relates

not to the contested second sentence of § 12a par. 5, but to the first

sentence of the same section and the same paragraph, which prima facie

permits an “additional applicant” under § 4 par. 4 of the Bankruptcy and

Settlement Act who establishes his participation in the bankruptcy

proceedings only after the relevant decision is issued to file an appeal

against it, without documenting his receivable. Nonetheless, the

petitioner did not contest this first sentence, and the Constitutional

Court has no reason to specifically consider interpretation of it.
 


VI.
 

Thus,

the Constitutional Court did not agree with the petitioner’s arguments

presented in the present petition. However, it points out that under its

settled case law it is bound only by the proposed judgment in the

petition to open proceedings. However, it is not bound by the petition’s

reasoning. Therefore, it is not inconsistent with its mission it if

reviews the contested provision from other viewpoints as well (cf. e.g.

judgment I. ÚS 89/94). Therefore, it also considered the contested

sentence beyond the framework of the arguments in the petition, from the

point of view that the creditor is supposed to, simultaneously with the

appeal, document his receivable, which must be a monetary one. It also

took into account possible violation of ratified and promulgated

international treaties on human rights and freedoms by which the Czech

Republic is bound. As it concluded in its judgment file no. Pl. ÚS

36/01, published as no. 403/2002 Coll., the enshrining in the

Constitution of a general incorporative norm, and thereby overcoming a

dualistic concept of the relationship between international law and

domestic law (constitutional Act no. 395/2001 Coll.), can not be

interpreted to the effect that it would remove 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 possible derogative consequences. The scope

of the concept of the constitutional order can not be interpreted only

with regard to Art. 112 par. 1 of the Constitution, but also in view of

Art. 1 par. 2 of the Constitution. The Constitutional Court also

confirmed this conclusion in its further decision-making (cf. judgment

file no. I. ÚS 752/02).
 

The

Constitutional Court again points to one of the main aims of the

Bankruptcy and Settlement Act, protection of the rights of the creditors

of a debtor who becomes insolvent. Under § 4 par. 1 of the Bankruptcy

and Settlement Act, an application for bankruptcy can be filed by the

debtor or any of the creditors. The inception of insolvency (§ 1 par. 2)

is connected without differentiation with the debtor’s obligations or

the receivables of creditors, monetary or non-monetary. The only

requirement is that the obligations/receivables be “due.” Using a

teleological, but systematic, interpretation of the Bankruptcy and

Settlement Act (§ 1 par. 2 is among the “introductory provisions”) the

group of creditors under the contested sentence is subject to the

condition of the receivables being “due.”
 

Every

natural person or legal entity has the right to peaceful enjoyment of

his/its property (Art. 1 par. 1 of the Additional Protocol to the

Convention for the Protection of Human Rights and Fundamental Freedoms,

the “Additional Protocol”). The enjoyment of the rights and freedoms set

forth by the Convention for the Protection of Human Rights and

Fundamental Freedoms must be secured without discrimination on any

ground such as sex, race, colour, language, religion, political or other

opinion, national or social origin, association with a national

minority, property, birth or other status (Art. 14 of the Convention for

the Protection of Human Rights and Fundamental Freedoms).
 

A

“due receivable” is a property value under Art. 1 of the Additional

Protocol, as it meets the conditions imposed by the ECHR case law on the

concept of “legitimate expectation,” which the creditor must have that

his receivable against the debtor will be realized, and is in effect

transformed into the effective exercise of the property right (a

receivable made fully specific, current, and enforceable) (see, e.g.,

the decision on acceptability in the matters Malhous v. the Czech

Republic of 13 December 2000, part B; Gratzinger and Gratzingerová v.

the Czech Republic of 10 July 2002, §§ 68 and 72).
 

In

view of the guarantees provided for the right to use property and

protection of it and the right not to be discriminated against in the

peaceful enjoyment of one’s property, we can admit the conclusion that

creditors authorized under the Bankruptcy and Settlement Act could be

only creditors with due “monetary” receivables. Creditors with

non-monetary receivables can not be referred only to the phase of

proceedings after a declaration of bankruptcy, as, in contrast, is

claimed without further explanation by JUDr. Zelenka and JUDr. Maršíková

in their commentary, p. 18. Their position would be discriminatory in

comparison to creditors with monetary receivables, as it would

unjustifiably advantage the protection of monetary property in contrast

to non-monetary property. The relevant provisions of the Bankruptcy and

Settlement Act must be interpreted in accordance with the guaranteed

rights of all creditors. The contested sentence, which expressly

recognizes the right to appeal against a decision to deny the

application for bankruptcy due to insufficient assets only to creditors

with receivables of a monetary nature, disadvantages creditors who can

document only a non-monetary receivable. This introduces an inequality

between the creditors under the contested provision, an inequality which

is not reasonably justified and is discriminatory. In view of the

explicitly stated condition of a receivable being monetary, there is no

room for a constitutional interpretation. Z. Krčmář, in his commentary

to this Act, also reached an analogous conclusion concerning the

discriminatory nature of the contested sentence in this context,

although he did apply it in the present petition (Krčmář, Z.: The

Bankruptcy and Settlement Act, IFEC Prague, 2000, p. 38).
 

Therefore,

for the abovementioned reasons, the Constitutional Court under § 70

par. 1 of the Act on the Constitutional Court, as amended by later

regulations, annuls the contested § 12a par. 5 second sentence, of the

Bankruptcy and Settlement Act, expressed by the word “monetary,” due to

inconsistency with Art. 1 of the Additional Protocol to the Convention

for the Protection of Human Rights and Fundamental Freedoms and Art. 14

of the Convention for the Protection of Human Rights and Fundamental

Freedoms, as of the day this judgment is promulgated in the Collection

of Laws. The remaining part of the petition is denied, in view of the

abovementioned reasons (§ 70 par. 2 of the Act).

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

Brno, 24 June 2003        




Dissenting Opinion
of Constitutional Court judge Eliška Wagnerová to the judgment of 24. June 2003, file no. Pl. ÚS 44/02

I

do not agree with the majority opinion insofar as it did not grant the

petition to annul § 12a par. 5 second sentence of Act no. 328/1991

Coll., on Bankruptcy and Settlement, as amended, in its full extent. On

the contrary, I agree with the reasons stated in the judgment concerning

the unreasonableness and discriminatory nature of differentiating

receivables into monetary and non-monetary. In other words, I agree with

the evaluation of substantive law aspects of the contested provisions,

but I have reservations about evaluating the equality of the position of

parties to specific proceedings in a purely procedural sense.
 

The

Constitutional Court reviewed the contested provision in the form of

specific review of norms, as proceedings on review of a norm were opened

at the instigation of the Supreme Court (thus, it was not a matter of

abstract review of a norm, as the judgment states, in the sense of

classification used by European legal scholarship – see, e.g.

Cappeletti/Ritterspach, Die gerichtliche Kontrolle der

Verfassungsmässigkeit der Gesetze in rechtsvergleichender Sicht, JöR

1071 or Ch. Starck, Verfassungsgerichtsbarkeit in Westeuropa, 1986). In

my view, it is necessary to agree with the Supreme Court that the

contested provision violates the principle of procedural equality in

certain specific proceedings, contained in Art. 37 par. 3 of the Charter

of Fundamental Rights and Freedoms, because this case concerns the

procedural right of parties to single specific proceedings. As the

judgment says, the states of the court proceedings at the first level

and the appeal level must be seen as a whole, and a segment of the

parties to the proceedings has the possibility to exercise its rights

only in part of the proceedings, without the possibility of filing an

appeal.
 

For this reason,

the arguments contained in judgment Pl. ÚS 19/02 concerning Art. 96 par.

1 of the Constitution can not be used. If the Constitutional Court, in

that judgment, concluded that the then-contested provision of the

Bankruptcy and Settlement Act was unconstitutional on the grounds of

conflict with Art. 96 par. 1 of the Constitution, the more so does the

unconstitutionality of the provision reviewed today come to the

forefront, if it is inconsistent with Art. 37 par. 3 of the Charter. The

subjective law contained therein, though for purposes of reviewing

norms transferred into the form of a principle, by which a norm is

measured, strengthens the effect of applying this principle. It is

evident that a court decision made with the application of the contested

provision can be cast in doubt before the Constitutional Court in

proceedings on a constitutional complaint, which will raise the

objection that the court has interfered in subjective law arising from

Art. 37 par. 3 of the Charter.
 

If

a “legal norm” contained in Art. 37 par. 3 of the Charter takes both

forms, i.e. both the form of a principle and the form of a subjective

right, Art. 96 par. 1 of the Constitution is limited only to expression

in the form of a principle, with no subjective right standing behind it.

And if a contested norm is inconsistent with such a provision contained

in the constitutional order, it must be subjected to a much stricter

test than in a case where the contested norm conflicts merely with a

principle representing only an objective right.
 

Paradoxically,

the majority opinion increased the circle of addressees of the

contested legal norm (creditors) who will be in an unequal position with

other parties (particular applicants) of bankruptcy proceedings who

exercise their rights in such proceedings at two levels. In my opinion,

the Constitutional Court has thus not only failed to remove the

unconstitutionality of the contested legal framework, as the Supreme

Court proposed, but by slightly turning the angle of view at the

substantive law aspect of the contested legal norm, which the Supreme

Court did not share or raise, re-formed the contested legal norm.

Brno, 7 July 2003