2005/10/25 - Pl. ÚS 20/04: Business Trustee

25 October 2005

HEADNOTES

The

mere fact that the final result may be a situation where a business

trustee’s claims are not satisfied is not unconstitutional. This fact

must also be seen in light of the abovementioned decision of the

European Court of Human Rights (Van der Mussele v. Belgium), which

emphasized that the risks undertaken in connection with the practice of a

particular profession (in the cited case, of an attorney), which

include the risk of non-payment of compensation for work performed, are

balanced out by advantages connected with that profession (in the cited

case, a professional monopoly in defense and representation). These

conclusion can also be applied, without anything further, to the

activity and position of a business trustee, in whose case the risk of

non-satisfaction of statutory claims, which is of course quite

insignificant, basically has a counterweight in his monopoly status for

conducting the activity of an trustee.

The

Constitutional Court concluded that there are no grounds for granting

the constitutional complaint, and it is not necessary to annul § 338zo

par. 4 of the CPC, because in the overwhelming majority of cases

satisfaction of a business trustee’s statutory claims can be achieved

with the help of instruments contained in the CPC.


 

CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH EPUBLIC


The

Plenum of the Constitutional Court, composed of Stanislav Balík,

František Duchoň, Vlasta Formánková, Vojen Güttler, Pavel Holländer,

Ivana Janů, Dagmar Lastovecká, Jiří Mucha, Jan Musil, Jiří Nykodým,

Pavel Rychetský, Miloslav Výborný, Eliška Wagnerová a Michaela Židlická

decided on this day on a petition from the District Court in Ostrava,

seeking the annulment of § 338zo par. 4 of Act no. 99/1963 Coll., the

Civil Procedure Code, as amended by later regulations, as follows:

 

The petition is denied.

 


REASONING


I.
 

The

petitioner, in accordance with Art. 95 par. 2 of the Constitution of

the Czech Republic seeks to have the Constitutional Court issue a

judgment annulling § 338zo par. 4 of the Civil Procedure Code (the

“CPC”). It stated that in its decision-making in the matter file no. 90 E

1096/2002 it concluded that this provision is inconsistent with Art. 1

and Art. 3 par. 1 of the Charter of Fundamental Rights and Freedoms, for

the following reasons:
 

In

its decision of 7 April 2003, ref. no. 90 E 1096/2002-8, the District

Court in Ostrava ordered execution of its decision by sale of the

obligated party’s business, and appointed Mgr. Z. N. as the trustee. In a

filing of 14 November 2003, the trustee gave the court a report on the

price of the business under § 338m of the CPC. According to this report,

the obligated party’s business has debts totaling CZK 26,035. As

regards the obligated party’s assets, it was determined that the

business has de facto not existed for over 4 years, and it has no

personal property, real estate, or receivables. By decision of 23

January 2004, ref. no. 90 E 1096/2002-37, the District Court in Ostrava

stopped execution of the decision under § 338n par. 6 of the CPC,

because the value of things, rights and other assets belong to the

business is not greater than the amount of the business’s payable

financial obligations, the expected compensation for the trustee, and

reimbursement of the trustee’s cash expenses. In her filing of 11 March

2004, the trustee, pursuant to § 338zo par. 4 of the CPC, provided an

accounting of the trustee’s compensation and cash expenses. She listed

cash expenses of CZK 106 for postage, and proposed that the court set

the compensation for the trustee in its discretion, based on the time

required to perform the office; under § 2 of Decree no. 485/2000 Coll.

on Compensation of Trustees, the basis for determining a trustee’s

compensation is the price determined under § 338n par. 2 of the CPC, but

in this case it is impossible to determine that compensation, because

the business has no property.
 

The

petitioner also pointed to § 338h par. 1 of the CPC, under which a

court, in a decision ordering execution of a decision by sale of a

business, shall appoint a trustee for the business, whom the law (e.g. §

338k of the CPC, 338m of the CPC) charges with fulfilling a number of

obligations, and also makes him liable for damages which he causes by

at-fault violation of his obligations. The court shall appoint as

trustee a person registered under special regulations in the list of

bankruptcy trustees. Under § 338i par. 4 of the CPC, the trustee is

entitled to compensation and to reimbursement of cash expenses. The

amount of trustee compensation, how it is determined, and determination

of cash expenses is regulated by Ministry of Justice Decree no. 485/2000

Coll. The basis for determining a trustee’s compensation is the price

of the business determined under § 338n par. 2 of the CPC (the net

assets of the business). The decree does not provide for compensation of

the trustee in the event that execution of the decision is stopped,

e.g. under § 338n par. 6 of the CPC. According to the court, the

inconsistency between the regulation provided by the cited § 338i par. 4

and the decree can be overcome by interpreting the statute so that the

court determines the compensation in its discretion, and taking into

account the scope of the trustee’s work.
 

The

petitioner also referred to the contested § 338zo par. 4 of the CPC,

under which the court shall impose an obligation to pay the trustee

compensation and reimbursement of cash expenses if execution of a

decision is stopped, either on the obligated party, or jointly and

severally on the entitled party, those who entered proceedings as

additional entitled parties, and creditors who have registered their

claims (§ 338s and 338zn of the CPC), depending on the grounds on which

the execution of the decision was stopped (§ 338zo par. 4 of the CPC).

However, the statutory construction of § 338zo par. 4 of the CPC makes

it possible for a situation to arise in the proceedings, where the

ability to satisfy the trustee’s claims is directly dependent on the

solvency of the parties to the proceedings. Because an entitled party

can be required to pay the trustee’s claims only in exceptional cases

(usually when he did not observe the necessary level of care when filing

the petition for execution of a decision), in most cases it is the

obligated party who is bound by this obligation. Especially in a

situation where the obligated party’s business is over-indebted (§ 338n

par. 6 of the CPC), it is evident that the trustee’s claims will not be

satisfied, or will be satisfied only in part; if the business trustee

was not made the bankruptcy trustee under § 13b par. 3 of Act no.

328/1991 Coll., on Bankruptcy and Settlement (the “Bankruptcy Act”), the

business trustee has only non-priority claims against the bankrupt (§

31 par. 5 of the Bankruptcy Act). If the bankruptcy petition was denied,

then the business trustee does not have even this possibility for

satisfying his claims. As a result of the statutory framework for

compensation of trustees, in a number of cases the business trustee,

although he fulfills all obligations imposed by law, does not receive

compensation for fulfilling his office, and he is not reimbursed for

cash expenses which he paid out of his own funds. The structure of

compensation for business trustees not only leads to failure to satisfy

their lawful claims, but also thus deforms the overall results of

execution of a decision by sale of a business, because it removes from a

certain group of business trustees the important motivation of

compensation.
 

The petitioner

added that a business trustee must be considered a special public law

body, just like a bankruptcy trustee (see Constitutional Court judgment

file no. Pl. US 36/01, published as no. 403/2002 Coll., also Collection

of Decisions of the Constitutional Court, volume 26, judgment no. 80).

The abovementioned statutory structure for deciding on a trustee’s

compensation and cash expenses (§ 338zo par. 4 of the CPC) creates a

situation where it is impossible to satisfy a business trustee’s lawful

claims for compensation and cash expenses, without establishing another,

alternative source for paying these claims (e.g. an obligation of the

state to pay a trustee’s claims, or an obligation on the entitled party

to provide a deposit for the compensation and cash expenses). The

provision of § 338zo par. 4 of the CPC does not even permit using as an

alternative source any deposit paid under § 270 par. 3 of the CPC,

because that deposit can be used only to pay expenses of execution of a

decision which are paid by the state. Thus, in the petitioner’s opinion,

this creates an inequality in compensation for two groups of business

trustees – a first group of business trustees, the satisfaction of whose

claims for compensation and cash expenses is secured by law (in the

budget of revenues from sale of a business or in the budget of

bankruptcy assets under § 31 par. 5 of the Bankruptcy Act) and a second

group of business trustees without the possibility of satisfying their

claims, or with only a negligible possibility – even though both groups

of business trustees fulfill all the obligations imposed on them by law.


 


II.
 

The

Constitutional Court, in accordance with § 69 of Act no. 182/1993

Coll., on the Constitutional Court, as amended by later regulations (the

Act on the Constitutional Court”), sent the petition to open

proceedings to parties to the proceedings – the Chamber of Deputies and

the Senate of the Parliament of the Czech Republic and also requested a

position statement from the Ministry of Justice of the Czech Republic.
 

The

statement from the Chamber of Deputies of the Parliament of the Czech

Republic begins by recapitulating the content of the petition to annul

the contested statutory provision and then the statutory process leading

to the enactment of that provision. The amending proposals which were

passed did not affect the contested provision. The legislature acted in

the belief that the enacted statute was in accordance with the

Constitution and our legal order, and leaves it to on the Constitutional

Court to evaluate its constitutionality.
 

The

Senate of the Parliament of the Czech Republic, in its extensive

statement on the merits of the matter, stated that in the case of a sale

of a business the legislature could not ignore the situation where, in

the course of an execution of a decision by sale of a business it

becomes apparent that the business is insolvent (over-indebted). The

only procedural methods for addressing insolvency in our law are

bankruptcy and settlement; therefore, when insolvency was discovered, it

was appropriate to address it by stopping the execution proceedings (§

338n par. 6 of the CPC, § 338w par. 3 of the CPC), in favor of

bankruptcy proceedings which were intended for that purpose (§ 4b of the

Bankruptcy Act). If a court stops execution of a decision, it shall,

under § 338zo par. 4 of the CPC, impose an obligation to pay the

business trustee compensation and reimbursement of cash expenses, on the

obligated party, or jointly and severally on the subjects cited

therein. Thus, the legislature did not leave the claims of business

trustees without statutory support – although in the form of a monetary

claim. In the Senate’s opinion, on can conclude from these

circumstances, supported by further statutory texts (§ 338i par. 4 of

the CPC, § 338ze par. 7 of the CPC), that one can not ascribe to the

legislature an intent to create a legal situation which would deny

business trustees the possibility of being paid compensation and

reimbursement of cash expenses. In this regard, a source of funds for

satisfying the claims of a business trustee found primarily with those

(private) persons as a result of whose conduct the business trustee’s

expenses arose, can also be considered legitimate (and constitutional).
 

The

Senate also points to § 338i par. 4 of the CPC, under which the trustee

is entitled to compensation and reimbursement of cash expenses. If a

business is successfully sold, the claim is satisfied from the assets

being divided; if the claim is not satisfied in full from the assets,

the court shall recognize the business trustee’s claim against the

obligated party, secured under § 338ze par. 7 of the CPC. However, if

the business is not sold in civil proceedings, the court – as already

stated – shall stop the proceedings and impose an obligation to pay the

trustee’s claim on subjects specified in § 338zo par. 4 of the CPC. If a

qualified reason for the “unsuccessful” sale of a business is that

funds obtained through the sale are insufficient to cover the specified

obligations (the price of things, rights and other property valued

belonging to the business together with the funds … does not exceed the

amount of the business’s payable monetary obligations, the claims of the

entitled party, of persons who joined the proceedings as additional

entitled parties … the compensation of the trustee and reimbursement of

his cash expenses, or exceeds it only negligibly), the business trustee

has an opportunity to realize his claim under the Bankruptcy Act. The

fate of the satisfaction of the claim depends on whether the bankruptcy

trustee in the matter is the same person (a business trustee, who,

however, does not perform his function while the bankruptcy proceedings

are going on) or not.
 

Thus,

in the Senate’s opinion, one can say that, as regards the claim to

compensation and reimbursement of cash expenses, a business trustee who

is also the bankruptcy trustee has a “more advantageous position” in

bankruptcy proceedings than a “mere” business trustee. The advantage of

the claim consists in the fact that it will be satisfied from the

bankruptcy assets (§ 31 par. 5, together with § 31 par. 2 of the

Bankruptcy Act), at any time during the bankruptcy proceedings (§ 31

par. 1 of the Bankruptcy Act). In its filing, the petitioner objects to

the “inequality of business trustees” or the “creation of two groups of

business trustees,” insofar as it places other trustees, the

satisfaction of whose claims is “secured from the budget proceeding from

the sale of the business or from the budget from the bankruptcy

assets,” opposite the group of business trustees who do not have the

opportunity to have their claims thus satisfied. In the Senate’s

opinion, the inequality according to the selected structure is not

“claimed” comprehensively. Other examples could be constructed in

addition to the one provided by the petitioner, for example, one where a

business trustee’s claim was not fully satisfied from the proceedings

of sale of real estate, and he was also unable to exercise his claim

against a guarantor (§ 338ze par. 7 of the CPC). Therefore, the Senate

closed this part of its statement by saying that if “perfect” equality

was to have been achieved (here one allegedly can not literally use the

claim stated by the petitioner to secure the same right for compensation

and cash expenses, because that would make the entire problem

unsolvable) in satisfying the claims of business trustees for

compensation and cash expenses, their claim would have to be satisfied

as part of the execution of a decision by sale of the business. This

would basically mean that the remainder of the claim (or perhaps all of

it) would have to be paid by the state. Here it is possible – in the

Senate’s opinion – to counter the petitioner’s claim about de-motivation

of business trustees with the argument that it is not the threat of

non-satisfaction of their claims, but the “one hundred percent”

certainty, that could be the de-motivating factor. Likewise, it is not

insignificant that full satisfaction of a trustee’s claims in the regime

of execution proceedings would, in the case of an over-indebted

business, lead to an undesirable exemption of the claims from the regime

of the Bankruptcy Act.
 

In

its statement the Senate refers to judgment no. 403/2002 Coll., in which

the Constitutional Court addressed the similar issue of compensation

and reimbursement of expenses of a bankruptcy trustee in bankruptcy

proceedings. In the Senate’s opinion, the following statement by the

Constitutional Court will be fundamental to the key issue of

differentiating two groups of business trustees (with unequal

possibilities for satisfaction of their claims) even though both groups

fulfill all the obligations imposed by law: “If the purpose of the

statutory framework permitting bankruptcy proceedings is also

constitutional in a case where, in bankruptcy proceedings, no bankruptcy

assets are converted to money, and a deposit for bankruptcy expenses

was not paid … (note: and there was thus no other source) …, it is then

necessary to consider that the situation which this creates at the

statutory level of payment to the trustee of cash expenses and

compensation must be considered to violate the constitutional principle

of non-accessory equality.” However, in the Senate’s opinion, it would

easy, viewed through the prism of that text, to “succumb to the

impression that there is a clear solution even in the event that § 338zo

par. 4 of the CPC is annulled.” However, it is necessary to consider

other circumstances. As was already stated, the claim of a business

trustee is satisfied from the bankruptcy assets (§ 338ze of the CPC), or

from other sources. Apart from the obligated party, these sources are

the guarantors, under § 338ze par. 7 of the CPC, or the entitled parties

or creditors, under § 338zo par. 4 of the CPC. Of course, in the

special case of the company being over-indebted, sources for satisfying a

business trustee’s claims must be sought in bankruptcy proceedings.

Thus, from the point of view of the Civil Procedure Code, no other

source of funds for a business trustee exists, but the civil procedure

code does not prevent (on the contrary, it creates essential

prerequisites for) the use of a special, standard, and legislatively

adequate source for the situation (over-indebtedness of a business);

(here the Senate referred to part of its statement, already cited

above). However, according to the Senate, the entire matter appears

different from the point of view of the Bankruptcy Act. In that regard

one can share the petitioner’s concerns about the unequal approach to

satisfying the claims of a business trustee (regarding this, see above –

claims with a “more advantageous” position). However, according to the

Senate a possible solution would be outside the regime of the Civil

Procedure Code and is thus not the topic of this detailed statement,

which the Senate closed by stating that it is completely up to the

Constitutional Court, to evaluate the constitutionality of the contested

provision.
 

The brief

position statement of the Ministry of Justice, which proposes not

granting the petition, states that annulling the contested provision

would, on the contrary, create inequality, because “the court would not

have a provision in the law” under which it could allocate compensation

and reimbursement of cash expenses to the trustee.
 


III.
 

The

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

Constitutional Court, considered the question whether the Act whose

contested provision is claimed to be unconstitutional was passed and

issued within the bounds of constitutionally provided jurisdiction and

in a constitutionally prescribed manner.
 

The

statute in question is Act no. 30/2000 Coll., which amends Act no.

99/1963 Coll., the Civil Procedure Code, as amended by later

regulations, and certain other Acts. In this regard, the Constitutional

Court determined from the relevant parliamentary publications, shorthand

transcripts, and voting records, that the Chamber of Deputies of the

Parliament of the CR duly approved the draft of this Act at its session

on 9 December 1999 and the Senate of the Parliament of the CR approved

the draft in the wording approved by the Chamber of Deputies at its

session on 12 January 2000. After signature by the President and the

Prime Minister, the Act was promulgated in the Collection of Law, in

part 11, as number 30/2000 Coll. Thus, the statute in question was

passed and issued within the bounds of constitutionally provided

jurisdiction and in a constitutionally prescribed manner.
 


IV.
 

After

this determination, the Constitutional Court turned to evaluating the

content of the contested statutory provision in terms of its consistency

with the constitutional order of the Czech Republic [Art. 87 par. 1

let. a) of the Constitution of the Czech Republic].
The provision which the petitioner contests and seeks to have annulled reads:
 

“The

court shall impose an obligation to pay the trustee compensation and

reimbursement of cash expenses either on the obligated party or jointly

and severally to the entitled party, those who joined the proceedings as

additional entitled parties, and creditors who registered their claims

(§ 338s a 338zn), according to the grounds on which the execution of the

decision was stopped.”
 

To

begin with, the Constitutional Court dealt with the question of the

status of a business trustee and his definition in relation to a

bankruptcy trustee. The activity and status of a business trustee is

similar to the status and activity of a bankruptcy trustee under the

Bankruptcy Act. As with bankruptcy proceedings, the appointment of a

business trustee is an obligatory, conceptual component of execution of a

decision by sale of a business (§ 338i of the CPC). As was already

stated in Constitutional Court judgment file no. Pl. US 36/01, doctrine

ranks a bankruptcy trustee among special public law bodies, and his task

is to ensure the proper conduct of bankruptcy proceedings (see K.

Eliáš, Konkurs [Bankruptcy]. Právník [The Lawyer], no. 2/1995, p. 123;

H. Hrstková, R. Tománek, Některé základní otázky zákona o konkursu a

vyrovnání [Some Basic Issues of the Bankruptcy Act]. Právo a podnikání

[Law and Business], no. 10/1994, p. 27 et seq.; Fr. Štajgr, Konkursní

právo [Bankruptcy Law]. Prague 1947, p. 71).
 

The

Constitutional Court agrees with the doctrinaire definition in relation

to a bankruptcy trustee, and has no reservations to its use in relation

to a business trustee. The doctrinaire definition is based on factors

defining the concept of a public law body, which are public purpose, the

manner of appointment, and authority. The public purpose of the

institution of a bankruptcy trustee, as well as of a business trustee,

must be seen in acceptance of limited public interference in the

resolution of property relations. The manner of appointment of a

business trustee results from a decision by a state body – a court (§

338i par. 1 of the CPC). His authority and obligations, which are

established in a number of provisions of the CPC, are then the exercise

of authority.
 

A business

trustee is appointed by a court, from a list of persons registered under

the Bankruptcy Act in the list of bankruptcy trustees. The list of

trustees can include only individuals with a clean criminal record, who

have full legal capacity, have appropriate expert competence, and agree

to be registered, or a general partnership, which will perform the

trustee’s activities through its partners, and proves that they meet the

conditions for being registered in the list. In exceptional cases, the

court may appoint as trustee a person who is not registered in the list,

provided he meets the conditions for registration, if he agrees to be

appointed as trustee.
 

As in

its previously cited judgment (file no. Pl. 36/01), to which it refers

in this regard, the Constitutional Court starts with the fact that the

performance of the office of a business trustee appointed by a court can

not, from a constitutional law standpoint, be classified as work or

services required by law for the protection of the rights of others

under Art. 9 par. 2 let. d) of the Charter. This follows from the fact

that a business trustee is chosen from the list of bankruptcy trustees

(§ 338i par. 1 of the CPC) maintained by the appropriate court, and an

individual or general partnership can be registered in the list only if

he or it agrees to be registered. A person who is already in the list

can refuse appointment as a business trustee only if there are serious

reason for doing so. In exceptional cases, the court may appoint as

trustee a person who is not registered in the list, if, of course, the

person agrees to be appointed. This mechanism ensures either an

implicit, prior consent to perform the office of trustee, or specific

consent in a given case. Therefore, the performance of this office does

not meet the element of lack of consent, as a condition for the

performance of work or services under Art. 9 par. 2 of the Charter, or

Art. 4 par. 3 of the Convention. This conclusion is also consistent with

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

matter Van der Mussele v. Belgium (decision of 23 November 1983). A

person registered in the list of bankruptcy trustees, by applying for

and registering in the list, gave preliminary consent to appointment to

the position and the related risks, which include the risk that a

business trustee may not have all his statutory claims satisfied in all

cases. The fact that a business trustee may not have all his claims

satisfied, even in bankruptcy proceedings, if the process of execution

of a decision fails, is a risk which applies to all business trustees,

and there is thus no inequality in their position. In any case, not only

a business trustee, but everyone who performs a similar office by state

authorization (e.g. a notary) is in a similar situation.
 

Performance

of the office of a business trustee is also not part of an employment

relationship, and thus neither the content, nor the purpose and

significance of Art. 26 of the Charter apply to it. It is also not the

conduct of business, although it is similar to it, because of the nature

of the activity which is conducted for purposes of earning profits, nor

is it the conduct of other economic activity, and therefore, from a

constitutional law viewpoint, it can not be classified in the framework

defined by Art. 26 of the Charter.
 

In

addition to the abovementioned common elements, to which we can add the

liability of a business trustee or a bankruptcy trustee for violation

of obligations caused by his fault, there are of course also substantial

differences between the two offices. It must be kept in mind that both

the regulations for a bankruptcy trustee in the Bankruptcy Act, and the

regulations for a business trustee in the Civil Procedure Code are

different, comprehensive, and independent frameworks. While the activity

of a business trustee is aimed only at the sale of a business, the

activity of a bankruptcy trustee is aimed at converting all the

bankruptcy assets to money, and the main purpose is the proportional

satisfaction of the claims of all creditors from the property included

in the bankruptcy assets. In the case of execution of a decision by sale

of the business of the obligated party, there is usually no

interference in the activity of the business itself, as often happens

with bankruptcy, but only a forced change of the business owner (the

original owner, the obligated party, is replaced by a new owner – the

winner at auction).
 

However,

the main, and fundamental difference between the two kinds of

proceedings lies in the fact that while bankruptcy proceedings are

opened if the debtor is insolvent, on the basis of a bankruptcy petition

filed by the debtor, or a creditor (thus, opening proceedings is not

available to only one person), execution of a decision by sale of a

business is comprehensively governed by the dispositive principle. Thus,

it is fundamentally a proceeding which is opened only at the proposal

of the entitled party. This brings with it the specific features of

execution proceedings. Above all, the entitled party has the opportunity

to choose the manner of executing the decision, and it is purely up to

him whether to turn to execution of a decision by sale of a business,

where there may be, e.g., a danger of over-indebtedness. Therefore he

also bears greater responsibility for his decision. Before filing a

petition for execution of a decision the entitled person must carefully

weigh how he will proceed. In addition, the entitled person has

relatively effective means for determining the extent of the obligated

party’s property. These include primarily the institution of a property

declaration, established in § 260a et seq. of the CPC, under which a

creditor whose monetary claim has been recognized by an executable

decision, before filing a petition for execution of the decision, may

petition the court to summon the obligated party and require him to make

a property declaration. That, in addition to § 260 of the CPC (court

assistance in determining the financial abilities of the obligated

party) is another form of assistance which the court provides to

creditors so that they can successfully exercise their claims through

execution of a decision. Moreover, the court too is supposed to evaluate

the suitability of the proposed method of executing a decision, and if

it considers it evidently unsuitable, it should order execution of the

decision in another suitable manner. (§ 264 par. 1 of the CPC).
 

In

the present matter, annulment of § 338zo par. 4 of the CPC is proposed,

because in the petitioner’s opinion the manner of compensating a

business trustee provided in the statute need not lead to satisfaction

of his statutory claims (the claim for reimbursement of cash expenses

and to compensation). The statutory construction permits a situation to

arise where the statutory claims of a business trustee can not be

satisfied, without establishing another alternative source for paying

these claims. According to the petitioner, this deforms the overall

results of execution of a decision by sale of a business, because it

removes from a certain group of business trustees the important

motivation of compensation; it establishes inequality in compensation

between a bankruptcy trustee, the satisfaction of whose claim for

compensation and cash expenses is secured by the Bankruptcy Act (§ 31

par. 5 of the Bankruptcy Act) and a business trustee under the Civil

Procedure Code, who does not have the possibility of satisfying his

claims, or the possibility for satisfying them is only negligible. The

Constitutional Court does not completely agree with this opinion. It

must be kept in mind, as mentioned above, that execution of a decision

is a proceeding based on a petition. This also underlies the regulation

in the CPC. Under § 338i par. 4 of the CPC, a business trustee is

entitled to compensation and reimbursement of cash expenses. If a

business is successfully sold, his claims is satisfied from the

distributed assets. The business trustee’s claim to compensation and

cash expenses must be satisfied even if the distributed assets are not

sufficient. Thus, it the claim is not fully satisfied from the assets,

the court shall recognize the business trustee’s claim against the

obligated party, the fulfillment of which is guaranteed jointly and

severally by the entitled party, those who joined the proceedings as

additional entitled parties, and creditors who registered their claims

(§ 338ze par. 7 of the CPC). The obligation to satisfy the trustee’s

claims is primarily imposed on the obligated party. In the interests of

actual satisfaction of the business trustee is provided that the

entitled party, those who joined the proceedings as additional entitled

parties, and creditors who registered their claims (§ 338s of the CPC)

are jointly and severally liable for fulfillment of this obligation.

This regulation ensures that a business trustee will not find himself in

a situation where his statutory claims are not paid.
 

If

the sale of a business does not take place in civil proceedings, the

court shall stop the proceedings and impose an obligation to pay the

trustees’ claims on the subjects specified in § 338zo par. 4 of the CPC.

These are either the obligated party or, jointly and severally the

entitled party, those who joined the proceedings as additional entitled

parties, and creditors who registered their claims (§ 338s of the CPC

and § 338zn of the CPC). If the obligated party does not have sufficient

funds to pay the claims of the business trustee, it is quite legitimate

to require them to be paid by the entitled party or other creditors,

because, as stated above, the entitled person is responsible for the

choice of the manner of execution of the decision, and bears the related

risk for possible non-payment of the business trustee’s claims by the

obligated party. The business trustee’s claims for payment of his

compensation and expenses is thus not completely statutory without legal

support. In this regard we must point out that a business trustee can

request advances for cash expenses, as indicated in § 338i par. 5 of the

CPC. The advance for cash expenses shall be provided to the trustee by

the court on the basis of the request. Although this provision speaks in

particular about expenses in connection with engaging an expert, it is

not ruled out for the trustee to request an advance for other expenses

which he will incur in the sale or preparation of the sale of the

business. Therefore, if, in the course of the execution of the decision,

a need arises to cover expenses for cash expenditures, there is nothing

to prevent the court from requiring the entitled party to provide an

advance for paying them. This also applies in a situation where it is

obvious that it will not be possible to pay the business trustee’s

expenses from the sale of the business. The court can also take such

measures ahead of time, e.g. when ordering execution of the decision.

Thus, it is up to the business trustee to thoroughly use all the

opportunities and mechanisms which the CPC provides him. Cash expenses

paid from this advance are considered to be expenses of the sale of the

business. Thus, the situation in the judgment cited above concerning a

bankruptcy trustee can not arise; in that situation the bankruptcy

trustee incurred expenses which he had to pay himself. The only problem

can arise at the point where the entitled party has fulfilled the

conditions for exemption from court fees. The court can not require such

a person to pay an advance for expenses of executing a decision (§ 270

par. 3 second sentence of the CPC). If there is any revenue from the

sale of the business, the business trustee’s statutory claims are of

course paid from it. If that is not the case, the business trustee must

pay the expenses of execution of a decision himself. However, if it is

evident before execution of a decision is ordered that the profit from

sale of the business will not be sufficient even to pay the business

trustee’s claims and a situation could arise where satisfaction of the

business trustee’s claims could be threatened, it is up to the court, to

carefully evaluate the obligated party’s financial situation before

ordering execution of the decision. If it is quite evident that the

obligated party’s assets will not suffice even to cover expenses, it

should not order execution of the decision at all. The court is also

directed to follow these steps by § 264 par. 2 of the CPC, under which

the court shall deny the petition to execute a decision if it is evident

from the petition that the revenue which would be achieved would not

even suffice to cover the expenses of executing the decision. The

properly functioning system, opportunities and mechanisms established in

the CPC, together with careful evaluation of the situation both by the

entitled party and by the court, should prevent a situation from arising

which would be a basis for a petition to annul § 338zo par. 4 of the

CPC. Thus, we can conclude that the contested § 338zo par. 4 of the CPC

is not a violation of the constitutional law principle of equality.
 

If,

despite all the foregoing, a situation arises where a business trustee

is required to pay the expenses of execution of a decision himself, he

has an opportunity to exercise his claim against the obligated party by a

different method of execution of the decision, or by bankruptcy

proceedings. Another non-negligible difference between the execution of a

decision and bankruptcy lies in the fact that when bankruptcy is

completed, it is quite evident that the bankrupt has left only the

assets which are part of the bankruptcy assets, or that he has no assets

left. This is not the case with execution of a decision by sale of a

business. If the sale of a business as part of execution of a decision

is unsuccessful, the court can not determine the overall financial

situation of the obligated party from the materials which it has at its

disposal. It can only speculate, but can not reach a reliable

conclusion, because proceedings on execution of a decision by sale of a

business are not proceedings on total assets, but only on part of them.

Therefore, if the abovementioned opportunities and mechanisms fail, a

business trustee always has, within execution of a decision under the

CPC (guarantee by the entitled party, advances for expenses, etc.), an

opportunity to exercise recognized claims for compensation and cash

expenses through a different manner of execution of a decision, and in

an extreme case also through bankruptcy proceedings.
 

In

conclusion, the Constitutional Court emphasizes that the mere fact that

the final result may be a situation where a business trustee’s claims

are not satisfied is not unconstitutional. This fact must also be seen

in light of the abovementioned decision of the European Court of Human

Rights (Van der Mussele v. Belgium), which emphasized that the risks

undertaken in connection with the practice of a particular profession

(in the cited case, of an attorney), which include the risk of

non-payment of compensation for work performed, are balanced out by

advantages connected with that profession (in the cited case, a

professional monopoly in defense and representation). These conclusion

can also be applied, without anything further, to the activity and

position of a business trustee, in whose case the risk of

non-satisfaction of statutory claims, which is of course quite

insignificant, basically has a counterweight in his monopoly status for

conducting the activity of an trustee.
 

It

is true that in terms of the Bankruptcy Act, one can agree with the

petitioner’s fears about an unequal approach to satisfying the claims of

a business trustee who later, in bankruptcy proceedings, became the

bankruptcy trustee, and a business trustee who did not become a

bankruptcy trustee. However, that question exceeds the regime of the

Civil Procedure Code, and is therefore also not the subject of the

reasoning of this judgment.
 

Based

on the foregoing considerations, the Constitutional Court concluded

that there are no grounds for granting the constitutional complaint, and

it is not necessary to annul § 338zo par. 4 of the CPC, because in the

overwhelming majority of cases satisfaction of a business trustee’s

statutory claims can be achieved with the help of instruments contained

in the CPC. Given correctly functioning mechanisms and correct use of

the procedural regulation of execution of a decision, a situation should

not arise where a business trustee’s claims are not satisfied. If the

Constitutional Court annulled the cited provision, it would thereby, for

example, deprive the court of the ability to bind the obligated party

to pay a business trustee’s claims in a situation where a claim was

exercised that was satisfied by the obligated party from other funds,

and the court stopped the execution of the decision.
 

In

view of the foregoing conclusions, the Constitutional Court did not

find the petition for annulment of § 338zo par. 4 of the CPC to be

justified. Therefore, it denied it under § 82 par. 1 of the Act on the

Constitutional Court.

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

Brno, 25 October 2005

 

 


Dissenting Opinion
of

judges Vojen Güttler, Ivana Janů, Dagmar Lastovecká, Miloslav Výborný

and Eliška Wagnerová to the judgment of the Plenum of the Constitutional

Court of 25 October 2005, which denied the petition from the District

Court in Ostrava to annul § 338zo par. 4 of Act no. 99/1963 Coll., the

Civil Procedure Code, as amended by later regulations
I. The

reasoning of the Plenum’s judgment remains primarily at the level of

simple law. The detailed interpretation of the provisions of the CPC

under consideration, which can more or less relate to the adjudicated

matter is certainly of good quality from an expert standpoint, but it

misses the constitutional law substance of the case, and in the

conclusion admits that the final result can be a situation (which it

does not consider unconstitutional) where the business trustee’s claims

won’t be satisfied anyway.
 

It

is, of course, not the task of the Constitutional Court, in proceedings

on a petition to annul a certain statutory provision, to give

exhaustive instructions on how to proceed in interpreting simple law in a

particular case, but to evaluate – either as part of specific review of

constitutionality (at the petition of a general court) – whether the

contested provision will stand in terms of constitutionality.
 

Here

one also can not overlook the constitutional requirement of clarity and

certainty of law (note: in relation to the detailed legal regulation of

the issues under review the gap in the statute becomes all the more

apparent, if it does not regulate a subsidiary source from which a

business trustee’s claim can be paid), as well as (in particular) the

requirement of transparency of the decision making of the Constitutional

Court itself (to handle similar matters in a similar manner). The

Plenum’s judgment – in the opinion of the dissenting judges – does not

respect these requirements because it does not sufficiently reflect the

similar situation discussed in Constitutional Court judgment file no.

Pl. US 36/01, which concerns a bankruptcy trustee.
 

The

general court rightly proposed – knowing the Constitutional Court’s

case law, with express reference to the previously addressed comparable

matter – annulment of the contested provision of the CPC, evoking

similar unconstitutional results. With reference to the key

constitutional arguments which are analyzed in the following text, in

particular the opinion that both matters are comparable from a

constitutional law viewpoint (not only in terms of ordinary law), we can

not but conclude that also in terms of the principle of predictable

decision making by the Constitutional Court itself the petition should

have been granted.

II. That conclusion can be based, in particular, on the following grounds.
The

essence of the matter is (in particular) the already mentioned question

whether the conclusions stated in Constitutional Court judgment file

no. Pl. US 36/01 (Collection of Laws no. 403/2002), concerning a

bankruptcy trustee, apply in principle (mutatis mutandis) to the present

matter, i.e. for a situation in which a business trustee can find

himself, as regards his claim for compensation and reimbursement of cash

expenses. Basically the question is one of weighing whether the

position of a business trustee is comparable with the position of a

bankruptcy trustee, as the petitioner believes, or whether there are

sufficiently important differences that would justify different

treatment of them as regards the claim for compensation and

reimbursement of cash expenses (giving an advantage to a bankruptcy

trustee), as the Senate of the Parliament of the CR indicated in its

statement – although not with a clear conclusion – and as the Plenum’s

majority opinion concludes.
 

The

dissenting judges emphasize that this evaluation must, naturally, and

primarily, be based on a constitutional law viewpoint, not only on the

position of simple law. They conclude that the key part of the

constitutional law arguments contained in the abovementioned judgment is

also applicable to the present case; because they did not find grounds

to diverge from the previously expressed opinions they state (repeat)

the following arguments, which led the Constitutional Court to grant the

previous petition.
 

Execution

of a decision by sale of the business of the obligated party is,

generally speaking, a relatively effective means of enforcing a

financial claim; yet, there is no interference in the actual activity of

the business, but only a forced change of its owner (the original

owner, the obligated party, is replaced by a new owner – the winner at

auction). However, a different situation arises if the court determines

that the business is over-indebted – i.e. in the event that the value of

things, rights and other assets belong to the business together with

the funds specified in § 338n par. 1 let. b) is not greater than the

amount of the business’s payable financial obligations, the claims of

the entitled party and those who joined the proceedings as additional

entitled parties, which do not belong to the business, and the expected

expenses of the sale, compensation for the trustee, and reimbursement of

the trustee’s cash expenses or exceeds it only negligibly (§ 338n par. 6

of the CPC); in that case the court shall stop execution of the

decision. It is precisely this situation that arose in the case that led

the general court to file the present petition to annul the contested

statutory provision.
 

An

obligatory component of proceedings to execute a decision by sale of a

business is – similarly to the appointment of a bankruptcy trustee in

bankruptcy proceedings – appointment of a business trustee. Under § 338i

of the CPC the court shall appoint as trustee a person registered under

special regulations in the list of bankruptcy trustees. In exceptional

cases, the court may also appoint a person who is not registered in the

list, provided he meets the conditions for registration, if he agrees to

be appointed as trustee. Persons registered in the list of bankruptcy

trustees can refuse the position only for serious reason, which the

court will evaluate. The trustee is required to perform his position

with expert care, and is liable for damages which he caused by at-fault

violation of his obligations imposed by law or by the court.
 

In

the cited judgment, file no. Pl. US 36/01, published as no. 403/2002

Coll., the Constitutional Court defined the elements of a public law

body as follows: they are public purpose, the manner of appointment, and

authority. The public purpose of the institution of a business trustee

must also be seen in acceptance of limited public interference in the

resolution of property relations which have reached a crisis (in the

form of forced sale of the obligated party’s business), the manner of

appointment results from a decision by a state body (a court), and his

authority, as in the case of a bankruptcy trustee, are the exercise of

authority. Thus, one can conclude that a business trustee is a special

public law body whose activity is, also in doctrinaire opinion, similar

to the activity of bankruptcy trustees (cf., e.g., Bureš, Drápal,

Krčmář, Mazanec, Občanský soudní řád, komentář, 6. vydání [The Civil

Procedure Code, Commentary, 6th ed.], Prague, C. H. Beck, 2003, p.

1427). It is precisely in the public law nature of the position of a

business trustee in execution proceedings under the CPC that the

dissenting judges see substantial grounds which lead them to consider

the petition to annul the contested provision to be justified.
 

Under

§ 338i par. 4 of the CPC the (business) trustee is entitled to

compensation and to reimbursement of cash expenses. If execution of a

decision is stopped, then under the contested provision, the court shall

impose an obligation to pay the trustee compensation and reimbursement

of cash expenses either on the obligated party, or jointly and severally

on the entitled party, those who entered proceedings as additional

entitled parties, and creditors who have registered their claims (§ 338s

a 338zn), depending on the grounds on which the execution of the

decision was stopped. As the petitioner correctly stated, this statutory

structure for deciding on the trustee’s compensation and cash expenses

permits a situation to arise where the business trustee’s statutory

claims to compensation and reimbursement of cash expenses can not be

satisfied, without establishing another alternative source for paying

these claims. The provision of § 338zo par. 4 of the CPC does not permit

using as an alternative source any deposit paid under § 270 par. 3 of

the CPC, because that deposit can be used only to pay expenses of

execution of a decision which are paid by the state. Thus, the

possibility of satisfying a business trustee’s claims is really tied to

the solvency of the parties to the proceedings. The dissenting judges

are naturally aware that proceedings on bankruptcy and execution

proceedings are not of a completely identical nature, and that in

execution proceedings the entitled party initially bears certain costs

of the proceedings (e.g. the court fee for a petition). However, in this

adjudicated matter a special regulation applies (§ 338zo par. 4); it

permits imposing an obligation to pay the trustee’s compensation and

reimbursement of cash expenses on the entitled party, but depending on

the grounds for which the proceedings were stopped. In this regard we

can agree with the petitioner that the obligation to pay the trustee’s

claims can be imposed on the entitled party only in exceptional cases –

usually when he did not observe the necessary level of care when filing

the petition for execution of a decision (i.e. in the case of procedural

fault on the part of the entitled party) – and that in most cases it is

the obligated party who is bound by this obligation (cf. also the cited

Commentary, p. 1461,1268). Especially in a situation where the

obligated party’s business is over-indebted (§ 338n par. 6 of the CPC),

it is evident that the trustee’s claims will not be satisfied, or will

be satisfied only in part; if the trustee of the business was not made

the bankruptcy trustee under § 13b par. 3 of Act no. 328/1991 Coll., the

business trustee has only non-priority claims against the bankrupt (cf.

§ 31 par. 5 of Act no. 328/1991 Coll.); and if the bankruptcy petition

was denied, the business trustee does not have even this possibility for

satisfying his claims. Thus, in the petitioner’s opinion, this creates

an inequality in compensation for two groups of business trustees – a

first group of trustees of businesses, the satisfaction of whose claims

for compensation and cash expenses is secured by law (in the budget of

proceeds from sale of a business or in the budget of bankruptcy assets

under § 31 par. 5 of Act no. 328/1991 Coll.) and a second group of

business trustees who do not have the possibility of satisfying their

claims, or with only a negligible possibility, even though both groups

of trustees of businesses fulfill all the obligations imposed on them by

law. In the opinion of the dissenting judges this opinion of the

general court can not be completely ruled out – with reference to the

already stated conclusions of the Constitutional Court in judgment file

no. Pl. US 36/01, published as no. 403/2002 Coll. – or from a

constitutional law viewpoint. In particular we must conclude that the

legal framework in question also establishes inequality between business

trustees as a public law body and a comparable group of other public

law bodies (e.g. bankruptcy trustees) although no reasonable grounds for

such differential treatment can not be found. As was already stated, a

business trustee can refuse the public law position to which he is

appointed by a court only in exceptional cases (“for serious reasons,

which the court shall evaluate”), and he is required to perform it with

expert care, and is liable for damages which he caused by violation of

his obligations. Surely it can not be allowed for the state not to

ensure for the holder of a public position, on whom it imposes

non-negligible obligations, and on whom it has increased demands,

appropriate compensation and reimbursement of cash expenses, or for a

situation to be permitted to arise – not as an exception – in which he

would basically perform this position for free, or even pay for doing

it.
 

Thus, we can only repeat

that if the Constitutional Court accepts as its starting point the

hypothesis that a business trustee – similarly to a bankruptcy trustee –

can be classified as a special public law body, then from a

constitutional viewpoint the key issue for this matter is that of

constitutional safeguards for compensation and reimbursement of expenses

connected with the exercise of public positions. These safeguards are

provided by the normative content arising from the constitutional

principle of equality (Art. 1 and Art. 3 par. 1 of the Charter). In the

understanding of the constitutional principle of equality the

Constitutional Court agreed (in particular in the judgments in matters

file nos. Pl. US 16/93, Pl. US 36/93, Pl. US 5/95, Pl. US 9/95) with the

concept 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, in the interests of securing its functions, to decide to

provide a particular group fewer advantages than another. Even here,

however, it may not proceed arbitrarily … If the law provides benefits

for one group, and simultaneously thereby imposes disproportionate

obligations on another group, this can be done only on the basis of

public interests.” The Constitutional Court thereby rejected an absolute

concept 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 is intended by all modern constitutions.” (Pl. US

36/93). It thus shifted the content of the principle of equality into

the area of constitutional acceptability of viewpoints for

differentiating subjects and rights. It sees the first viewpoint in

ruling out arbitrariness. The second viewpoint arises from the legal

opinion stated in the judgment in the matter 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, at least in a

certain regard, on the very essence of equality. As a rule this happens

if the violation of equality is connected to 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, etc.” (concurring, Pl. US 5/95). The second viewpoint in

evaluating the unconstitutionality of a legal regulation establishing

inequality is thus the interference it establishes in another

fundamental right and freedom.
 

The

Constitutional Court points out, as it stated in the cited judgment

file no. Pl. US 36/01, that in its case law it interprets the

constitutional principle of equality in the sense of accessory and

non-accessory equality. In the cited judgment, the Constitutional Court

among other things stated as regards the issue, concerning the

adjudicated case, that “If the purpose of the statutory framework

permitting bankruptcy proceedings is also constitutional in a case

where, in bankruptcy proceedings, no bankruptcy assets are converted to

money, and a deposit for bankruptcy expenses was not paid because the

petitioner seeking a declaration of bankruptcy was exempt from that

obligation, then the situation which this creates at the statutory level

of reimbursement of cash expenses and compensation of the trustee must

be considered to violate the constitutional principle of non-accessory

equality. Compared to cases where, in bankruptcy proceedings, assets

were converted into money, or a deposit for bankruptcy expenses was

paid, and the funds used to pay trustees’ cash expenses and

compensation, the trustees’ claims (payment of cash expenses and

compensation) in cases of an insolvent bankrupt and a petitioner exempt

from the obligation to pay a deposit for bankruptcy proceedings expenses

will not be satisfied, because the bankruptcy assets are insufficient

to pay the expenses of bankruptcy proceedings.” The text of the

then-valid and effective provisions of the Bankruptcy Act, which the

Constitutional Court, in that judgment, found to be unconstitutional,

was the following: “If the petitioner’s claim arises from wage claims,

the petitioner is exempt from payment of advances, with the exception of

employees specified in § 67b.” (§ 5 par. 1 second sentence of the

Bankruptcy Act) and “The trustee’s claims shall be paid from the

bankruptcy assets, and if they are insufficient, from the advance for

bankruptcy proceedings expenses paid by the petitioner.” (§ 8 par. 3

second sentence of the Bankruptcy Act). The dissenting judges do not

overlook the fact that the normative framework in the present case is –

as follows from the foregoing text – somewhat different; however, the

unconstitutional consequences established by the relevant statutory

framework (i.e. the lack of provision of an alternative source for

paying the trustee’s compensation and expenses, see above) affecting the

position of a business trustee, or some of them, are basically

identical. The obligated party is simply over-indebted. If there are no

funds and no person to pay the justified claims of a business trustee,

it must be explicitly stated how to address such a situation; this

applies all the more if the relevant statutory framework concerning

execution of a decision by sale of a business is otherwise so

comprehensive and detailed that it evidently tries to address every

situation which could arise in the course of execution. In this regard

it can not be overlooked that § 338i par. 5 of the CPC does provide the

obligation of a court to provide an advance to the request of a business

trustee, but only for payment of cash expenses incurred, in particular

for engaging an expert; thus, it does not concern the trustee’s

compensation at all. However, the constitutional principle of

non-accessory equality, which includes ruling out arbitrariness by the

legislature in differentiating subjects and rights, also implies the

maxim of proportionality for the area of compensation and reimbursement

of expenses connected with the exercise of public positions. Therefore,

the dissenting judges conclude that the inequality created in

compensation and reimbursement of expenses connected with the exercise

of the public position of a business trustee is an inequality which is

extreme (because it permits non-payment of compensation and

reimbursement of cash expenses for one group of trustees), as well as an

inequality which lacks a reasonable purpose and significance. At this

point we can also state that in these cases it would evidently be

appropriate – de lege ferenda – to have the state pay the trustees’

compensation and cash expenses. As regards the consideration expressed

in the statement from the Senate of the Parliament of the CR about the

allegedly de-motivating factor of “one hundred percent” certainty of

satisfying a business trustee’s claims, we can only state, for

completeness, that this matter is not about the issue of motivation or

de-motivation of a business trustee, but about the entitlement to

compensation and reimbursement of cash expenses to the holder of a

public office, which is expressly stated by law (the cited § 338i par. 4

of the CPC).
 

As in the case

of judgment file no. Pl. US 36/01, it must be stated that if the

contested provision, for the reasons stated, is inconsistent with Art. 1

and Art. 3 par. 1 of the Charter of Fundamental Rights and Freedoms,

this is not caused by its text, but by the gap in the law which it

creates. What is unconstitutional is the omission by the legislature,

which results in an unconstitutionally unacceptable inequality (on the

doctrinaire concept of the concept of legislative omission see V.

Šimíček, Opomenutí zákonodárce jako porušení základních práv

[Legislative Omission as a Violation of Fundamental Rights]. In: Deset

let Listiny základních práv a svobod v právním řádu České republiky a

Slovenské republiky [Ten Years of the Charter of Fundamental Rights and

Freedoms in the Legal Order of the Czech Republic and the Slovak

Republic]. Eds. B. Dančák, V. Šimíček, Brno 2001, pp. 144-159). This

matter concerns a false gap, which is the incompleteness (absence) of

the written law compared to the explicit regulation of similar cases,

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

of general legal principles. An illustration of how to solve such a gap

is the judgment in the matter file no. Pl. US 48/95 (Collection of

Decisions of the Constitutional Court, volume 5, judgment no. 21), in

which the Constitutional Court normatively filled the gap created by

inequality in the legal framework with the help of constitutionally

consistent interpretation of the relevant legal framework. However, that

method can not be used in the present matter. Likewise, it is not

possible to derive, e.g. by expansive interpretation of general

provisions of the CPC (see, e.g., § 270 par. 3 of the CPC) a subsidiary

obligation on the part of the state to pay a business trustee’s

compensation and cash expenses, if the provision of that obligation is

lacking in the special provisions concerning the execution of a decision

by sale of a business. It would be difficult to understand the cited §

270 par. 3 of the CPC as a sort of “general rule,” establishing the

state’s obligation to pay expenses for execution of a decision in all

situations coming into consideration. In this adjudicated matter there

is a special, exhaustively conceived framework for the execution of a

decision by sale of a business, moreover in a situation where

proceedings are stopped (§ 338n par. 6, § 338zo par. 4 of the CPC).

Another special provision, i.e. § 338i par. 5 of the CPC permitting the

business trustee to ask the court for an advance – as was already stated

– also does not resolve the matter, because the advance applies

expressly only to payment of cash expenses (not to the trustees’

compensation), and generally only in connection with engaging an expert.
 

Therefore

the Constitutional Court – as was already stated – should have granted

the petition and annulled § 338zo par. 4 of Act no. 99/1963 Coll., the

Civil Procedure Code, as amended by later regulations.
 

III.

The dissenting judges – only for completeness – add to the main

arguments of the Plenum’s judgments, which are basically built on

interpretation of ordinary (general) law, the following:
 

1)

The judgment argues on the basis of § 260a et seq. of the CPC (the

obligated party’s property declaration), which permits the entitled

party to determine the obligated party’s financial situation and not

propose execution of a decision by sale of a business, where there may

be a danger of over-indebtedness. In the opinion of the dissenting

judges, however, this does not address the essence of the matter,

because the contested provision § 338zo par. 4 involves an entitlement

of the business trustee, not an entitlement of the entitled party; the

business trustee himself can not affect the conduct of the entitled

party in any way.
 

2) The

judgment argues on the basis of § 338ze, par. 7 of the CPC, under which –

if the business trustee’s claims were not satisfied from the

distributed assets – the court shall impose this obligation on the

obligated party; the entitled party and other specified persons are

guarantors for the fulfillment of this obligation (note: in other words

satisfaction of the business trustee is thus guaranteed).
 

This

argument can not be accepted. The contested § 338zo par. 4 involves a

completely different procedural situation, because there the business is

over-indebted, and the court has therefore stopped the proceedings

without the execution of the decision having been performed (the

business was not, in fact, sold). Thus, one can not proceed according to

§ 338ze par. 7 (see judgment), where the business was already sold and

paid for, i.e. the execution of the decision was implemented and the

budget is being implemented. We can also add that if it was not

possible, even after stopping execution of a decision due to

over-indebtedness (§ 338n par. 6 of the CPC) to proceed under § 338ze

par. 7 of the CPC (as the judgment states), then the existence of the

contested provision § 338zo par. 4 of the CPC would have no purpose at

all. However, it does have a purpose, it is a special regulation for the

case of stopping execution of a decision, which imposes an obligation

to pay a business trustee’s claims, possibly on the entitled party, but

according to the grounds on which the execution of the decision was

stopped. (Note: It is precisely in view of this that the legal framework

does not ensure that a business trustee’s claims will always be

satisfied. This is discussed in more detail at another point in this

dissenting opinion.)
 

3) The

judgment also points to § 338i par. 5 of the CPC and states that a

business trustee may request an advance for the payment of cash

expenses, even if it is evident that it will not be possible to pay his

expenses from the sale of the business. In the opinion of the dissenting

judges, however, this will not be sufficient in a number of cases,

because the cited provision makes it possible to provide an advance only

for payment of cash expenses, but not for the trustee’s compensation,

which is often considerably higher (e.g., in this matter, the cash

expenses were only CZK 106). In addition, in a number of cases the

trustee will not request an advance, because often it is not possible to

estimate that a business is over-indebted; if the entitled party then

meets the conditions for being exempt from court fees, he can not be

given an obligation to pay an advance for expenses of execution of the

decision at all (§ 270 par. 3 of the CPC).
 

4)

The judgment also argues on the basis of § 264 par. 2 of the CPC, under

which the court shall deny the petition ... if it is evident from the

petition that the revenue which would be achieved would not suffice to

cover the expenses of executing the decision; thus it is claimed to be

up to the court, before proposing execution of a decision, to carefully

evaluate the obligated party’s financial situation so that – depending

on that – it might not order execution of the decision at all. In the

opinion of the dissenting judges even this does not address the essence

of the matter; the present case concerns the already existing claims of a

business trustee, which arose after a court simply ordered execution of

a decision by sale of a business, and did not proceed according to §

264 par. 2 of the CPC. In any case, in a number of cases the court will

not determine the financial situation of the obligated party, and (in

particular) the over-indebtedness of the business will not be evident

“from the petition,” as the cited § 264 par. 2 of the CPC presumes.
 

5)

The judgment also states that even if a business trustee were

nevertheless forced to pay the expenses of execution of a decision

himself, he can exercise his claim against the obligated party through a

different manner of execution of a decision, or through bankruptcy

proceedings. In the opinion of the dissenting judges this is an academic

consideration, because in a number of cases there will be no other

executable property of the obligated party, all the more so if an

unsuccessful execution of a decision was exercised on his over-indebted

business.
 

6) Finally, the

judgment considers that if a business trustee’s claims were not

satisfied at all, this would not be an unconstitutional situation. It

argues on the basis of the decision of the European court of Human

Rights (Van der Mussele v. Belgium), which states that the risks of the

work of a lawyer (including the risk of non-payment of fees) are

balanced out by the professional monopoly in defense and representation;

these conclusions can allegedly also be applied to the activity and

position of business trustees. In the opinion of the dissenting judges,

however, this comparison is not appropriate, because a lawyer conducts

his profession continually, as his permanent and paid profession (and

only as part of that can he be appointed, for example, as a defense

counsel ex offo), whereas the position of a business trustee is not a

permanent profession.
 

It is

evident from this text that the routes which should – according to the

judgment of the Plenum – with the help of interpretation of ordinary

law, lead  to securing a business trustee’s claims to compensation and

payment of cash expenses are not an unambiguous and clear solution to

the matter. If the execution of a decision is stopped, they are – in the

opinion of the dissenting judges – largely unusable, including from the

viewpoint of the cited ordinary law. The important thing is that it is

the state that is required – from the point of view of constitutionality

– to guarantee to a public functionary whom it appoints (the business

trustee) payment of his statutory financial claims. However, the state

has not done this, because, as has already been stated, the statutory

framework of the Civil Procedure Code contains a gap which can not be

filled in by constitutionally consistent interpretation.

Brno, 25 October 2005