Statistical data: 1 January 1996 - 30 April 1996

Number of decisions:
4 final decisions including:
• 2 rulings concerning the compliance of laws with the Constitution
• 2 rulings concerning the compliance of governmental resolutions with the laws
All cases - ex post facto review and abstract review. The content of the cases was the following:
• privatisation: 1
• financial questions: 2
• commercial banks: 1
All final decisions of the Constitutional Court were published in Valstybes zinios (Official Gazette).

Important decisions

Identification: LTU-96-1-001
a) Lithuania / b) Constitutional Court / с) / d) 24.01.1996 /e) 7/95/ f) On initial privatisation of State property / g) Valstybes zinios (Official Gazette), 9-228 of 31.01.1996 /h).

Keywords of the systematic thesaurus:
Institutions - Economic duties of the State.
Fundamental rights - General questions - Basic principles - Equality and non-discrimination.
Fundamental rights - Civil and political rights - Right to property - Privatisation.

Keywords of the alphabetical index: Company, initial privatisation / State property.

Headnotes:
The Constitution enumerates property which exclusively belongs to the Republic of Lithuania (the subsoil of the earth, as well as nationally significant internal waters, forests, parks, roads, and historical, archaeological and cultural facilities). According to the Civil Code, other possessions may also belong to the State. This property, as a rule, corresponds to the necessary exercise of State powers, including powers of attribution, or, alternatively, it is of general importance, the ownership of such property by the State being linked with the significance of the property itself.
Article 28 of the Constitution stipulates that "procedures concerning the management, utilisation, and disposal of State property shall be established by law". Conse-quently, relations arising from the management, utilisation and disposal of State property are to be regulated only according to the law. Therefore, the norms of bye-laws may never contradict the law.
Article 29 of the Constitution consolidates the principle of equality of all people before the law, the courts and other State institutions and officers. This principle must be observed when passing and applying laws, as well as when administering justice. This principle requires uniform application of legal assessments to homogeneous facts and prohibits arbitrary assessments of essentially homogeneous facts.
However, persons themselves may be different, and in some cases, when passing laws, this is to be taken into consideration. For example, if a law directed towards the good of society takes into consideration differences in the social status of persons, this does not in itself mean that the principle of equality is violated. Besides, quite frequently laws are aimed only at certain categories of persons, or they are valid only in specific situations under which particular categories of persons fall. The variety of social life determines the manner and content of legal regulations, but diverse interpretation of inborn personal rights and their diverse application to individual categories of persons is not permissible.
The legislator is called upon to regulate questions concerning privatisation of State property, the activities of State enterprises, control of State shares possessed in joint-stock companies, as well as other matters connected with the management, utilisation, and disposal of State property. It may choose the legal manner for this regulation within the limits of the Constitution.

 Summary:
The case was initiated by a group of Seimas members who requested the review of certain norms of company law, as well as of some provisions of the Law on Initial Privatisation of State Property, having regard to their compliance with the Constitution.
The petitioner considered that Article 10 of the company law, whereby reorganisation was defined as the transformation of a company as a legal person without a liquidation procedure, read together with Article 50 of the said law, which provided that "public and private companies shall have to amend their Articles of Association according to this law and have them registered according to the procedure established by the Law on Register of Enterprises within 9 months as of the date of the enactment of this law", contradicted the Constitution.
The petitioner argued that the disputed provisions failed to ensure that companies undergoing reorganisation be established legally, i.e. that the company being reorganised should be founded on prior or existing company laws or that it should have been re-registered following privatisation in accordance inter alia with the Law on Initial Privatisation. On the contrary, the law appeared to expressly permit this last possibility.
The Constitutional Court established that some laws adopted in Lithuania provided for State enterprises to issue shares (collect contributions) or to privatise a part of the capital goods (up to 10 percent) of the enterprise. The capital accumulated was not to be divided into shares. At the same time, there was no prohibition on increasing private share capital from its profits. Thus, legal conditions were created to increase private share capital without privatisation of the enterprise as a whole. Depending on how the ratio between private shares and State capital changed, pursuant to the procedure established by the Law on State Enterprises to reorganise State enterprises into joint-stock companies or private joint-stock companies, the legal status of such companies changed in the Register of Enterprises, and thus their activities became subject to company law.
The company law defines reorganisation as transformation of a company without the liquidation procedure, i.e. attention is paid mainly to the specific character of companies (as well as other enterprises) functioning as the subjects of commercial economic activity; to the continuity of their activity; and to the succession of the rights and liabilities of the companies reorganised. In these circumstances, the disputed norm did not establish any restrictions or privileges concerning the procedure of reorganisation which violated the principle of the equality of persons.
For these reasons, the Constitutional Court ruled that the disputed norms were in compliance with the Constitution.

Languages: Lithuanian, English (translation by the Court).

Identification: LTU-96-1-002
a) Lithuania / b) Constitutional Court / с) / d) 28.02.1996 / e) 10/95 / f) On the capitalisation of the credits of some enterprises / g) Valstybes zinios (Official Gazette), 20-537 of 06.03.1996/h).

Keywords of the systematic thesaurus:
Constitutional justice - The subject of review – Rules issued by the executive.
Sources of constitutional law - Hierarchy – Hierarchy as between national sources.
Institutions - Executive bodies - Powers.
Fundamental rights - General questions – Basic principles - Equality and non-discrimination.

Keywords of the alphabetical index: Capitalisation / Credits / Enterprises.

Headnotes:
The constitutional principle of equality does not prevent the law from establishing different legal regulations in respect of categories of people who are in different situations. This also applies to legal persons, and not only to natural persons, as the former are, as a rule, corporations of natural persons.
The Ministry of Agriculture was permitted by the government Resolution at issue to utilise the Agriculture Support Fund in order to cover the debts of certain enterprises owing to the Bank of Agriculture, as well as to acquire shares on behalf of the State up to the amount of the corresponding increase in their assets or authorised capital. This process is defined as the "capitalisation of credits".
Such a form of disposal of State assets is not established in the Law on State Regulation of Economic Relations in Agriculture. It is only the legislator who may establish the form of utilisation of State assets, because Article 128.2 of the Constitution stipulates that "Procedures concerning the management, utilisation, and disposal of State property shall be established by law".

Summary:
A group of Seimas members appealed to the Constitutional Court requesting review of a government Resolution "On the capitalisation of the credits of some enterprises under the authority of the Ministry of Agriculture", having regard to its compliance with the Constitution and the law.
The Ministry of Agriculture was permitted by the disputed Resolution to repay gratis and irretrievably the expenses of the enterprises enumerated in the appendix to the Resolution and which function on the basis of private enterprise; i.e. the Ministry is permitted to cover the debts of the aforesaid enterprises owing to the Bank of Agriculture by utilising the means of the Agriculture Support Fund. In the opinion of the petitioner, these payments are made on the basis of individual selection, and not pursuant to certain rules which should be applied to all enterprises processing agricultural goods.
The aforementioned enterprises, after the disputed government Resolution had been adopted, acquired the right to never repay private expenses and debts. The petitioner therefore argued that the Resolution violated the essential principles of a free market based on fair competition and equality of all subjects of law.
The Constitutional Court, while ruling that the Resolution did not contradict the constitutional principle of equality, found that it did contradict the Law on State Regulation of Economic Relations in Agriculture because the said law did not provide for any such possibility of covering the particular debts of individual enterprises.

Languages: Lithuanian, English (translation by the Court).

Identification: LTU-96-1-003
a) Lithuania / b) Constitutional Court / с) / d) 15.03.1996 / e) 13/95/ f) On the stamp tax rates / g) Valstybes zinios (Official Gazette), 25-630 of 20.03.1996 / h).

Keywords of the systematic thesaurus:
Constitutional justice - The subject of review - Rules issued by the executive.
Sources of constitutional law - Hierarchy - Hierarchy as between national sources.
Institutions - Executive bodies - Powers.
Institutions - Public finances - Taxation.
Fundamental rights - Civil and political rights - Rights in respect of taxation.

Keywords of the alphabetical index: Stamp duty.

Headnotes:
Stamp duty, even though it may be called a stamp tax, differs essentially from a measure of taxation properly understood because it is in the nature of a direct recompense. This tax is collected for actions performed by State institutions, as well as for the issue of documents bearing legal power (Article 1 of the Law on Stamp Tax). As a rule, such payments are paid only once. On the other hand, the characteristic of taxes is that they are paid regularly over an established time period, and their nature is not that of a direct recompense, i.e, after they have been paid, the State has no obligation to perform any action or render any particular service for the tax payer's benefit.
It is impossible to assert that the government, by establishing the rates of stamp duty, intruded upon the competence of the Seimas because it was the Seimas, and not the government, which introduced stamp duty after passing the Law on Stamp Duty. In Article 3.1 of this law, the purpose for which the duty is collected is expressly indicated, whereas in Article 3.2 it is established that the rates of duty, except for cases under investigation in the courts or in respect of copies of issued documents, shall be established by the government.
The right to freely choose one or another type of occupation or business may be regulated in various ways. This right is first of all bounded by manifold natural considerations, notably the skills and capacities of every person. These extend to questions concerning the possession of corresponding training, to an individual's moral and other qualities (e.g., physicians, teachers,  judges, public prosecutors, etc.), the acquisition of a specific license (e.g., drivers), etc.
The opportunity to freely choose one's business is also restricted by objective requirements, e.g., the possession of the initial capital. It follows that a person may be prevented for any such reasons from making such a choice - a person when choosing an occupation or business knows in advance that he is supposed to have an adequate training, or pay particular taxes, and, according to his skills or capacities, decides what to choose.
What is important and relevant from a legal viewpoint, however, is that the opportunity for a person to exercise a free choice is not restricted directly, in a normative manner, i.e., the person may not be prohibited from choosing a particular occupation or business.
The stamp duty rates established by the government would have the effect of restricting competition if they were different for the same categories of persons (a sector of the economy or type of business), i.e, if certain economic entities were privileged by being subject to one rate, and others discriminated against by being subject to a different rate. In the present case, however, the government has established equal stamp duty rates for all entities in the same sector of the economy or the same type of business.

Summary:
The case arose from a petition submitted to the Court by a group of Seimas members, requesting a review as to whether certain aspects of the stamp duty rates established by the government were in compliance with the Constitution and the law.
The petitioners argued that the government, by constantly increasing stamp duty, transformed it into a means of illegally replenishing the budget and thereby in fact intruded upon the competence of the Seimas which is established in Article 67.15 of the Constitution to "establish State taxes and other obligatory payments". In addition, the petitioner alleged that the government, by groundlessly increasing the rates of stamp tax, unlawfully restricted freedom of individual economic activity and initiative (Article 46.1 of the Constitution), as well as the right to the opportunity to freely choose one's business (Article 48.1 of the Constitution).
In the view of the petitioners, these actions in turn created conditions that encouraged the monopolisation of the market, because small and medium-sized businesses were financially incapable of meeting the high rates of stamp duty and, therefore, were compelled to give up the most profitable markets to large companies and monopolies, in violation of Articles 46.3, 46.4 and 46.5 of the Constitution.
The Constitutional Court ruled that the government, in establishing the rates of stamp duty, had fulfilled the provision of the law. It did not thereby violate the provision of Article 67.15 of the Constitution, as it merely established the rates of stamp duty and did not establish new taxes or other obligatory payments. Thus the disputed stamp duty rates were found to comply with article 67.15 of the Constitution, as well as with Article 6 of the Law on Stamp Duty.

Languages: Lithuanian, English (translation by the Court).

Identification: LTU-96-1 -004
a) Lithuania / b) Constitutional Court / c) / d) 18.04.1996/ e) 12/95/ f) On Commercial Banks / g) Valstybes zinios (Official Gazette), 36-915 of 24.04.1996 / h).

Keywords of the systematic thesaurus:
Institutions - Courts - Procedure.
Institutions - Public finances - Central bank.
Fundamental rights - Civil and political rights – Right to property - Other limitations.
Fundamental rights - Economic, social and cultural rights - Commercial and industrial freedom.

Keywords of the alphabetical index: Bankruptcy, commercial bank / Banks, commercial, insolvency / Depositors, protection.

Headnotes:
Subjective property rights are an element of the absolute legal relation of ownership whereby the owner may oppose all other persons in respect of the use of the property. On the other hand, the owner, when exercising his property rights, is not entirely free. It is established in Article 28 of the Constitution that: "While exercising their rights and freedoms, persons must observe the Constitution and the laws of the Republic of Lithuania, and must not impair the rights and interests of other people". Therefore, the subjective property right may be defined as the legally protected opportunity of the ownerto manage the possessions which belong to him, to utilise and dispose of them at his discretion and in his interests, within the bounds, however, of the limits imposed by the law and by respect for the rights and freedoms of other people.
In common with the protection of fundamental rights in other democratic States governed by the rule of law, restrictions may lawfully be placed on the exercise of property rights, as well as on some other basic human rights. But in all cases, the essential content of the basic right cannot be violated by such restrictions. If reasonable limits are exceeded, or if its legal protection is not sufficiently ensured, that is a situation which is to be distinguished from the denial of the fundamentals of the right.
Legal persons also have a constitutional obligation to observe the Constitution and the laws, as well as not to impair the rights and interests of other people. It follows from the content of Article 28 that persons who when exercising their rights and freedoms do not observe the Constitution and the laws, or impair the rights and freedoms of others, may be subject to corresponding sanctions, including restrictions on their property rights and restraints on their economic activities and power of initiative.
The possibility of applying sanctions to a bank is connected to the establishment of violations of law committed by the management bodies of the bank, and to the non-fulfilment of obligations concerning its economic activities.
The main objective of the sanction - suspension of the activities of the management bodies of the bank - which is regulated by the contested provisions of the law is a preventive one: if there appears to be a threat to the trustworthiness and stability of the bank, the law attempts to protect the interests of depositors and to ensure the safety, trustworthiness and stability of the bank and banking system.
The bank, disposing of the assets of others, assumes corresponding risks and responsibilities, and its share capital constitutes a guarantee for the borrowed capital. From this perspective, the above sanction also seeks to preserve the bank's assets and to improve its functioning.
The institution of bankruptcy proceedings is an example of the exercise of a person's right to appeal to a court, as consolidated in Article 30.1 of the Constitution. The legal provisions which consolidate this right do not violate the principle of equality of all people before the court. After bankruptcy proceedings have been instituted, other persons who have legitimate property interests take part in the investigation of such civil proceedings, i.e. they take part in the bankruptcy procedure which is investi-gated in accordance with the determined legal procedure. Every person taking part in the proceedings has the rights and obligations which are determined by the Code of Civil Procedure and which correspond to his or her procedural status, as well as, in this case, the rights characteristic of the judicial bankruptcy procedure against a bank as provided for by the Law on Commercial Banks. Therefore, the objection of the petitioner that the institution of bankruptcy proceedings is "a procedural decision in favour of the subject that brought the action" is not well-founded.
Under Article 5 of the Code of Civil Procedure, the court must institute civil proceedings in all cases where the statement of the party concerned complies with the requirements of the relevant provisions on civil procedure. The disputed norms of the Law in question were to be interpreted analogously in an imperative manner: the court must institute bankruptcy proceedings if the statement of the party concerned is in conformity with general requirements of the relevant provisions of the Code of Civil Procedure as well as with supplementary conditions provided for in that Law. Thus, the institution of bankruptcy proceedings against a bank is linked to the fulfilment of the corresponding requirements of a procedural character. It should not be viewed as a violation of the principle of the independence of judges and of the courts.

Summary:
The case was referred by the Court of Appeal, requesting a review as to whether certain provisions of the Law on Commercial Banks were in compliance with the Constitution.
The petitioner argued that Article 37 of the Law, which provided that the Bank of Lithuania was entitled to suspend the powers of the bank council, to remove from office the board of the bank and the head of the bank administration, and to appoint a temporary bank administrator, had the effect that a State institution, the Bank of Lithuania, had the power to decide to take over private property - the property of a commercial bank - and to manage it. Once so taken over, the share-holders/owners of the bank were deprived of the possibility of managing and utilising their property. Thus the right to private property, as well as the freedoms of commercial activity and of initiative, were restricted in a manner which was contrary to the principle of equality before the courts, as consolidated in Article 29.1 of the Constitution.
Furthermore, in the opinion of the petitioner, there existed grounds for finding that the above legal provisions contradicted Article 109.2 of the Constitution, which consolidates the independence of judges and courts while administering justice. The requirement for the court to act in a particular manner impeded the court, and made it dependent upon the will of the party submitting the statement concerning the institution of bankruptcy proceedings. In addition, reliance by the court in such circumstances on the sole and uncontested evidence of the Bank of Lithuania concerning the solvency of the bank in question deprives the court of the possibility of arriving at an alternative procedural decision - to refuse to institute bankruptcy proceedings against the bank.
The Constitutional Court pointed out that, under Article 45 of the Law, the conclusion of the Bank of Lithuania concerning the commercial bank's insolvency could be challenged by any party before the court considering the request for the institution of bankruptcy proceedings against the bank, and that their rights were thus protected. The Bank of Lithuania, which is obliged by law to ensure the reliable functioning of the currency market and the system of credits and payments, is also entitled to submit a statement to the court regarding the bank's insolvency.
It was also noted that in the bankruptcy law of other countries, the right of the State institution which supervises banking to immediately apply sanctions to an insolvent bank so that its depositors were protected and the remaining assets were preserved was essentially not disputed: after the failure of a private bank, State interests, and not only those of a limited private sphere, are also affected.
The individual's right to appeal to the court is implemented by the procedure established by the Code of Civil Procedure and other laws. If a person enjoys a subjective procedural right to appeal to the court and has exercised it accordingly, the relevant provisions of the Code of Civil Procedure do not provide for an opportunity to reject his application. The acceptance of the application by court order, as a procedural act, confirms the institution of civil proceedings before the court.
The Constitutional Court ruled that the disputed provisions of the Law on Commercial Banks were in compliance with the Constitution.

Languages: Lithuanian, English (translation by the Court).