The Constitutional Court found no 223 / 2019 Coll.
The Constitutional Court found on 2 July 2019 sp. zn.
Valid
The Constitutional Tribunal found
Text versions:
05.09.2019
223
FIND
The Constitutional Court
On behalf of the Republic
The Constitutional Court decided under sp. zn. Pl. Pl. ÚS 2 / 19 on 2 July 2019 in plenary composed of the President of the Court of Paul Rychetský and of the judges Louis David, Jaroslav Fenyk, Josef Fiale, John Filip (Judge Rapporteur), Jaromír Jirsa, Tomáš Licháčník, Vladimir Sládeček, Radovan Suchánek, Catherine Šimáková, Vojtěch Šimíček, Milady Tomková, David Uhír and Jiří Zemánek, on the proposal 1. Ludmili Ticháčáčáčáček and 2. Vlastimil Ticháčáček, both represented by JUDr Prehým Kubíček, a lawyer, with the seat of Kasárenská 4, Česká Buděovice, on the annulment né part of the First Act of the First Act of the Constitutional Act (Insolvennance), in 30 June 2017, expressed ated by the Chamber of the Czech Republic of the Czech Republic.
as follows:
Paragraph 410 (2) of the First Law No. 182 / 2006 Coll., on the bankruptcy and methods of its resolution (insolvency law), as amended by 30 June 2017, in part expressed in the word "unsecured," was contrary to Articles 36 (1) and 37 (3) of the Charter of Fundamental Rights and Freedoms in conjunction with Article 1 (1) of the Constitution of the Czech Republic.
Reasons
Subject matter
1. Constitutional complaints pursuant to Article 87 (1) (d) of the Constitution of the Czech Republic (hereinafter referred to as the "Constitution") seek the annulment of the Resolution of the Supreme Court of 30 March 2017 No 26 / 2015- 31, the Resolution of the Supreme Court of Olomouc (hereinafter referred to as the "Supreme Court") of 26 November 2014 No 11 VSOL 145 / 2014- 18 and the Resolution of the Regional Court of Brno (hereinafter referred to as the "Regional Court") of 29 July 2014 No 26 ICm 176 / 2014- 10 (KSBR 26 INS 21585 / 2013) with a view to constitute an anti-constitutional interference with the fundamental right of the citizen for judicial protection and a fair trial of the first sentence of Article 40 (probably "Article 90," of the First Constitution "and Article 36 (1) of the Charter of the Charter of Fundamental Rights of Fundamental Rights").
2. With this constitutional complaint, the appellants, pursuant to § 74 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., joined the motion to abolish the word "unsecured 'in § 410 (2) of the First Law No. 182 / 2006 Coll., on the bankruptcy and methods of its resolution (Insolvency Act), as effective until 30 June 2017, and in § 410 (5) of the First Insolvency Act, as effective until 31 May 2019.
3. The constitutional complaint and the requested court file state that the contested order of the Regional Court rejected the appellants' action to determine that the claim of the commercial corporation RM by the investment cooperative, which is the registered office of Kvítková 3642, Zlín (hereinafter "the creditor '), was rejected in full by virtue of Article 160 (1), Article 160 (2) and (4) of the Insolvency Act, in respect of part-claims No 2 to 6, and in respect of part-claim No 1 and fully denied by the appellant (as debtors) by law, and decided that none of the parties had the right to pay the costs. The Regional Court concluded that the appellants denied the claim of the secured creditor, which, in the light of Paragraph 410 (2) of the insolvency law, has no effect and are therefore not even entitled to bring an action for the determination of the claim.
4. On appeal of the appellants of the constitutional complaints challenged by the order, the Supreme Court confirmed the order of the Regional Court and held that none of the parties had the right to pay the costs of the appeal. Even the Supreme Court concluded that, under Paragraph 410 (2) of the Insolvency Act (as in force on the date of the first and second review proceedings), only the denial of an unsecured creditor's claim has the same effects as the denial of the claim by the insolvency administrator in the duration of the effects of the approval of the debt relief.
5. The appellants rejected the order of the Supreme Court by invoking, however, which the Supreme Court referred to in Article 243c (1) and (2) of the Civil Code (hereinafter referred to as "o.s. ') refused, in that it was not admissible pursuant to § 237 (s), since the solution in the appeal procedure by the Court of Appeal is in accordance with the case-law of the Court of Appeal [namely the Supreme Court resolution of 29.5.2014 sp. zn. 29 ICdo 33 / 2014 (Reports of Judgments and Opinions, No 92 / 2014), of 31.8.2016 sp.
Arguments of the applicants
6. In the constitutional complaint, the applicants stated that the basis of the whole case was based on the conclusion of the consumer loan agreement with the creditor, on which they received CZK 150,000, from which they paid CZK 94 147 until the insolvency began. This agreement contained a disadvantaged provision for consumers. For example, the claim was secured by a lien where the subject-matter of the pledge was at least 10 times the value, the arbitration clause which entrusted the appointment of the arbitrator to a private body which was not an arbitration panel. They also pointed out that in the application of the claim, the creditor claimed the costs of the arbitration procedure of one third of the principal of the claim.
7. On 2 August 2013, the appellants submitted applications for insolvency proceedings with an application for authorisation for debt relief, the insolvency court authorised the debt relief and appointed the insolvency administrator. The creditor entered (in the opinion of the appellants late) a claim totalling CZK 1 096 605.54, which is several times in excess of the original commitment. Both the insolvency administrator and they denied this claim up to almost 90% at the next meeting of creditors, which was only attended by the creditor; he then proposed to dismiss the insolvency administrator and appoint another person, while the insolvency court granted him the right to vote under Paragraph 51 of the insolvency law. Subsequently, the newly appointed insolvency administrator fully recognised the creditor's claim. By this procedure, the insolvency court, according to the appellants, violated its (supervisory) obligation under Paragraph 10 (b) of the insolvency law.
8. In the context of the contested decisions, the appellants argued that, in their view, Paragraph 410 (2) of the Insolvency Act does not restrict the right of the debtor to file an action under Paragraph 160 (1) of the Insolvency Act, since it does not determine the effect of the denial of the claim on the secured creditor, but only that the denial of the unsecured claim has the same effects as the denial of the insolvency administrator and it must therefore be assumed that the creditors of the secured creditors are treated in accordance with the provisions of § 190 to 202 of the Insolvency Act. If it is for the denial to have a different effect from that of the insolvency administrator in the event of the denial of claims, then the appellants consider that the action in question must be brought by the debtors themselves. In this context, they argued to the Supreme Court that it did not address the question whether the refusal of their action was contrary to the right of everyone to refer their case to the courts.
9. On the application for annulment of the above provision, the appellants stated that the generally accepted interpretation (supported by the case-law of the Supreme Court) effectively deprives the debtor of the possibility of recourse to the court in the event of excessive and unjustified requirements of the secured creditor, if the insolvency trustee, in particular the "elected 'creditor as a majority, is, for any reason, inactive. In particular, in the case of consumer contracts, the Supreme Court and the Constitutional Court pointed out the unequal position of the consumer or the abuse clause, depriving the consumer of the possibility of eliminating this disproportion in particular in insolvency proceedings. This proposal is intended to go beyond the applicants' interest, as the debtors' problems are relatively common in practice.
Arguments of the parties on the constitutional complaint and replica of the applicants
10. The Judge-Rapporteur, in accordance with the procedure laid down in Article 42 (4) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 77 / 1998 Coll., sent a constitutional complaint to the parties and subsequently gave the appellants the opportunity to reply.
11. The Supreme Court stated on the constitutional complaint that the appeal raised by the appellate court in accordance with its caselaw and the appellants' view that the General Court did not interpret the provisions of Paragraph 410 (2) of the First Insolvency Act in a constitutional manner is unfounded. Following this, he referred to (and quoted) his decisions R 92 / 2016 and resolution sp. zn. 29 ICdo 60 / 2014 (see above), where he stated the reasons undoubtedly for the constitutional interpretation of that provision. It states, inter alia, that the legislation in question is a logical consequence of the scheme which applies to satisfy the creditor's debt relief claim. For such claims, the bankruptcy regime in which it has the right to claim satisfaction from the full proceeds of the redemption of the collateral and in the course of the liquidation procedure is applied according to the bankruptcy rules, but on the other hand, it does not have the right to receive other satisfaction of the secured claim other than the collateral (Section 398 (3), last sentence of the insolvency law) when the value of the collateral is exhausted, so that nothing else is received in the event of derecognition and is excluded from the vote on the method of derecognition (Section 402 (1)). It is precisely the fact that the position of the secured creditors is essentially the same as that of the bankruptcy in the event of the debt cancellation that justifies the conclusion that the bankruptcy regime will also be enforced in the present case. At the same time, the Supreme Court pointed out that the views formulated in Decision R 92 / 2014 did not only represent a three-member Chamber, but were a majority view of the Supreme Court with a view to approving the publication of this decision in the Reports of Judgments and Opinions by the votes of all 35 judges present at the hearing of the Civil and Commercial College of the Supreme Court, none of the points of reference (including the legal faculties) of the interpretation. The Supreme Court also referred to the order of the Constitutional Court of 30 October 2014 sp. zn. II. ÚS 2604 / 14 and of 27 February 2018 sp. zn. The reason for the annulment of the contested provision under the Supreme Court is also not given for the reasons set out in that provision. The argument put forward by the appellants, based on the presumption that a bankrupt debtor must have the right to deny each claim in the course of insolvency proceedings, is fundamentally wrong. In dealing with bankruptcy, the debtor (the insolvency) had no such right and no such right, and the debtor's right to claim is not enforced even in foreign law. It is limited to the treatment of bankruptcy (reorganisation and debt relief), but only to debt debts that are not satisfied "in bankruptcy" and which include unsecured claims. At the same time, he pointed out that the application for annulment of the provision had been filed with a constitutional complaint under point I. ÚS 1410 / 11, which the Constitutional Court rejected by order of 29 October 2013. In view of this, the Supreme Court concluded that the constitutional order had not been infringed by its procedure or decision and that there were no grounds in constitutional law for the annulment of the contested provision. It therefore proposed that the Constitutional Court, pursuant to Article 43 (2) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, (hereinafter referred to as the Law on the Constitutional Court) reject the constitutional complaint.
12. The Supreme Court stated in its observations that its conclusions were based on § 410 (1) and (2) of the Insolvency Act as well as on the order of the Supreme Court of 29 May 2014, sp. zn. 29 ICdo 33 / 2014, and proposed to reject the constitutional complaint. However, he added that, according to the explanatory memorandum to the draft amendment to the Insolvency Act, in the light of the conclusions of the Court of Justice of the European Union ("the EU Court ') set out in the judgment of 21 April 2016 in Case C-377 / 14 Ernst Georg Radlinger and Helena Radlinger v FINWAY a.s., the amendment of Paragraph 410 of the Insolvency Act to extend the right of a debtor who has been authorised to be defaulted to deny claims both unsecured and secured.
13. The Regional Court is convinced that it has done the right thing. The creditor entered his claim in time, a review meeting and a first meeting of creditors took place on 13 November 2013, where all claims, except the creditor's claim, were examined, as the insolvency administrator submitted an insufficiently completed review sheet which could not be accepted. At the creditors' meeting, he followed the voting right in accordance with § 51 (3) of the Insolvency Act, in its version effective until 31 June 2014, and admitted to the creditor whose claim was not reviewed, who then exercised his authority under § 29 of the Insolvency Act. At the second review meeting on 11 December 2013, the insolvency administrator accepted the claim, the applicants denied it in the amount of CZK 1 034 024,04, they accepted the amount of CZK 64 581,50. The appellants were informed that only the denial of an unsecured creditor's claim had the same effects as the denial of the claim by the trustee (§ 410 (2) of the insolvency law). Since it was an enforceable claim, it pointed out to the appellant that they did not apply the admissible grounds for denying such a claim (§ 410 (3) of the Insolvency Act). Nevertheless, the appellants brought an action to deny the claim, the Regional Court rejected it for the above reason.
14. In the reply, the appellants pointed out two points to support the merits of their constitutional complaint. First, the judgment of the EU Court of Justice (sub-12), first, the legislative procedure initiated concerning the government proposal to amend the insolvency law, according to which the word 'unsecured' should be deleted from the provision in question (Article 410 (5) of the insolvency law).
Further procedure in proceedings before the Constitutional Court
15. On the basis of the evidence thus collected, the Constitutional Court's decision-making Chamber concluded that the appellants' (appellants) application for annulment of the provision in question was not manifestly unfounded, thus fulfilling the conditions for the procedure laid down in Paragraph 78 (1) of the Law on the Constitutional Court. Therefore, in its Resolution of 30 April 2019 No III of the ÚS 2589 / 17-42 (Constitutional Court Decision available at http: / / nalus.ujud.cz), the Fourth Chamber of the Constitutional Court, in its Resolution of 30 April 2019, suspended the procedure for the annulment of the contested provision, and forwarded the application to plenary for a decision pursuant to Article 87 (1) (a) of the Constitution.
16. Even this resolution was rejected by the appellants' proposal to stop the procedure for the annulment of part of the provisions of Paragraph 410 (2) of the First Insolvency Act, as amended by 30 June 2017, as defined by the word "unsecured." The appellants, in view of the high likelihood that the contested part of the provision will be annulled and also in order to speed up the procedure in respect of their proposal, have withdrawn their application for annulment of the legal provision in question, suggesting that the procedure be terminated in that part. The application to terminate the application for annulment of the contested provision of the Insolvency Act of the Constitutional Court pursuant to § 43 (1) (e) of the Law on the Constitutional Court, as amended by Act No. 77 / 1998 Coll., (per analogiam), has been rejected as the Law on the Constitutional Court does not permit the withdrawal of such an application. As the Constitutional Court has already interpreted in its (unpublished) order of 12.7.1995 sp. zn. Pl. ÚS 8 / 95, this is because, in Paragraph 68 (1) of the Law on the Constitutional Court, the principle of official nature, which implies the obligation of the Constitutional Court as a body for the protection of constitutionality (Article 83 of the Constitution) to discuss any proposal for a review of the constitutionality or the legality of the law if it has not been rejected. Another exception to this principle is that, in the course of the proceedings, the grounds for its cessation arise, where only Paragraph 67 of the Law on the Constitutional Court, which sets out as a condition under which the Constitutional Court may act, the legal situation in which both the legislation which is being reviewed and the law which is the benchmark of the evaluation form part of the legal order (see paragraphs 10 to 16 of Resolution No III). In the present case, the withdrawal of the application was not admissible and, therefore, the Constitutional Court, having concluded that, in the course of the procedure for the application for annulment of the law or its provision under Article 64 (1) (d) [Note: now point (e)] or under Article 64 (3) of the Law on the Constitutional Court, if this law or its provisions were to lapse, the procedure "without further application '(cf. Section 68 (1) of the Law on the Constitutional Court) continues to determine whether it is decided that the annulment of the legislation or its provisions was not contrary to the legislation of a higher legal force.
Observations of the parties
17. Following the referral of the case to the plenary of the Constitutional Court, the Judge-Rapporteur pursuant to § 42 (4) of the Law on the Constitutional Court, as amended by Act No. 77 / 1998 Coll., sent a motion for observations to the parties and addressed the Government of the Czech Republic ("the Government ') and the Ombudsman asking whether they would exercise their right to intervene as interveners.
18. In its observations by the Chamber of Deputies of the Parliament of the Czech Republic (hereinafter referred to as the Chamber of Deputies), the letter of 5 June 2019, signed by its President, states that the Insolvency Act was discussed in the Chamber of Deputies at first reading on 26 October 2005 and was ordered to discuss the constitutional legal committee. The Constitutional Legal Committee discussed the draft law on 26 January 2006, a comprehensive amendment was tabled to the press at its meeting (the resolution, together with the comprehensive amendment, was included in Press 1120 / 1). The second reading of the draft law took place on 27 January 2006 and the amendments were processed as print No 1120 / 2. The third reading of the bill took place on 8 February 2006. The bill was approved by the Chamber of Deputies as a comprehensive amendment and other amendments.
19. The contested provision was amended by Act No. 69 / 2011 Coll., which was discussed in the Chamber of Deputies as Press No. 233 (Government proposal) at first reading on 1 February 2011 and was ordered to discuss it to a constitutional legal committee. The Constitutional Legal Committee discussed the draft law on 7 February 2011 and adopted Resolution No 233 / 1. The second reading on the draft law took place on 8 February 2011 and the amendments were processed as print No 233 / 3. The third reading of the bill took place on 11 February 2011, the bill was approved by the Chamber of Deputies. That provision was further amended by Act No. 64 / 2017 Coll., discussed in the Chamber of Deputies as Press No. 785 (Government proposal) at first reading on 3 June 2016 and mandated to the constitutional legal committee as the guarantee committee and the Social Policy Committee. On 27 June 2016 (Resolution No 785 / 1), on 5 September 2016 (Resolution No 785 / 3), on 29 September 2016 (Resolution No 785 / 4) and on 13 October 2016 (Resolution No 785 / 5), on 29 June 2016 (Resolution No 785 / 2). The second reading of the draft law took place on 7 September 2016 and 18 October 2016 and the amendments were processed as print No 785 / 6. The Guarantee Constitutional Legal Committee discussed the draft law after second reading on 3 November 2016. The third reading of the bill took place on 2 and 9 December 2016, the bill was approved by the Chamber of Deputies.
20. The last amendment of that provision (the deletion of the word "unsecured"), effective on 1 June 2019, was implemented by Act No. 31 / 2019 Coll., discussed in the Chamber of Deputies as Press No. 71 (Government proposal) at first reading on 20 March 2018 and mandated to discuss a constitutional legal committee as a guarantee committee and a committee on social policy. The Constitutional Legal Committee discussed the draft law on 10 September 2018 (Resolution No 71 / 3) and 1 October 2018 (Resolution No 71 / 5), the Social Policy Committee discussed the draft law on 11 May 2018 (Resolution No 71 / 1), 7 September 2018 (Resolution No 71 / 2) and 27 September 2018 (Resolution No 71 / 4). The second reading of the draft law took place on 3 October 2018 and the amendments were processed as print No 71 / 6. The Guarantee Constitutional Legal Committee discussed the draft law after second reading on 10 October 2018. The third reading of the draft law took place on 26 October 2018. The bill was passed by the Chamber of Deputies.
21. In conclusion, the President of the Chamber of Deputies stated that the draft laws were approved by the two chambers of the Parliament of the Czech Republic, the laws were signed by the relevant constitutional authorities and were duly declared and that it was up to the Constitutional Court to examine the question of the alleged unconstitutional nature of the contested provision and to decide on the proposal for its annulment.
22. In its observations to the Senate of the Parliament of the Czech Republic ("the Senate ') of 30 May 2019, its President stated that Paragraph 410 (2) of the Insolvency Act was amended by Act No. 217 / 2009 Coll., Act No. 69 / 2011 Coll. and Act No. 294 / 2013 Coll., namely in the word" Unsecured', which is proposed to be repealed, but the amendment has not occurred since the issue of the Insolvency Act as such until that date. After 30 June 2017, the provision in question was affected by other amendments, through Act No. 64 / 2017 Coll. (rather legislative-technical change) and Act No. 31 / 2019 Coll., which repealed the word "unsecured '(newly in the first sentence of Paragraph 410 (5) of the First Insolvency Act). In addition, the explanatory memorandum states that" the amendment is linked to the adaptation of the legislation in force to the conclusions of the judgment of the EU Court of Justice of 21 April 2016 in Case C-377 / 14 Ernst Georg Radlinger and Helena Radlinger v FINWAY a.s., according to which the right to effective judicial protection of the consumer is a part of the right to deny, before the national court, the validity of claims on credit agreements which may be regarded as abusive, whether or not covered'. The debt relief thus extended the debtor's right to claim the debts of the secured creditors.
23. Furthermore, the President of the Senate stated that the draft insolvency law had been delivered to the Senate on 28 February 2006 and assigned to him in the Senate register of the 5th term of office No 288. This proposal was dealt with by the Constitutional Legal Committee (Resolution 93 of 15.3.2006, Senate Press No. 288 / 1) as the Committee on the Economy, Agriculture and Transport (Resolution 298 of 22.3.2006, Senate Press No. 288 / 2), when both Senate Committees recommended approving the bill as referred to by the Chamber of Deputies. The Senate dealt with the bill at its 10th meeting, where it was approved by Resolution No 416 of 30 March 2006 in the version referred to by the Chamber of Deputies when, in vote No 199 of the 54 senators present, 49 senators voted in favour of its approval and none were against it. When discussing the draft insolvency law at the Senate meeting, no one commented on the essential content of the contested provision. The bill was adopted in the Senate within the limits of the Constitution and in a constitutional manner.
24. In view of the importance of the amendment introduced by Act No. 31 / 2019 Coll. (repealing the word "unsecured ') in relation to the contested provision, the President of the Senate considered it appropriate to summarise the legislative process in this case. The bill was delivered to the Senate on 26 November 2018 and was assigned to it in the Senate register of the 12th term of office. This proposal was dealt with by a constitutional legal committee (Resolution No 5 of 5 December 2018, Senate Press No 12 / 1) as a guarantee committee which recommended to the Senate the draft law to be approved by the Senate in the version referred to by the Chamber of Deputies, and by the Committee on Health and Social Policy (Resolution No 10 of 12 December 2018, Senate Press No 12 / 2), which recommended that the bill be returned to the Chamber of Deputies with amendments aimed in particular at changing the wording of one of the options for the fulfilment of the repayment schedule with the redemption of the property, the definition of the disrepute and the change of one of the situations where the insolvency court will be obliged to reject the proposal for the waiver. Furthermore, the Committee on Health and Social Policy adopted an accompanying resolution expressing an interest in feedback from the subsequent application practice of the present regulation to the selected ministries. The Senate dealt with the bill at its 4th session, where Resolution 54 of 19 December 2018 returned it to the Chamber of Deputies in the wording of the amendments adopted, the main source of which was the resolution of the Committee on Health and Social Policy, when vote No 33 of the 74 senators present voted in favour of 63 senators, was not against. In addition, he also agreed with the abovementioned accompanying order. However, the contested provision does not affect any resolution. When discussing the bill at the Senate meeting, no one commented on the essential content of the contested provision. The bill was adopted in the Senate within the limits of the Constitution and in a constitutional manner.
25. Finally, the President of the Senate also stated that it was entirely up to the Constitutional Court to examine the constitutionality of the draft contested provision.
26. By letter dated 27 May 2019, the Government, through the Minister of Justice, stated that by order No 367 it had decided not to use its right to intervene, and pointed out that the contested provision was the subject of a "deleveraging amendment 'by Act No 31 / 2019 Coll. and that, on its basis, the word" unsecured' was deleted with effect from 1 June 2019.
27. The Ombudsman also stated by letter of 16.5.2019 that she would not exercise her procedural right to intervene.
Abandonment of oral proceedings
28. The Constitutional Court concluded that further clarification of the case could not be expected from oral proceedings, therefore it waived the first sentence of Section 44 of the Constitutional Court Act.
Text of the contested provision
29. The contested provision (highlighted) of Paragraph 410 (2) had the following wording until 30 June 2017:
"The denial of an unsecured creditor's claim by the debtor shall have the same effects as the denial of the debt by the insolvency administrator, but Paragraph 51 (2) shall not be affected by this. The insolvency practitioner shall be entitled to receive a claim from the insolvency practitioner. If the debtor has denied the claim in the review proceedings which took place prior to the approval of the debt relief, the effects of that denial shall take place on the date on which the debt relief occurred; that date shall also be applicable to the beginning of the time limits for bringing an action for the determination of the authenticity, amount or order of the claim. Creditors of non-enforceable claims which have been denied by the debtor shall always bring an action against the debtor. '
30. After the amendment of the Insolvency Act implemented by Act No. 64 / 2017 Coll. the contested provision (now as Section 410 (5)) was worded as follows (the contested part highlighted):
"The denial of an unsecured creditor's claim by the debtor shall have the same effects as the denial of the debt by the insolvency administrator, but Paragraph 51 (2) shall not be affected by this. The insolvency practitioner shall be entitled to receive a claim from the insolvency practitioner. If the debtor has denied the debt before approval of the debt relief, the effects of such denial shall occur on the date on which the debt relief occurred; that date shall also be applicable to the beginning of the time limits for bringing an action for the determination of the authenticity, amount or order of the claim. Creditors of an irrecoverable claim which has been denied by the debtor shall always bring an action against the debtor. '
31. Currently, after the amendment of the Insolvency Act implemented by Act No. 31 / 2019 Coll., the provisions of Paragraph 410 (5) are as follows:
"Denying the creditor's claim by the debtor has the same effects in terms of the effects of the approval of the debt relief as the denial of the claim by the insolvency administrator, but the provisions of Paragraph 51 (2) are without prejudice to this; The insolvency practitioner shall be entitled to receive a claim from the insolvency practitioner. If the debtor has denied the debt before approval of the debt relief, the effects of such denial shall occur on the date on which the debt relief occurred; that date shall also be applicable to the beginning of the time limits for bringing an action for the determination of the authenticity, amount or order of the claim. Creditors of an irrecoverable claim which has been denied by the debtor shall always bring an action against the debtor. '
Proceedings before the Constitutional Court
32. The procedural conditions for the annulment procedure or its individual provision are fulfilled. The application was submitted by an actively legitimate body, i.e. by the person who lodged a constitutional complaint under the conditions laid down in Section 74 of the Law on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., [Section 64 (1) (e) of the Law on the Constitutional Court], was referred to the plenary of the Constitutional Court in accordance with the procedure laid down in Section 78 (1) of the Law on the Constitutional Court and the Constitutional Court is competent to discuss this proposal [Article 87 (1) (a) of the Constitution].
33. As regards the admissibility of the proposal, the contested provision was first transferred to Paragraph 410 (5) of the Insolvency Act and then, with effect from 1 June 2019, by Law No 31 / 2019 Coll. amended the provision of Paragraph 410 (5) of the Insolvency Act by deleting the word "unsecured '. In accordance with Article 67 (1) of the Law on the Constitutional Court, the proceedings are terminated if the law, other legislation or individual provisions which are proposed to be annulled expire before the end of the proceedings before the Constitutional Court. However, for the termination of the procedure, the Constitutional Court did not find that the conditions laid down in the case under examination were met, as the findings already set out in the decision of 10.1.2001 sp. zn. Pl. ÚS 33 / 2000 (N 5 / 21 SbNU 29; 78 / 2001 Sb.), confirmed findings of 28.3.2006 sp. zn. Pl. ÚS 42 / 03 (N 72 / 40 SbNU 703; 280 / 2006 Sb.), or 6.2.2007 sp. According to the Constitutional Court, if the judge of the General Court concludes that the law to be applied in the resolution of the case (i.e. not only in force at that time but also no longer in force but still in force at that time) is contrary to the constitutional law, he is obliged to bring the case before the Constitutional Court and that if the Constitutional Court had refused to deal with the constitutional or non-constitutional nature of the applicable law, that would have been contrary to Article 95 (2) of the Constitution and contrary to the principle of concentrated constitutional justice.
34. This conclusion should also be applied by analogy to a situation where the Constitutional Court is not contacted by the General Court in accordance with the procedure laid down in Article 95 (2) of the Constitution, in conjunction with Article 64 (3) of the Constitutional Court Act, but by a legitimate complainant pursuant to Article 87 (1) (d) of the Constitution, in conjunction with Articles 74 and 64 (1) (e) of the Constitutional Court Act or Article 87 (1) (i) of the Constitution.
35. In the present case, the appellant is not a court (Article 95 (2) of the Constitution, Article 64 (3) of the Law on the Constitutional Court), as was the case in the above cases, but a legitimate appellant [§ 74 in conjunction with Article 64 (1) (e) of the Constitutional Court Act], but here the Constitutional Court is obliged, however, to fulfil its role as a judicial authority for the protection of constitutionality (Article 83 of the Constitution) by discussing and deciding on the terms of the Law on the Constitutional Court in a similar manner as would have been submitted by the General Court (which did not happen in the present case), since otherwise the protection of constitutionality could not be ensured and provided in a situation envisaged by Article 74 of the Law on the Constitutional Court, as amended by Law No 48 / 2002 Coll. It must be added that this is a provision which is simultaneously "accesoric 'in the event that, in doubt about the constitutionality of the law in force, the General Court, pursuant to Article 95 (2) of the Constitution, in conjunction with Article 64 (3) of the Law on the Constitutional Court, does not use its design authority. Neither the Constitutional Court nor the Chamber responsible (nor the General Court) can decide on a constitutional complaint in such a case without resolving the question of the constitutionality of the Law applied.
36. The Constitutional Court could therefore proceed to assess whether the contested legal provision is in accordance with the constitutional order, i.e. (a) the contested legislation was adopted and issued within the limits of the constitutional competence laid down, (b) the constitutional procedure for its adoption or extradition was followed, and (c) the contested legislation is in accordance with the constitutional order in terms of content (§ 68 (2) of the Law on the Constitutional Court, as amended by Act No 48 / 2002 Coll.).
Review of the procedure for the adoption of the legislative provision under review
37. The Constitutional Court under the provisions of § 68 (2) of the Law on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., first examined whether the insolvency law had been adopted within the limits of the Constitution laid down by competence and by the constitutional procedure.
38. The procedure for the adoption of the Insolvency Act itself has already been examined by the Constitutional Court and no procedural defects have been identified [see the finding of 1.7.2010 sp. zn.
39. Paragraph 410 (2) of the Insolvency Act was then amended by Act No. 217 / 2009 Coll. (in the first sentence was deleted the word "by fulfilling the repayment calendar"), Act No. 69 / 2011 Coll. (when the first sentence was completed at the end of the first sentence, the words "; for this denial, the provision concerning the finding of a claim relating to the insolvency administrator applies mutatis mutandis' and the sentence" Creditors of an irrecoverable claim which has been denied by the debtor is added to the end of the first sentence, and the law No 294 / 2013 Coll. (when the words "the insolvency administrator" were inserted, "Paragraph 51 (2) is not affected by this") and Act No. 64 / 2017 Coll. (in particular the number of the paragraph was changed). In the light of the material under consideration, these amendments did not change the contested part of the provision of Paragraph 410 (2).
40. The Constitutional Court, on the basis of the observations of the two chambers of the Parliament of the Czech Republic as well as the stenographic records of their meetings, concluded, in a situation where the legislative procedure was not even questioned, that the contested provision was adopted in a constitutional manner.
41. In the case of Act No. 217 / 2009 Coll. the first reading of his proposal in the Chamber of Deputies took place on 3 April 2009, the second reading on 5 and 12 May 2009 and the third reading on 15 May 2009. The bill was approved in the Chamber of Deputies by votes 124 of the 126 Members who applied. In the Senate, the bill was passed by 55 votes from 60 senators present in the Chamber of Deputies on 17 June 2009. After the signing of the President of the Republic, the law was declared on 20 July 2009.
42. The first reading of Bill No. 69 / 2011 in the Chamber of Deputies took place on 1 February 2011, the second reading on 8 February 2011 and the third reading on 11 February 2011. The bill was approved in the Chamber of Deputies by the votes of 115 out of 167 Members. In the Senate, the bill was passed by 50 votes from 58 senators present in the Chamber of Deputies on 3 March 2011. After the signing of the President of the Republic, the law was published on 21 March 2011.
43. The procedure for the adoption of Act No. 294 / 2013 Coll. has already been examined by the Constitutional Court and even in this case no defects have been detected [see the find of 11.7.2017 sp. zn.
44. If the draft Act No. 64 / 2017 Coll., the first reading in the Chamber of Deputies took place on 3 June 2016, the second reading on 7 September and 18 October 2016 and the third reading on 2 and 9 December 2016. The bill was passed in the Chamber of Deputies by 118 out of 159 Members. In the Senate, the bill was passed by 31 votes from 51 senators present by the Chamber of Deputies on 19 January 2017. After the signing of the President of the Republic, the law was declared on 3 March 2017.
45. Finally, for the sake of completeness, it is necessary to add that the contested provision (see above) was deleted from the Insolvency Act by Act No. 31 / 2019 Coll., amending Act No. 182 / 2006 Coll., on the Decrease and Methods of its Resolution (Insolvency Act), as amended, Act No. 120 / 2001 Coll., on the Judicial Enforcement Act and Enforcement Act (Enforcement Order) and on the Amendment of Other Laws, as amended, Act No. 292 / 2006 Coll., Act No. 6 / 2002 Coll., as amended, and Act No. 296 / 2017 Coll. The bill was returned by the Senate with amendments (see the press of the Chamber of Deputies of the VIII term, No 71 / 9 and Senate observations sub 24). Since the text of the proposal returned was not approved by the Chamber of Deputies in accordance with the procedure laid down in Article 47 (2) of the Constitution, in conjunction with Article 97 (4) of Act No. 90 / 1995 Coll., on the Rules of Procedure of the Chamber of Deputies, a vote was taken on the draft amendment to the Insolvency Act in question as referred to the Senate (Press of the Chamber of Deputies No. 71 / 8). In accordance with the procedure laid down in Article 47 (3) of the Constitution, in conjunction with Rule 97 (5) of the Rules of Procedure of the Chamber of Deputies, this proposal was approved at its 26th meeting on 22 January 2019 by a majority of 181 of the 186 Members present.
Meritative assessment of the proposal
46. The Constitutional Court concluded that the complainant's (appellants') action proposal was justified as the contested part of the provision of Paragraph 410 of the Insolvency Act was at the relevant time contrary to Article 36 (1) of the Charter and Article 1 (1) of the Constitution. The assessment of whether the right to a legal judge under Article 38 (1) of the Charter has also been infringed in proceedings before general courts will then be a matter for the decision on the constitutional complaint itself.
47. The contested part of the provision of Paragraph 410 of the Insolvency Act was contrary to Article 36 (1) of the Charter, according to which anyone may claim his or her right in a court or other body. The legislator, if it comes to consumer relations, has not properly complied with its obligations as required by Article 1 (1) of the Constitution. It should be pointed out here that the Constitutional Court of 10 April 2014 sp. zn. III. ÚS 3725 / 13 (N 55 / 73 SbNU 89), according to which the consumer relationship is not directly regulated at the level of specific constitutional law, is not, however, isolated from the functioning of the constitutionally guaranteed fundamental rights and freedoms, so that in this legally regulated relationship the exercise of fundamental rights and freedoms manifests as an obligation of the State to protect such fundamental rights and freedoms in that consumer relationship (Article 1 (1) of the Constitution) both by creating conditions for the conclusion of consumer contracts and by resolving disputes arising therefrom. However, this protection has not been adequately ensured in the context of insolvency proceedings (derecognition), as required by Article 36 (1) of the Charter. The legislation in question, which allowed only certain claims to be denied and limited possible objections to the termination or limitation of claims, did not comply with this requirement of protection and, therefore, the means provided by the insolvency law in the event of debt relief to consumers were not effective in such a way as to avoid, where appropriate, the application of unfair terms in the contracts (the subject of the present procedure is whether or not the protection was there, rather than whether the consumer contract in question actually did).
48. It is appropriate to add that the last amendment of the Insolvency Act implemented by Law No 31 / 2019 Coll. reacted to the interpretation of Article 7 (1) of Council Directive No 91 / 13 / EEC of 5 April 1993 on unfair conditions in consumer contracts implemented by the EU Court of Justice in its judgment of 21 April 2016 in Case C-377 / 14 Ernst Georg Radlinger and Helena Radlinger v FINWAY a.s. on a preliminary question raised by the Regional Court in Prague. This amendment, in Part One, paragraph 111, provided that, in Paragraph 410 (5) of the Insolvency Act, the word "unsecured 'was deleted. By doing so, the legislator has corrected his mistakes for the future. In view of the existence of a special regulation of the law on insolvency (in the event of the insolvency settlement of debts), it was proposed, inter alia, to amend the applicable wording of Paragraph 410 of the insolvency law and to extend its effects" to the claims of secured creditors. "The amendment thus removed the distinction between secured and unsecured creditors in the hypothesis of the contested provision § 410 (2) (subsequently § 410 (5)) of the insolvency law, and at the same time reflected in the position of debtors in a reflex manner. In addition, the explanatory memorandum in the press of the Chamber of Deputies, No 71 / 0 (see also sub-45) explicitly stated that the proposed amendment was related to the adaptation of the legislation in force to the conclusions of the judgment of the Court of Justice. In his view," the right to effective judicial protection is part of the right of the consumer to deny before a national court the validity of claims under a credit agreement which contains clauses which may be considered abusive, whether or not they are claims secured or unsecured'. The Court of Justice replied to the question raised by the Court of Justice in such a way that Article 7 (1) of this Directive precludes national rules such as those at issue in the main proceedings (i.e. before the Regional Court in Prague) which, in insolvency proceedings, does not allow the court in which the proceedings are conducted to examine, by itself, the official abuse of the nature of the contractual arrangements from which the claims lodged in that proceedings have arisen, even though that court has the necessary information on the legal and factual situation, and which allows that court to examine only unsecured claims and limits objections to the possibility of claiming the annulment or limitation of such claims.
49. In the view of the Constitutional Court, this conclusion must necessarily also be reflected in the assessment of the case in the light of the constitutional fundamental right of judicial protection provided for in Article 36 (1) of the Charter, in the light of the circumstances of the case (see the contention of the appellants of sub-6, the justification of the claim on the nature of the terms of the contract is not the subject of proceedings in the current plenary case). This provision guarantees everyone the possibility of seeking "established procedure 'of their right in a court or other body, which corresponds to the obligation of the court to grant such protection (also" established procedure'). It is then entirely up to the legislator to determine the conditions and details (i.e. "procedures') when it comes to implementing the basic law in question (Article 36 (4) of the Charter). It is limited in its competence, inter alia, in that the" implementing 'adopted by it must not be denied the substance and meaning of the fundamental law in question (Article 4 (4) of the Charter); This means that judicial or other legal protection must be realistically "achievable" and sufficiently effective in its outcome, which ultimately also means that the level of such protection should be adequate in relation to the position that the person concerned has in the relevant legal relationship.
50. In the present case, it should be taken into account that both the Czech Republic and European Union law provide consumers with increased substantive legal protection against abusive contractual clauses, due to a certain compensation of their significantly weaker position in the relevant area of contractual relations. For the same reason, the need for specific (increased) protection must be considered in procedural terms, i.e. where the "normal regime 'is not sufficient in terms of the right to judicial protection. Such a so-called qualified defect as referred to in Article 36 (1) The documents were also in the case under examination, since there was no (nor was it possible to create) procedural space for the court to examine the contract in question in terms of whether it did not contain disproportionate arrangements, on the grounds that the insolvency court was not entitled to" open "the proceedings in question by itself and could not initiate them (directly or indirectly) or the debtors themselves. Accordingly, the procedural arrangements in question appear to be incompatible with the fundamental right to judicial protection.
51. It should be added that, in relation to the secured claims, the insolvency law provided for a claim law (registered) to creditors and, in particular, to the insolvency administrator, for which there is a system of independent and impartial performance of the function [see point 70 of the decision of 7.11.2017 sp. zl. ÚS 33 / 15 (422 / 2017 Coll.)], however, despite the fact that there is a specific system of insolvency proceedings (see point 64 of the quoted finding), in which the exercise of certain procedural rights of its participants may be "transferred 'to the insolvency administrator (see paragraphs 68 and 69 of that finding), the Constitutional Court considers that the right to a decision of a third party cannot be waived under the circumstances, unless it would be legally enforceable with that right (debtor or court).
52. In addition, the guarantees in question are primarily in relation to creditors (as a whole), since, although insolvency proceedings are to be conducted under the insolvency law in such a way that none of the participants is unfairly damaged or illegally favoured, its purpose is to achieve a swift, economical and maximum satisfaction of creditors [§ 1 (a), § 5 (a) of the insolvency law], while the creditor committee has a number of powers with regard to the insolvency administrator, including the right to propose its appeal to the insolvency court. It was therefore not guaranteed that, in any event, where necessary, a procedure would be opened in which the court (insolvency) would examine whether the consumer contract did not contain unreasonable conditions. It can therefore be concluded that, if the insolvency court is not without further authorisation for the review, the debtor himself must be given the opportunity to initiate the procedure in which that review could be carried out.
53. Moreover, the alleged contradiction of the contested provision with the constitutional order does not, in the view of the Constitutional Court, concern only consumer relations, but applies in general. It also infringed the principle of equality between the parties to the proceedings (Article 37 (3) of the Charter) in relation to Article 36 (1) of the Charter when, without a rational reason, it distinguished between debtors of secured and unsecured claims, if it is about the effects of their actions. In this context, the Constitutional Court took into account the arguments put forward by the Supreme Court contained in Resolution sp. zn. 29 of the ICdo 60 / 2014, according to which the reasons for such distinction lie in that the insolvency regime (i.e. the "logical outcome of the debt relief scheme ') applies to the satisfaction of the secured creditor's debt claim.
54. It can certainly be accepted that the fact that the claim is secured or unsecured may in fact justify the distinction between creditors in two groups subject to a different legal regime, if it is to satisfy their claims, as the Constitutional Court accepted in its resolution of 6 February 2014, sp. zn. I. ÚS 3271 / 13, in the spirit of the principle that it should be in a better position to guard its rights (by ensuring its claim). The decision on the way in which the secured claims are to be met in the event of bankruptcy is therefore essentially a matter for the legislator, who has chosen a similar model in the case of bankruptcy in several possible ways.
55. However, this cannot be applied to the recovery and subsequent satisfaction process. Here, for each of them, the reasons for the different legal regime must be assessed separately, not only from the perspective of the creditor, but also of its reflective effects on the status of the debtor. If, in view of the satisfaction of the claim, the "quality 'of the claim is undoubtedly of significant material importance (especially from the creditor's point of view), from the point of view of the claim itself, or whether the claim exists (and, where appropriate, to what extent), the circumstances are irrelevant (both from the creditor's point of view and the debtor's point of view). There was therefore a situation where the different treatment of debtors was lacking (in that regard) a reasonable sense and purpose, which constitutes a constitutionally unacceptable choice of legislator [cf. the finding of 25.6.2002 sp. zn. ÚS 36 / 01 (N 80 / 26 SbNU 317; 403 / 2002 Sb.)].
56. In conclusion, it can be noted that the adjustment did not correspond to the role of the insolvency administrator in insolvency proceedings, where, in the event of bankruptcy, the insolvency administrator takes over the disposal authorisation of the debtor, while in the case of resolution of the insolvency situation of the debtor, the insolvency administrator primarily performs a supervisory function. This is why, in the case of debt relief, it appears - as is the case with the reorganisation (cf. Section 336 of the Insolvency Act) - the existence of a debtor's right to claim, which has an effect on the finding not only unsecured but also secured claims, as a logical solution or systemic solution.
Conclusion
57. In the light of these reasons, the Constitutional Court granted the application of the application of Article 70 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., to declare the unconstitutionality of part of the provision § 410 (2) of the First Insolvency Act, as effective by 30 June 2017, expressed in the word "unsecured." For the sake of completeness, it should be added that from the point of view of the application of the requirement of Article 89 (2): The same conclusion must be drawn on the same part of the provision of Paragraph 410 (5) of the Insolvency Act, as in force until 31 May 2019, even if that provision was not used in the initiation proceedings before the General Courts.
President of the Constitutional Court:
JUDr. Rychetský v. r.
In accordance with Article 14 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, the Judges Vladimir Sládeček and Radovan Sukánek took a different position.
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Regulation Information
| Citation | The Constitutional Court found no 223 / 2019 Coll., on the application for annulment of part of § 410 paragraph 2 sentence of the First Act No. 182 / 2006 Coll., on bankruptcy and methods of its resolution (insolvency law), as effective until 30 June 2017 |
|---|---|
| Regulation Type | The Constitutional Tribunal found |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 05.09.2019 |
|---|---|
| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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