The Constitutional Court found No 261 / 2006 Coll.

Motion denied.

In accordance with Article 95 (2) of the Constitution of the Czech Republic (hereinafter referred to as the Constitution), the appellant requested that the Constitutional Court issue a finding repealing Article 697 of Act No. 40 / 1964 Coll., Civil Code, as amended, (hereinafter referred to as the Circular Code). It stated that, under sp. zn. 15 C 127 / 2004, a proceeding is pending before it as a general court, the object of which is to claim the owner of the city A. against the tenant J. Z. to pay the rent from the flat and to pay the late fee; it is a payment of CZK 6,315 with a fee of 2.5 per day, but at least CZK 25 for each month started from CZK 6,315 from 16 December 2003 until payment. As part of the preparation of the negotiations, the appellant concluded that the applicant's claim to pay the rent should be assessed under Section 696 (1) of the Code and the claim to pay the late payment fee under Section 697 of the Code. At the same time, however, he concluded that the provision of Article 697 of the Code to be applied in the decision-making process is contrary to the Charter of Fundamental Rights and Freedoms (hereinafter referred to as the Charter), with the general legal principle of equality in law as regards the legal status of participants in this commitment relationship.

According to § 697 of the Civil Code, if the lessee does not pay the rent or payment for the service provided with the use of the apartment within five days of its due date, the lessee is obliged to pay the fee for the late payment of the lease. The appellant submits that it assessed the compliance of the contested provision with the Charter in the light of the decision of the Constitutional Court, sp. zn. In this case, the Constitutional Court stated that the legal distinction between access to certain rights must not be a sign of pleasure, and that there is a breach of the principle of equal access to rights when different entities in the same or comparable situation are treated differently without objective and reasonable grounds for different approaches being applied. The contested provision of Paragraph 697 of the Code infringes, in the appellant's view, the principle of equality between the parties to a given commitment relationship in their access to their rights in that, in the event of the delay of each participant, it provides for a different penalty which, in principle, does not equal them and contradicts Article 1 of the Charter. The position of the lessor and the lessee in default of the cash payment is comparable, since they are both parties to an obligation relationship which is not fundamentally different from other obligations. If the lessee of the apartment is late in paying the rent or payment for the performance associated with the use of the apartment, the lessor is entitled to charge him for the late payment under the provisions of § 697 of the Code, while the lessor is entitled to charge him only interest for the late payment, or overpayment, under the provisions of § 517 (2) of the Civil Code. It cannot be disregarded that the amount of interest on late payments and the late payment fee are highly different. Whereas, according to Government Decree No. 142 / 1994 Coll., which determines the amount of interest on late payments and the fee for late payments under the Civil Code, the interest on late payments is currently set at 2 times the discount rate of the Czech National Bank at 2% per year (and at the time of its peak from 27.5.1997 to 13.8.1998 it was said to be 26% per year), the amount of the late payment fee is set at the same regulation at 2.5 per annum, i.e. more than 91% per year.

The appellant further stated that, if the legislator's attempt was to penalise the non-payment of the rent and the performance associated with the use of an apartment of penalties with a higher impact than the interest on late payment, there was no rational reason for this, since the non-payment of the rent is sufficiently sanctioned by the rebuttal reason for the lease contract under § 711 (1) (d) of the Civil Code. On the other hand, the effect of this unequal position is that the unjustifiable financial burden on tenants, who, often for objective reasons, are in financial distress and, as a result, are late in paying the rent, which makes their social status more difficult.

In the view of the appellant, it is not sufficient not only to apply the Government Decree No. 142 / 1994 Coll. in the decision of the General Court pursuant to Article 95 (1) of the Constitution, since, in such a case, it would not be possible to grant the lessor or the right to a late payment fee (see: at all), since the right to interest on late payment of the rent and the performance associated with the use of the apartment is subject to the special legal provision of § 697 of the Civil Code, which takes precedence over the general rule of § 517 (2) of the Civil Code.

The Constitutional Court sent a motion to initiate proceedings in accordance with the provisions of Section 69 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, to the parties - the Chamber of Deputies and the Senate of the Parliament of the Czech Republic - and requested the opinion of the Ministry of Justice.

In particular, it is stated in the Chamber of Deputies of the Parliament of the Czech Republic that equal status means, among other things, that those bodies have to agree on their rights and obligations, provided that these obligations do not arise on the basis of foreseeable legal fact directly from the law. The explicit provision of the Civil Code is based on the application of a penalty provision which, in specific cases, provides for the right of the creditor to apply a default fee to the debtor in accordance with Section 697 of the Civil Code if the lessee has not paid the rent or payment for the performance provided with the use of the apartment within five days of its maturity. Therefore, in the view of the Chamber of Deputies, it cannot be reconciled with the appellant's view that the case in question is an unjustified and inadmissible disadvantage for tenants or a contradiction with Article 1 of the Charter.

In particular, the Senate of the Parliament of the Czech Republic stated in its extensive statement that the term "late payment fee" was introduced into the Civil Code - and cum grano salis as such - by 1 April 1964 in connection with the adoption of Act No. 40 / 1964 Coll., Civil Code. This legal institute, together with a more general interest on late payment, was seen as a flat-rate compensation applied as a result of the debtor's default on debt, but only in the Civil Code expressly defined by the case. The late payment was taken into account for the remuneration for the use of the flat or for the services associated with the use of the flat, the obligation to return the cases borrowed and, finally, the payment of the invoiced price for the service to which the obligation applied. Apart from the latter case, which was abolished with the transition to the market economy, the two remaining types, in the Senate's view, have maintained their exceptional status in the civil code to date. The obligation to pay the late payment thus pursues the ex-tax penalty - "apart from the proposal of the contested non-payment of the rent or payment for the service provided with the use of the flat within five days of its maturity (§ 697) '- only the lessee who is late in returning the case in the course of the commercial lease of movable property (§ 723 (1)). Although the nature of social relations in 1964 was diametrically different from today's state of affairs, the aim of the legislator at the time is to find a legally simple instrument that allows the selected relationships to be affected by special penalties for delays, that is to say different from" interest on late payments. "On the outside, the specificity was particularly pronounced at the level of the penalty, which, in view of the importance of the protected right, was to discourage the debtor, with increased urgency, from illegal conduct (increased threat of sanctions), possibly to intervene more seriously in his property sphere in the event of an infringement (increased penalty). This was therefore a legal exception, including the case of late payment for the use of the apartment (today's rent) and related services. Nor did the Politopadist legislature doubt in 1991 that it was precisely the breach of the obligation to pay rent and payments provided with the use of an apartment (rent in largo sensu) that had to be penalised differently - more strongly - from other money debts. Therefore, he has used an already established, consistently perceived legal instrument - a late payment, modified in the spirit of new socio-economic conditions.

The Senate added that, from the point of view of constitutionally protected rights, the relationship of the landlord (owner) of the apartment - the tenant is an internal collision ratio. This is due to a conflict of public interest in the protection of the right of residence with an interest in the protection of the right of ownership (leasing). At the same time it is an asymmetric ratio in which the lessee was favoured by traditional means, such as the possibility of giving notice only for axially defined reasons. In the opinion of the Senate, it should be noted that such an above-standard advantage was granted to the lessee only at the price not of the normal limitation of the rights of ownership (leasing). Therefore, the existence of a differentiated approach to rental entities by providing different legal means - comparing forces on both sides and thus stabilising the relationship as such - is perhaps or even desirable, if these considerations are based on these considerations. The late payment may be included in the category of "so-called" stabilisers. While the lessor fulfils his primary obligation (leaving the apartment to use), the lessee does not. Therefore, the late payment fee as a penalty for late rent cannot be compared to the penalty associated with the repayment of the excess, i.e. the interest on late payments, according to the defined criterion. The borrower's cash debt resulting from the non-repayment of the excess must be considered as debt from "ordinary" unfounded retention (non-refundable) of the money, which is located in the lease relationship - compared to the lessee's primary obligation - "by a level below."

Finally, the Senate stated that, in comparable cases (in largo sensu rent debt, or "overpayment" on rent), a realistically higher financial penalty on the lessee falls according to that model. It can therefore be concluded that the relevant government regulation reflects the principle of strict sanctions by law of that entity, where it is legally possible to require increased liability for its conduct, to the substatutory level in a way that is consistent. In the other, i.e. the amount of the late payment or the methods of calculating it and the other economic aspects of the whole issue, the Senate is not entitled to express itself in a competent manner without inappropriately interfering with the principle of division of power. It follows that the problem of assessing constitutionality is being moved to a level below the law in the contexts. The Senate further recalled that the provisions of § 697 of the Civil Code provide not only for the obligation to pay a fee, but also for the renewal of the rent and for the payment of the service provided with the use of the apartment by five days. The cancellation of this provision would thus counterproductive the break-down of the old principle and, in practice, the deterioration of the tenant's position. The anchoring of different institutes in the event of a delay in cash debt, i.e. in one case the late payment fee, in the other case the interest on late payment, is considered by the Senate to be objectively determined, acceptable, proportional, rational and therefore not constitutionally unequal. This difference does not therefore constitute an unconstitutional relevant moment for which Article 697 of the Civil Code should be deleted. The Senate also added that "in relation to proposals for the repeal of laws or individual provisions, the general courts should adhere to legal arguments that should be most convincing, particularly when the lower court attacks the long-term used and the higher (highest) courts with a frequently applied provision without the slightest doubt of its constitutionality '.

In principle, the Ministry of Justice agreed with the appellant's view on its observations signed by the Deputy Minister of Justice. Paragraph 697 of the Civil Code states that there is a clear inequality between the rights of the lessee and the lessor in terms of the legal effects of the delay, taking into account the significant difference between the amount of late payments (obligations of the lessee) and the interest on late payments (obligations of the lessor). This inequality - affecting the lessee - cannot be defended by an attempt to protect the lessor against non-payers, as this protection is allowed by other legal means (e.g. the possibility to terminate the lease contract, as argued by the appellant - the Cheb District Court). In the view of the Ministry of Justice, it is also not a defensible view that protection in the rental relationship is needed especially by the lessor at the expense of the rights of the lessee.

The Constitutional Court, with the agreement of all the parties to the proceedings, waived oral proceedings because it considered that further clarification could not be expected from the hearing.

The Constitutional Court is obliged - in accordance with § 68 (2) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended - to first consider whether the law, the inconstitutionality of whose provision is contested, was adopted and issued within the limits of the Constitution established competence and the constitutional procedure. However, the contested provision of the Civil Code was adopted and issued during the period of validity of the previous constitutional regulation of the legislative process and the division of legislative competence between the then Czechoslovak Federation and the Republic (Law No 509 / 1991 Coll. of 5.11.1991 amending, supplementing and adapting the Civil Code, with effect from 1.1.1992), so that the Constitutional Court did not assess the fulfilment of the above requirements. In the case of legislation issued before the Constitution becomes effective, the Constitutional Court examines - according to settled case-law - only their content compliance with the existing constitutional order and not the constitutionality of the procedure for their formation and observance of standard competence (cf., for example, the find sp. zn.

The Constitutional Court therefore took the view that the content of the contested provision of the Act was consistent with the constitutional order of the Czech Republic [Article 87 (1) (a) of the Constitution, Paragraph 68 (2) of the Law on the Constitutional Court].

Paragraph 697 of the Civil Code, which the appellant contests and proposes to abolish, reads: "If the lessee does not pay the rent or payment for the service provided with the use of the apartment within five days of its due date, he is obliged to pay the lessor a late fee. '

When dealing with the case under examination, it cannot be overlooked, first of all, that that legal provision is closely linked, first, to the provision of § 517 (2) of the Civil Code - as one of the general provisions of the obligation law (part-eighth of the Code) - which lays down the right of the creditor (tenant against the lessor) to interest on late payment in the event of the debtor's default, and, secondly, to the applicable implementing regulation of § 517 (2) of the Code, which is Decree No. 142 / 1994 Coll., which sets out the amount of interest on late payment and the fee for late payment under the Civil Code. In particular, for the implementation of Section 517 (2) of the Civil Code, the Government stated in Section 1 that "The amount of interest on late payments is twice the discount rate fixed by the Czech National Bank on the first day of late payment of the cash debt." and in Section 2 that "The amount of the late payment is 2,5 pro milo for each day of delay, but at least CZK 25 for each month of delay." However, it should be noted at this point that in the meantime, Government Decree No. 163 / 2005 Coll. of 23.3.2005 amending Government Decree No. 142 / 1994 Coll., setting out the amount of interest for late payment and the fee for late payment under the Civil Code was issued. Paragraph 1 was amended as follows: "The amount of interest on late payments corresponds annually to the rate of repo set by the Czech National Bank, plus seven percentage points. In each calendar semester in which the debtor's default persists, the amount of interest on late payments shall depend on the rate of the repo rate set by the Czech National Bank and applicable for the first day of the relevant calendar semester."

The provision cited in Section 517 (2) of the Civil Code itself reads: "If there is a delay in the payment of the cash debt, the creditor shall have the right to require the debtor, in addition to the payment of interest on late payments, if he is not obliged under that law to pay the late payment fee; the amount of interest on late payments and the late payment fee shall be determined by the implementing act. '; It is clear from the present text, or from the author's constitutional legal argument, that the proposal essentially imputes the legal situation which resulted from the legislation laid down (at the time the proposal was made) by a statutory regulation issued on the basis of the authorisation contained in Section 517 (2) of the Civil Code (... the amount of interest on late payments and the late payment shall be laid down in the implementing regulation). It can only be noted here that the Government is entitled, under Article 78 of the Constitution, to issue regulations implementing the law and within its limits. The explicit authorisation to issue the regulation is therefore not necessary for the legislative competence of the Government - contrary to the legislation of the ministries, other administrative offices and local authorities under Article 79 (3) of the Constitution. However, this does not change the fact that the Constitutional Court, being bound by the petition, can only assess the contested provision of Section 697 of the Civil Code in terms of compliance or non-compliance with the constitutional order of the Czech Republic of that provision itself and not the implementing regulation. (NB: For the sake of completeness, it can be added - as mentioned above - that the Government Decree No 142 / 1994 Coll. cited was issued for the implementation of § 517 (2) of the Code, not expressly for the implementation of the contested § 697 of the Code, although it is consistently implemented.) However, the possible inconstitutionality of the transactional legislation - even if it is found authoritatively - cannot, in itself, serve as a reason to repeal a particular legal provision (if, moreover, we consider the situation which has occurred in the meantime by the abovementioned amendment to the legislation). According to Article 70 (3) of the Law on the Constitutional Court, the Constitutional Court may, in accordance with Article 70 (3) of the Law on the Constitutional Court - even without a proposal - state which implementing provisions cease to be in force at the same time as the Act which is repealed, but not, in essence, by reverse procedure - to import the possible illegality of the contested legal provision from the alleged inequality (based, in the present case, on the different levels of interest on late payment and the fee for late payment), which is enshrined in the implementing regulation (cited by the Government Regulation) and, accordingly, to abolish the contested law.

The Constitutional Court therefore, from the point of view of the contested legal provision and in view of the appellant's objection, considers whether, from the point of view of the appellant of the constitutional principle of equality, it is constitutionally acceptable that a different legal regime be established to a certain extent in the event of a lease delay or payment for transactions provided with the use of an apartment, on the one hand, and in the case of a lease delay involving a cash debt. The content of that constitutional principle was interpreted by the Constitutional Court in a number of its findings. It identified in them the understanding of the constitutional principle of equality, as already expressed by the Constitutional Court of the CSFR (sp. zn. Pl. ÚS 22 / 92, Collection of Resolutions and Finances of the Constitutional Court of the CSFR, 1992, Found No 11), which stated that "It is for the State to decide, in order to safeguard its functions, that it will provide a group with less benefits than others. But even here, he must not go any further... If the law determines the benefit of one group and thereby imposes disproportionate obligations on another, it may do so only by referring to public values. 'The Constitutional Court thus rejected the absolute understanding of the principle of equality; He further stated that equality of citizens cannot be seen as an abstract category, but as a relative equality, as all modern institutions mean. The content of the principle of equality has thus shifted into the area of constitutional acceptance of the aspects of the distinction between entities and law. The first aspect, however, sees the exclusion of a forbearance; the second point of view arises from the legal opinion expressed in the judgment in the case under point Pl. ÚS 4 / 95 (Collection of finds and orders of the Constitutional Court, Volume 3, Found No 29, p. 209; published under No 168 / 1995 Coll.), which states:" inequality in social relations, if it is to affect fundamental human rights, must achieve an intensity, doubting, at least in a certain way, already the substance of equality. This is usually the case when the infringement of another fundamental right, such as the right to own property pursuant to Article 11 of the Charter, one of the political rights referred to in Article 17 et seq.' The second point of view in the assessment of the unconstitutionality of the law, allegedly establishing an inequality, is therefore the fundamental concern of another fundamental right or freedom (note: a summary of these conclusions was carried out by the Constitutional Court with reference to its specific findings, for example, in the case sp. zn.

On the basis of that general definition of the requirements laid down in the constitutionally conformal approach of the legislator to the status of the bodies under scrutiny of the commitment relationship, the Constitutional Court concluded that the contested provision of Paragraph 697 of the Civil Code could hardly be regarded as unconstitutional. The difference in sanctions affecting the parties to the lease - which essentially consists in paying interest on late payments for the lessor and in paying the late payment fee for the lessee, or the subsequent possibility of setting different amounts of interest on late payments and the late payment fee - does not constitute an infringement. The interest on late payments and the late payment, constituting an accessory to the claim, generally serve as a tool to increase the legal certainty of creditors. If the debtor is late, the contents of the bond are changed and the debtor is also obliged to pay interest for the delay or the fee for the delay if the law so provides (Section 517 (2) of the Civil Code). A certain difference in the level of these sanctions or a different way of calculating them is rationally justified in the case under examination not only in terms of equality but also in terms of proportionality. The law on the relationship between the landlord and the tenant of the apartment is currently diverted in favour of the tenant (Institute of Protected Hire, effective rental regulation, etc.). To some extent, therefore, the argument put forward by the Senate of the Parliament of the Czech Republic can be identified; in the relationship between the lessor and the lessee is a legal relationship of a specific nature, in some way asymmetrical, in which the lessee has been and is favoured by traditional means in order to function the rental relationship with the apartment, such as the possibility of giving notice only for taxiously defined notice reasons. Therefore, the existence of a differentiated approach to rental entities by establishing different legal means stabilising the legal relationship as such is possible. While the lessor fulfils its primary obligation (leaving the apartment to use), the lessee does not perform its obligation (using the apartment for rent); Therefore, the late payment fee as a penalty for the late payment of the lease cannot be compared without further comparison with the penalty against the lessor associated, for example, with the refund of the overpayment on the rent, i.e. the interest on the late payment, since the lessor's obligation is secondary and is not an essential element of the lease relationship. The Constitutional Court is therefore convinced that the provision of the contested special provision § 697 in the Civil Code did not give rise to any action by the legislator and that that legal regulation, which potentially allows one category of parties to the legal relationship to benefit from the subsequent substatutory regulation, does not lead to a breach of the constitutional principle of equality or to a breach of the principle of proportionality (note: although the appellant does not expressly request it). The legislator must have some scope to consider whether the possibility of such preferential treatment is provided for. Therefore, it does not appear to the Constitutional Court that this approach, in the present case allowing a certain advantage to the lessor, is not based on reasonable and objective grounds. In the case of the establishment of a particular disproportionality or inequality, it is, in view of the specific position of the lessor and the lessee, a matter of discrimination or inequality that is constitutionally acceptable and of a non-discriminatory legal situation.

The above conclusions are therefore not in line with the finding of the sp. zn. The Constitutional Court has stated here, inter alia, that certain legal arrangements which favour one group or category of persons over others cannot, in itself, be regarded as a violation of the principle of equality without further action. The legislature has some scope to consider whether such preferential treatment will anchor. In doing so, it must ensure that the favourable approach is based on objective and reasonable grounds (a legitimate objective of the legislator) and that there is a relationship of proportionality between that objective and the means of achieving it (legal advantage). It is difficult to conclude that the contested legal provision infringes these principles. This is sufficiently clear from the previous argument of this finding.

In general, it can be added that the possible asymmetry, which originates in a period of totalitarian regime, and the residues of this period, which remain until now, have no place - in principle - in a democratic rule of law. However, this would require a comprehensive assessment of the full legal status of the lessor and the lessee; However, the Constitutional Court - having regard to the content and scope of the proposal - is not entitled to do so in this procedure. The primary responsibility in this respect lies particularly in the area of legislation.

For all the above reasons, the Constitutional Court has concluded that the provisions of Paragraph 697 of the Civil Code do not conflict with the principle of equality under Article 1 of the Charter, which the appellant refers to, or with other principles arising from the constitutional order of the Czech Republic.

The Constitutional Court therefore rejected the application in accordance with Paragraph 70 (2) of the Constitutional Court Act.

Different opinions under Section 14 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, were taken by the Judges Stanislav Balík, Vlasta Formánková, Jiří Nykodém and Eliška Wagner to justify the decision.