Decided 6 May 2004 – III. US 258/03
                              
                “Interpretation of contracts”
                                                            
HEADNOTES
1) The acceptance of the ordinary court’s conclusions on the
content  of the legal transaction (the contract) is a  legal
judgment,  representing an authoritative  interpretation  of
the  legally  relevant manifestation of private intent,  and
not a factual finding, rather a finding made on the basis of
legal  knowledge  (see  the  agreeing  ruling  no.  III.  US
280/03).   In this connection, in the realm of fact  belongs
only findings of fact (but not the ascertainment of duties),
in  other  words, the ascertainment of the  existence  of  a
legal transaction itself, the identification of its subject,
the  genuineness of the document (if it is made  in  written
form),  and  the establishment of the wording of  the  text,
etc.
The  fulfillment of conditions for the subsumption  under  a
legal  norm  is not made up solely of the factual  findings,
rather  may be made up also of the determination of  duties.
Expressed  in other words, an adjudication of the requisites
of   a   contract   represent  the  subordination   of   the
individualized  and  concretized duties (rights)  under  the
general   and  abstract  (norms).   The  interpretation   of
contracts  (legal  transactions) is guided  by  interpretive
rules  which  are  analogous  to  those  which  govern   the
interpretation of generally binding legal enactments.
2)  The  meaning of § 15 para. 1, lit. c) of the  Bankruptcy
Act  is,  by the introduction of the institute of contesting
and  ineffectiveness of a legal transaction, to prevent  the
transfer  of  a  debtor’s property to third  person  to  the
detriment  of  the  creditor in cases of  doubt  as  to  the
debtor’s  good faith.  However, the transfer free of  charge
of  units in flats pursuant to §§ 23 para. 2, 24 para. 1  of
the  Bankruptcy Act does not constitute such  a  case.   The
transfer  free  of  charge  in  the  given  case  is  not  a
manifestation of the free will of the debtor, rather  occurs
ex lege.
The  Constitutional Court has, in a number of its  judgments
or  positions (see position no. Pl. US-st-1/96 and  judgment
no. Pl. US 33/97), expressed its view on the tension between
a  literal and a teleological interpretation.  It formulated
a  starting thesis in this regard in its judgment no. Pl. US
33/97,  in  which it declared that it is untenable  for  the
application  of  law  to  emerge solely  from  a  linguistic
interpretation;  such  linguistic interpretation  represents
merely  an initial approximation to the application  of  the
legal norm, it is the point of departure for the elucidation
and  clarification of its meaning and purpose (which purpose
is  served by a host of other approaches, such as a  logical
or  systematic interpretation, an interpretation  e  ratione
legis, etc.). Then in its judgment no. Pl. US 21/96, in  the
context of assessing a similar matter, it stated:  “A  court
is  not  absolutely  bound  to  the  literal  wording  of  a
statutory   provision,  rather  it  may  and  must   diverge
therefrom in cases where such is required by serious grounds
of   the   statute’s  aim,  the  history  of  its  adoption,
systematic  connection/context or certain of the  principles
which  have  their  basis  in a constitutionally  conforming
legal  order which is a meaningful whole.  At the same time,
it  is necessary to eschew arbitrariness, judicial decision-
making must be based upon rational arguments.”
      Consequently,  in the matter under consideration,  the
application  of § 15 para. 1, lit. c) of the Bankruptcy  Act
is  in conflict with its purpose and aim and as such must be
rejected.

JUDGMENT
On  6 May 2004 the Constitutional Court, sitting in a panel,
in  the  matter  of  the constitutional complaint  of  J.F.,
represented by JUDr. E. J., attorney, with the participation
of Ing. T. K., the administrator of the bankruptcy estate of
the  bankrupt, B. d. K. s. R., represented by JUDr.  M.  V.,
attorney, against the 25 March 2003 judgment of the  Supreme
Court,  case no. 29 Odo 560/2001-64, rejecting on the merits
the  extraordinary appeal, the 12 April 2001 judgment of the
High Court in Prague, file no. 13 Cmo 50/2001-37, and the  5
December  2000 judgment of the Regional Commercial Court  in
Prague,  file no. 4 Cm 164/2000-15 concerning the  exclusion
of  certain property from the inventory of bankruptcy assets
of  the bankrupt’s estate, and the 3 November 2003 ruling of
the  Municipal  Court in Prague, file no.  99  K  21/98-969,
denying   consent  to  the  non-auction  sale  of  precisely
designated  property  from  the  bankruptcy  estate,   which
complaint   was  submitted  with  a  motion  to   have   the
constitutional complaint heard out of order due  to  urgency
and  to  suspend  the  enforcement of the  designated  court
decisions,  as  well  as  in the  matter  of  the  petition,
pursuant  to  § 74 of Act No. 182/1993 Coll., proposing  the
annulment  of  §  15 para. 1 of Act No. 328/1991  Coll.,  on
Bankruptcy, as subsequently amended, decided as follows:

1.   The  25 March 2003 judgment of the Supreme Court,  case
no.  29  Odo 560/2001-64, the 12 April 2001 judgment of  the
High Court in Prague, file no. 13 Cmo 50/2001-37, and the  5
December  2000 judgment of the Regional Commercial Court  in
Prague,  file no. 4 Cm 164/2000-15, and the 3 November  2003
ruling of the Municipal Court in Prague, file no. 99 K 21/98-
969, are quashed.
2.   In  its  remaining parts, the complaint  is  denied  on
preliminary grounds.

REASONING

I. The Definition of the Matter according to the
Constitutional Complaint
In its petition submitted on 19 May 2003 for delivery to the
Constitional Court and then supplemented by submissions made
on  4 June 2003, 29 December 2003, and 6 February 2004,  the
complainant  sought  the  quashing  of  the  25  March  2003
judgment  of the Supreme Court, case no. 29 Odo 560/2001-64,
rejecting  on  the merits the extraordinary appeal,  the  12
April 2001 judgment of the High Court in Prague, file no. 13
Cmo  50/2001-37,  and the 5 December 2000  judgment  of  the
Regional Commercial Court in Prague, file no. 4 Cm 164/2000-
15  concerning  the exclusion of certain property  from  the
inventory of bankruptcy assets of the bankrupt’s estate, and
the 3 November 2003 ruling of the Municipal Court in Prague,
file  no. 99 K 21/98-969, denying consent to the non-auction
sale  of  precisely designated property from the  bankruptcy
estate, and proposes that the constitutional complaint heard
out  of  order  due  to urgency and the  suspension  of  the
enforcement of the designated court decisions, and  pursuant
to  §  74  of  Act No. 182/1993 Coll., submitted a  petition
proposing the annulment of § 15 para. 1 of Act No.  328/1991
Coll., on Bankruptcy, as subsequently amended.
       In  consequence  of  the  designated  ordinary  court
decisions,  he  considers that his  fundamental  rights  and
basic freedoms have been affected, namely those arising from
Art.  2 paras. 2, 3, Art. 3 para. 1, Art. 4 paras. 1, 3,  4,
Art.  11 paras. 1, 4, Art. 12 para. 1, Art. 36 para. 3,  and
Art.  38  para. 2 of the Charter of Fundamental  Rights  and
Basic Freedoms (hereinafter "Charter"), as well as from Art.
1, Art. 2 para. 3, and Art. 15 para. 1 of the Constitution.

II. Recapitulation of the Matter in the Proceedings before
the Ordinary Courts
From  the  file  of  the Municipal Court  in  Prague,  4  Cm
164/2000,  which  it  requested, from  the  content  of  the
contested  decisions, as well as from the reasoning  of  the
constitutional    complaint,   the   Constitutional    Court
ascertained the following:
     By its 5 December 2000 judgment, file no. 4 Cm 164/2000-
15,  the Regional Commercial Court in Prague rejected on the
merits the complainant’s action seeking the exclusion,  from
the  inventory  of  bankruptcy assets  from  the  bankruptcy
estate  of  the  bankrupt, B. d.  K.  s.  R.,  of  precisely
designated  shares in a flat and shares in common  areas  of
the  building  and  the  subjacent land.   The  trial  court
reasoned  its  decision  by the legal  conclusion  that,  in
accordance with the 30 April 1998 contract concluded between
the complainant and the bankrupt on the transfer of title to
the  flat  they  performed  a  legal  transaction  that  was
ineffective  in the sense of § 15 para. 1, lit.  c)  of  the
Bankruptcy Act, as it effected, free of charge, the transfer
to  another  person  of the property of  a  debtor  and,  in
consequence, the conditions for the exclusion of an item  of
property from the inventory of a bankrupt’s estate were  not
fulfilled in the case under consideration.
      On  the complainant’s appeal the High Court in Prague,
in  its  12 April 2001 judgment, file no. 13 Cmo 50/2001-37,
affirmed  the  judgment  of the first  instance  court.   It
stated that in the transfer, pursuant to § 23 odst. 2 a § 24
odst. 1 a 2 of the Act on Ownership of Flats, of title to  a
flat,  garage,  or  atelier, a mutual  settlement  of  funds
designated  for the financing of repairs on and  maintenance
of the building, or the house and unit, forms a component of
a  contract,  as well as any negative balance of  the  basic
fund  of  the residential management of the cooperative,  as
follows  from  §  24  para. 7 of the second  mentioned  act.
According  to  its  legal view, this  settlement  cannot  be
confused  with  the  duties  of  the  acquirer  to   pay   a
proportional amount of arrears of the outstanding investment
credit  granted for the construction and appurtenant to  the
transferred  unit  or  on  the outstanding  portion  of  the
preferential   credit   for   extensive   alterations    and
construction modifications on the transferred  flat,  or  on
the outstanding portion of commercial credits appurtenant to
the  flat,  since the duty to pay these arrears  is  imposed
upon  the acquirer in another provision of the Act on Flats,
namely  §  24  para.  5.  According to the  appellate  court
findings,  the  contract  at  issue  did  not  contain   the
mandatory attributes, as prescribed in § 24 paras. 5,  7  of
the  Act  on  the  Ownership of Flats, thus it  reached  the
conclusion on its invalidity pursuant to § 39 of  the  Civil
Code.   In  such  circumstances, it no longer considered  it
relevant  to assess the contract’s ineffectiveness  pursuant
to  §  15  para. 1, lit. c) of the Bankruptcy Act.   And  it
stated,  in reaction to the complainant’s objection  to  the
registration  of title to the residential unit  in  question
into  the  register of property by decision of the cadastral
office  (hence, a public document under § 134 of  the  Civil
Procedure  Code), that this did not result in a decision  on
the   contract’s  invalidity,  that  the  cadastral   office
assesses  the  legal  transaction at  issue  only  from  the
perspectives  exhaustively enumerated in  §  5  of  Act  No.
265/1992 Coll., as subsequently amended.  According  to  the
High  Court  the decision on the authorization  to  register
does  not prevent the assessment of the contract in a  civil
court proceeding, whether that be in accordance with § 39 of
the  Civil  Code or § 15 para. 1, lit. c) of the  Bankruptcy
Act.
     In its 25 March 2003 judgment, case no. 29 Odo 560/2001-
64,   the   Supreme  Court  rejected  on  the   merits   the
complainant’s extraordinary appeal.  Basing its decision  on
the  factual  findings  made by the appellate  court,  among
which were included the determination of the content of  the
contract  in question, it concurred on all points  with  the
appellate court’s findings of law.
     In its 3 November 2003 ruling, file no. 99 K 21/98-969,
the Municipal Court in Prague denied its consent to the non-
auction  sale  of  precisely designated  property  from  the
bankruptcy estate.

III. Recapitulation of the Points and the Petit of the
Constitutional Complaint
On  the  level  of  ordinary law  and  in  accord  with  the
arguments already asserted in the prior proceeding,  in  her
constitutional   complaint  the  complainant   objects,   in
particular,  to  the formalistic manner of interpreting  the
text  of the contract on the transfer of the title to a flat
from a cooperative to the complainant.  In the complainant’s
view,  the conclusion that the contract at issue is invalid,
due to the failure to observe the conditions flowing from  §
24  para.  7 of the Act on the Ownership of Flats, does  not
pass muster, since the fund for repairs and maintenance  was
not  burdened by any debts and, thus, she was not,  in  this
connection,  a  debtor in relation to the cooperative.   She
also  views the appellate court’s decision to be surprising,
since   the   trial   court  assessed   the   matter   under
consideration  according to § 15 para. 1 of  the  Bankruptcy
Act,  while the appellate court did so in accordance with  §
39 of the Civil Code in conjunction with § 24 para. 7 of the
Act  on  the Ownership of Flats.  In her view, due  to  this
approach,  she  was deprived of the opportunity  to  advance
factual  and  legal  arguments.   Further,  the  complainant
considers  the High Court’s conclusion (to the  effect  that
the  contract at issue does not contain a clause under §  24
para.  7  of  the Act on the Ownership of Flats)  to  be  in
conflict  with the admitted evidence, specifically the  fact
that  this  clause is contained in Art. VI para.  2  of  the
contract.   Then,  as  a matter of constitutional  law,  she
objects  that  §  15  para. 1 of the Bankruptcy  Act  is  in
conflict with the constitutional protection of the right  of
property.   In  addition,  the  complainant  refers  to  the
restitutional nature of the transfer of title to flats  from
a  cooperative  to  the members thereof  and  the  necessity
arising therefrom of proceeding in accordance with §  68  of
the  Bankruptcy  Act, as well as the unjustified  preference
accorded  the  bankrupt’s  creditors  in  relation  to   the
complainant and other members of the cooperative.  She finds
the alleged preference to consist in the infringement of  §§
23  and  24 of the Act on the Ownership of Flats, regulating
the  right to the transfer, free of charge, of a residential
unit  of  a house owned by a residential cooperative  which,
the  complainant is convinced, is in no way affected by  the
declaration of the cooperative’s bankruptcy.
      For  the given reasons, the complainant proposes that,
in its judgment, the Constitutional Court quash the 25 March
2003 judgment of the Supreme Court, case no. 29 Odo 560/2001-
64,  the 12 April 2001 judgment of the High Court in Prague,
file no. 13 Cmo 50/2001-37, and the 5 December 2000 judgment
of  the Regional Commercial Court in Prague, file no.  4  Cm
164/2000-15, in consequence of the designated ordinary court
decisions, fundamental rights and basic freedoms  have  been
affected, arising from Art. 2 paras. 2, 3, Art. 3  para.  1,
Art. 4 paras. 1, 3, 4, Art. 11 paras. 1, 4, Art. 12 para. 1,
Art.  36  para.  3, and Art. 38 para. 2 of  the  Charter  of
Fundamental   Rights   and   Basic   Freedoms   (hereinafter
"Charter"), as well as from Art. 1, Art. 2 para. 3, and Art.
15 para. 1 of the Constitution.
      The  complainaint  reasons  her  motion  to  have  the
constitutional complaint heard out of order due to  urgency,
as  well  as  to  suspend the enforcement of the  designated
court  decisions, by the possibility of irreparable  changes
to  the  property in consequence of the manner in which  the
administrator   of  the  bankruptcy  estate  proceeds;   the
petition  to  quash  the  3  November  2003  ruling  of  the
Municipal Court in Prague, file no. 99 K 21/98-969,  denying
consent  to  the  non-auction sale of  precisely  designated
property  from  the  bankruptcy  estate,  she  reasons,   in
particular, by its alleged conflict with § 23 para. 1 of the
Act  on  the Ownership of Flats and, in consequence thereof,
its  conflict with Art. 1, Art. 2 para. 3, and Art. 95 para.
1 of the Constitution, and Art. 2 paras. 2, 3, Art. 11 para.
1, and Art. 36 of the Charter.

IV. Recapitulation of the Main Parts of the Views Expressed
by the Parties
On the basis of the Constitutional Court’s request, pursuant
to  §§  42 para. 4 and 76 para. l of Act No. 182/1993 Coll.,
as  subsequently amended, on 10 February 2004,  one  of  the
opposing  parties  to  the proceeding,  the  Supreme  Court,
submitted  its  statement  of views  on  the  constitutional
complaint under consideration.  In its statement that  court
refers  to  the  ground for an extraordinary  appeal,  which
gives  grounds for the review of the decisions of  both  the
appellate  and trial courts, and by which a legal  issue  of
basic significance was resolved (according to § 239 para.  1
of  the Civil Procedure Code, in the version valid until  31
December  2000).   It  states  that  the  judgment  in   the
extraordinary  appeal affirmed the appellate  court’s  legal
view,   according   to  which  in  the   given   case,   the
complainant’s  action to exempt property from  execution  of
judgment  was dismissed due to the unconditional  invalidity
of  the contract on the transfer of title to a flat from the
cooperative to the complainant (§ 39 of the Civil  Code)  in
consequence  of the absence of agreement by the  contracting
parties  under § 24 para. 7 of the Act on the  Ownership  of
Flats.   The  party  to the proceeding  does  not  spot  any
formalistic  approach,  either in such  application  of  the
statutory provision in question or in the interpretation  of
the terms of the contract at issue.  It is convinced that it
consistently     followed    the    constitutional     order
(iparticularly the separation of powers principle, according
to  which the judicial power is not permitted, when applying
law,  to  replace  the  legislative power),  then  even  the
literal  wording,  as  well  as the  sense  and  meaning  of
relevant ordinary law.  As regards the restitutionary nature
of  Act  No.  42/1992 Coll., on the Regulation  of  Property
Relations   and  the  Settlement  of  Property   Claims   in
Cooperatives, the Supreme Court then refers to the fact that
only   certain  provisions  of  the  cited  act  are  of   a
restitutional   nature,   but   not   the   rules   on   the
transformation  of individual types of cooperatives  into  a
from  corresponding to the rules contained in the Commercial
Code.   For  the  given reasons, § 68 of the Bankruptcy  Act
does  not  apply  to the given matter.  In reaction  to  the
complainant’s assertion that an agreement corresponding to §
24 para. 7 of the Act on the Ownership of Flats is contained
in  Art. VI. para. 2 of the contract at issue, the party  to
the  proceeding  calls  attention to the  framework  of  the
review  in  an  extraordinary appeal, which  permits  it  to
review  the factual findings [§ 241 para. 3, lit. c) of  the
Civil Procedure Code, in the version valid until 31 December
2000].   Further,  the  Supreme Court  does  not  share  the
complainant’s  view  that  the  appellate   court   made   a
“surprising”  decision.  According to it, the  complainant’s
view  on  the assessment of the validity of the contract  at
issue (that it was not the object of review before the first
instance  court)  is enough to show that she  is  incorrect.
The  first  instance court reviewed the contract’s validity,
and  it  came  to  the  conclusion  that  it  is  valid  but
ineffective;  if  even  the appellate  court  examined  this
conclusion on the basis of a review of the same document  (§
213  of the Civil Procedure Code, in the version valid until
31  December  2000),  then according to  the  party  to  the
proceeding  it  did  not exceed the  bounds  of  its  review
authority.   If the contract’s validity had been subject  of
review  by the first instance court (albeit with a  positive
conclusion),  then,  in  the  Supreme  Court’s   view,   the
complainant could not have been “surprised” by the fact that
the  instrument  was  subject to review (albeit  toward  the
opposite conclusion) in the appellate proceeding.
      Finally, in its statement of views, the party  to  the
proceeding recalls that the conclusion, according  to  which
the  collective’s creditors cannot satisfy  their  justified
claims  to  the collective’s property only due to  the  fact
that  the  provisions of the Act on the Ownership  of  Flats
confers a special right to this property (the right  to  the
transfer, free of charge) on the members of the cooperative,
that  this property is not subject to enforcement, and  thus
not  to bankruptcy either, or that these rights endure  even
in  an  enforcement or bankruptcy proceeding,  would  be  in
conflict,  not only with the principles of the cooperative’s
property  liability for its own obligations (§ 222 para.  1,
second  sentence  of the Commercial Code),  rather  even  in
blatant conflict with the protection of the rights of others
(which,  in  contrast to the members of the cooperative,  do
not  have any influence on any irresponsible behavior by the
cooperative as regards the selection of obligations which it
is  not capable of covering).  In the Supreme Court’s  view,
the  complainant’s legal opinion would, in this  connection,
lead  to  the  conclusion that the Act on the  Ownership  of
Flats  operates  retroactively,  for  ex.,  in  relation  to
creditors, who prior to its entry into effect secured  their
claims as against the cooperative, for ex., by liens on  the
buildings  of  the  cooperative  which  contain  cooperative
flats.
      In relation to the petition proposing the annulment of
§  15  para.  1  of  the Bankruptcy Act, the  party  to  the
proceeding objects, in particular, to the fact that  it  was
not  applied  in  the  mentioned  matter.   As  regards  its
content, the party states that the provision quite obviously
is not in conflict with the constitutional order.
      In  conclusion, it asserts in the statement  of  views
that  the decision contested in the constitutional complaint
was  selected to be in the Collection of Judicial  Decisions
and  Positions  of  the  Supreme Court,  as  the  Civil  Law
Collegium and the Commercial Collegium of the Supreme  Court
approved,  at their 8 October 2003 meeting, the  publication
of  that  decision and determined that it would be published
in  issue  No. 1 of the 2004 Annual under no.  8,  with  the
headnotes, according to which:
       “I.  A  contract  on  the  transfer  of  title  to  a
residential  unit  owned by a cooperative,  a  component  of
which  is  not the mutual settlement of the funds designated
for  the financing of the repair and upkeep of the building,
or  of  the  house and units and further the funds  realized
from  the income of residential, accruing to the transferred
unit (§ 24 para. 7 of Act No. 72/1994 Coll., as subsequently
amended), je neplatna (§ 39 of the Civil Code).
      II.  A  house  owned by a cooperative, which  includes
cooperative flats, shall not be excluded from the  execution
of  the decision merely due to the fact that a member of the
cooperative  has  asserted his right, pursuant  to  Act  No.
72/1994 Coll., as subsequently amended, to the transfer free
of charge of a residential unit in this house.
     III. Until the conclusion of the bankruptcy proceeding,
members  of  the  cooperative who have asserted  the  right,
pursuant  to Act No. 72/1994 Coll., as subsequently amended,
to  the  transfer free of charge of title to  a  residential
unit  owned  by  the  cooperative,  shall  have  solely  the
statutory right of first refusal of this residential unit.
      IV.  Claims  arising from Act No.  72/1994  Coll.,  as
subsequently  amended,  are not restitution  claims  in  the
sense  of  §  68  of  Act No. 328/1991 Sb,  as  subsequently
amended.”
      In  view  of  what is stated above, the party  to  the
proceeding proposes that the constitutional complaint  under
consideration should be rejected on the merits as unfounded.

V. Evidentiary Proceeding
Pursuant  to  §  48  para. 1 of Act No. 182/1993  Coll.,  as
subsequently amended, the Constitutional Court  shall  admit
all  evidence necessary to establish the facts of the  case.
In addition, it shall decide which of the proffered evidence
it  is  necessary to admit and may also admit evidence other
than that which has been proposed.
      This  statutory provision must be interpreted in light
of  Art.  83  of the Constitution, according  to  which  the
Constitutional  Court is the judicial body  responsible  for
the  protection of constitutionality, as well  as  from  the
perspective  of  current case law, in which  is  accentuated
that  the  Constitutional  Court and  ordinary  courts  have
differing  functions.   The  Constitutional  Court  adjudges
decisions  of  ordinary  courts  contested  by  means  of  a
constitutional  complaint solely  from  the  perspective  of
whether fundamental rights and basic freedoms guaranteed  by
the  constitutional  order have been affected,  and  not  by
reviewing  the merits of the matter from the perspective  of
ordinary  law.   From this can be deduced, in  the  area  of
evidence  taking,  the  maxim  that  evidence  is  taken  in
relation to facts verifying the complainant’s assertion that
he  has  been affected in his fundamental rights  and  basic
freedoms, but not evidence in relation to the merits of  the
case,  that is evidence concerning matters on the  plane  of
ordinary  law,  leading to a decision on the merits  of  the
case.    This   differentiation  is  one  of  the   features
distinguishing   the  constitutional  judiciary   from   the
ordinary judiciary.
      From the perspective of the indicated guarantees,  the
Constitutional  Court  took evidence  in  the  matter  under
consideration  with  the  aim of  verifying  the  assertions
contained in the constitutional complaint from the  file  of
the Municipal Court in Prague, file no. 4 Cm 164/2000:
   -  on no. l. 36 is filed the record of the hearing before
the  appellate  court, held on 12 April 2001,  according  to
which  were “read into evidence Art. V and Art.  VI  of  the
contract  on  the  transfer of title to flat  no.  1472/10”,
concluded  on 30 April 1998 between B. d. K. s.  R  and  the
complainant.
   -  the appendices to the file contain the contract on the
transfer  of  title to flat no. 1472/10”,  concluded  on  30
April  1998 between B. d. K. s. R and the complainant,  Art.
VI of which reads as follows:

"VI.
Financial Settlement
   1)  On the basis of a request, the receiver shall pay the
grantor, at his own expense, the amount of the unpaid  long-
term  investment  credit, which as of 30. 6.  1998  for  the
transferred flat amounted to 39,800 Kc.
    2)  The  receive  agrees  that  the  remainder  of  fund
designated  for the financing of maintanence and repairs  of
the  common  area and facilities of the home appurtenant  to
the  transferred flat, including further increase  in  those
funds  from rental payments less any amount drawn upon  from
the  day  the contract on trusteeship is signed pursuant  to
paragraph  3  of this Article, is held by the grantor  until
the  time  the  transfer  of title  to  the  flat  and  then
transferred  to  the  account of the  administrator  of  the
house.
  3) The grantor is obliged:
  a) To use the amount of unpaid long-term investment credit
mentioned  in paragraph 1 of this article for an exceptional
one-off  repayment of credits to the bank together with  the
regular  installment payments of the credit as  of  30  June
1998  and  designate  the  bank, the  shares  of  which  the
exceptional payment concerns.
   b)  Make  an accounting of the advance on rental payments
already made and the advance on performances connected  with
the  use of a flat after the conclusion of the credit period
(that is, calendar year) until 30 June of the year following
the signature of the contract.”

VI.  Ratio Decidendi
VI/a The Scope of Constitutional Review
The  assessment  of  whether an  encroachment  by  a  public
authority  upon  fundamental rights and  basic  freedoms  is
unconstitutional consists of several components  (file  nos.
III.  US  102/94,  III. US 114/94, III. US  84/94,  III.  US
142/98,  III. US 224/98).  The first is the adjudication  of
the constitutionality of the legal provisions that have been
applied in the case (which follows from § 68 para. 2 of  Act
No.  182/1993  Coll.,  as  subsequently  amended).   Further
components  are  the  evaluation of  whether  constitutional
procedural  rights  have  been  observed,  and  finally  the
adjudication of whether the substantive legal provision  was
interpreted  and  applied  in a constitutionally  conforming
manner.

VI/b Assessment of the Matter on the Ordinary Law Plane
From   the   perspective  of  ordinary  law   relevant   for
constitutional review, for the case under consideration  the
statutory   provisions  that  apply  to   the   case   under
consideration are §§ 1, 6, 7, 15 para. 1, 19, 20,  32  para.
1,  and 68 of the Bankruptcy Act, §§ 23 and 24 of the Act on
the Ownership of Flats, § 1 of Act No. 42/1992 Coll., on the
Regulation  of  Property Relations  and  the  Settlement  of
Property  Claims  in  Cooperatives, § 222  para.  1  of  the
Commercial Code, §§ 39 and 41 of the Civil Code, § 5 of  Act
No. 265/1992 Coll., as subsequently amended, and § 241 para.
3, lit. c) of the Civil Procedure Code, in the version valid
until 31 December 2000.
      In  the matter under consideration, the Constitutional
Court did not find any grounds, in the sense of § 68 para. 2
of  Act  No.  182/1993 Coll., as subsequently  amended,  for
assessing  the constitutionality of the applied  substantive
and procedural law.
      The  aim  and purpose of the action to exempt property
from execution of judgment under § 19 of the Bankruptcy  Act
is  the authoritative finding of whether some property which
was  included  in  the  bankruptcy estate  was  properly  so
included,  whether some third person can claim  in  relation
thereto a stronger right than that of the bankrupt, that  is
a  right which rules out the inclusion of this property into
the  bankrupt’s estate and its subsequent liquidation in the
bankruptcy.
      The complainant cites three grounds which give rise to
such  a right.  The first ground is the exclusion of an item
from  the bankruptcy estate in the case a restitution  claim
was asserted in relation to it (§ 68 of the Bankruptcy Act),
and a claim asserted pursuant to §§ 23 and 24 of the Act  on
the  Ownership  of Flats is considered such  a  right.   The
second  ground is the right to the transfer, free of charge,
of  shares  of a flat in a building, the title of  which  is
held  by  a  cooperative (§§ 23 and 24 of  the  Act  on  the
Ownership  of Flats) which, in the complainant’s conviction,
is  in  no  way  affected  even  by  the  the  cooperative’s
declaration of bankruptcy.  Finally, the third ground is the
asserted content of the contract on the transfer of title to
a flat from the hands of the cooperative to the complainant,
where  the conclusion of the High Court, according to  which
the  contract at issue does not contain a clause under §  24
para.  7 of the Act on the Ownership of Flats, is considered
to  be  in conflict with the admitted evidence, specifically
with the fact that this clause is contained in Art. VI para.
2 of the contract.
      The  aim  and  purpose  of the  restitution  acts  (in
particular    Act   No.   119/1990   Coll.,   on    Judicial
Rehabilitation,  as subsequently amended, Act  No.  403/1990
Coll.,  on  the  Mitigation of the Consequences  of  Certain
Property  Injustices,  as  subsequently  amended,  Act   No.
87/1991   Coll.,   on   Extrajudicial   Rehabilitation,   as
subsequently  amended,  Act  No.  229/1991  Coll.,  on   the
Regulation  of  Ownership Relations to the  Soil  and  other
Agricultural  Property,  as  subsequently  amended)  is   to
mitigate  the  consequences  of  certain  injustices,  which
occurred   in  consequence  of  the  communist  totalitarian
regime,  violating fundamental rights and basic freedoms  in
the period from 1948 until 1989.
      According  to its § 1, Act No. 42/1992 Coll.,  on  the
Regulation  of  Property Relations  and  the  Settlement  of
Property Claims in Cooperatives, is a transformational  act,
while  only  in  one context does it contain  a  restitution
dimension  as well, namely in connection with the  surrender
of property of the Communist Party of Czechoslovakia and the
Socialist Union of Youth, acquired by cooperatives as  of  1
January  1990.  The rules contained in §§ 23 and 24  of  the
Act  on  the Ownership of Flats are then tied into  the  the
indicated transformational purpose of Act. No. 42/1992 Coll.
Otherwise,  the  Constitutional Court has  already,  in  its
judgment in the matter no. IV. US 460/98, given its views on
the  transformational, and not the restitutional,  character
for  the  given case of the relevant ordinary law.  For  the
given  reason  one  must  reach  the  conclusion  that   the
assertion  of a claim under §§ 23 and 24 of the Act  on  the
Ownership of Flats does not establish the conditions for the
fulfillment of the manner of proceeding under §  68  of  the
Bankruptcy  Act, that is, the exclusion of  units  in  flats
from  the  bankruptcy  estate  of  a  bankrupt  which  is  a
cooperative of flats.
      The aim and purpose of the Bankruptcy Act (§ 1) is the
disposition  of  the  assets of debtors who  are  insolvent,
while a debtor is insolvent if he has several creditors  and
is  not  capable,  over  an extended period,  to  cover  his
obligations,  even in the case that he is a natural  person,
if he is an entrepreneur, and a legal person is overburdened
with  debt.  The property which is subject to the bankruptcy
proceeding  is  above all that property (bankruptcy  estate)
which  belongs  to  the  debtor on  the  day  bankruptcy  is
declared, and also the property of other persons, especially
those  who acquired it on the basis of an ineffective  legal
transaction  by  the  debtor (§ 6 of  the  Bankruptcy  Act).
Further, according to § 222 para. 1 of the Commercial  Code,
cooperatives  answer for the violation of their  obligations
with  all their assets.  It follows therefrom that units  in
flats  which  are owned by a cooperative, however  much  the
members of the cooperative hold a claim, under §§ 23 and  24
of the Act on the Ownership of Flats.
     According to §§ 23 para. 2 and 24 para. 1 of the Act on
the  Ownership of Flats, members of the cooperative, possess
a  claim  to the transfer, free of charge, of the  title  to
share  in flats from the cooperative to them.  For the given
reasons  the complainant inferred that, from the  nature  of
the  matter,  this  property cannot  be  included  into  the
bankruptcy  estate of a bankrupt cooperative,  since,  under
the given circumstance, it cannot be liquidated (§ 27 of the
Bankruptcy Act).
      The conflict of norms of ordinary law outlined in this
way,  the resolution of which is then viewed differently  on
the  one hand by the complainant and on the other hand by  a
party  to  the  proceeding, is, however, a  merely  apparent
conflict.
     According to the mandatory provisions of §§ 1, 6 of the
Bankruptcy  Act,  and § 222 para. 1 of the Commercial  Code,
all  units  in  flats  held  by a  cooperative  on  the  day
bankruptcy  is  declared  become a part  of  the  bankruptcy
estate.
     According to §§ 23 para. 2 and 24 para. 1 of the Act on
the  Ownership  of  Flats, upon the fulfillment  of  certain
conditions  precisely laid down in the law, members  of  the
cooperative who is a renter of the flat aquires the right to
the transfer, free of charge, the flat from the ownership of
the cooperative.
       Under  the  conditions  contained  in  §  20  of  the
Bankruptcy  Act,  bankruptcy  creditors  are  authorized  to
assert  claims,  while § 7 of the cited  act  defines  as  a
“bankruptcy  creditor” each person who asserts  a  claim  in
relation to a bankrupt.  At the same time, even an  item  of
property can be the object of a claim, that is, even a  flat
(see,  for example, § 167 para. 2 of the Civil Code),  while
the  Bankruptcy  Act  also  envisages  the  possibility   of
satisfying a bankruptcy creditor’s claim in relation to  the
item by which the claim is secured (§ 28 odst. 1).
      In  the  case  of a cooperative of flats  which  is  a
bankrupt, if she duly asserts her claim even a member of the
cooperative can be a bankruptcy creditor, who is entitled to
a  claim flowing from the provisions of §§ 23 para. 2 and 24
para. 1 of the Act on the Ownership of Flats.
      Should  the  proceeds  from  the  liquidation  of  the
bankruptcy estate not suffice to cover the settlement of all
asserted  claims,  then according to § 32  para.  1  of  the
Bankruptcy Act, “other claims”, among which can be  included
as  well claims arising from §§ 23 para. 2 and 24 para. 1 of
the  Act  on  the  Ownership of Flats,  shall  be  satisfied
proportionally.  This means that a member of the cooperative
who  is a bankruptcy creditor shall, following the appraisal
of  the  shares in flats and the transfer of title to  them,
pay  the  difference between the proportional settlement  of
his  claims and the price of the shares in flats (§ 27 para.
5 of the Bankruptcy Act).
      The  complainant further considers to be  in  conflict
with  the admitted evidence, specifically with the fact that
this clause is contained in Art. VI para. 2 of the contract,
the   High   Court   conclusion  that  the  contract   under
consideration does not contain a clause under § 24  para.  7
of the Act on the Ownership of Flats.
      According to § 24 para. 7 of the Act on the  Ownership
of  Flats, a mutual settlement of funds designated  for  the
financing of repairs on and maintenance of the building,  or
the  house and unit, forms a component of a contract on  the
transfer  of  the  title to a unit from the cooperative,  as
does   further  the  funds  formed  from  the   gains   from
residential   management  that  are   appurtenant   to   the
transferred unit, and by the mutual settlement is meant both
the  repayment of remainder not drawn upon, as  well  as  of
arrears on the part of the acquirer.
     According to the legal view of the appellate court, the
settlement  pursuant  to § 24 para. 7  of  the  Act  on  the
Ownership of Apartment cannot be confused with the duties of
the  acquirer to pay a proportional amount of arrears of the
outstanding  investment credit granted for the  construction
and   appurtenant  to  the  transferred  unit  or   on   the
outstanding portion of the preferential credit for extensive
alterations   and   construction   modifications   on    the
transferred  flat, since the duty to pay  these  arrears  is
imposed upon the acquirer in another provision of the Act on
Flats,   namely   §  24  para.  5.   Proceeding   from   the
interpretation outlined in this way of the provisions  of  §
24  paras.  5, 7 of the Act on the Ownership of  Flats,  the
appellate  court  in the matter under consideration  reached
the conlusion that the contract at issue did not contain the
attributes  called for in § 24 para. 7 of the indicated  act
and,  since an obligatory attribute was concerned, the court
considered  that,  due  to its absence,  this  contract  was
unconditionally invalid (§ 39 of the Civil Code).   In  this
connection it further stated that in the proceeding  on  the
authorization to register the cadastral office assesses  the
legal  transaction  at  issue  only  from  the  perspectives
exhaustively enumerated in § 5 of Act No. 265/1992 Coll., as
subsequently   amended,   while   the   decision   on    the
authorization to invest does not hinder a court in  a  civil
court  proceeding from adjudging a contract’s invalidity  in
the  sense  of § 39 of the Civil Code or of other  statutory
provisions,  or  rather  its  ineffectiveness   as   against
bankruptcy creditors in the sense of § 15 para. 1,  lit.  c)
of the Bankruptcy Act.
     Proceeding from evidence admitted by the Constitutional
Court  at the oral hearing, the establishment of the wording
of  Art.  VI  of the contract on the transfer  of  flat  no.
1472/10, concluded on 30 April 1998 between B. d. K.  s.  R.
and  the complainant, and from the legal assessment  of  its
terms,  the Constitutional Court declares that the  contract
at  issue  corresponds to the requirements that follow  from
the  wording of § 24 para. 5, 7 of the Act on the  Ownership
of  Flats.  The provisions of Art. VI para. 2, and para.  3,
lit.  b)  contain both a clause on the mutual accounting  of
funds   designated  for  the  financing   of   repairs   and
maintenance  of  the  building and  the  residential  units,
further  the funds formed from the gain from the  management
of  the flats (from the perspective of the terms of Art.  VI
para.  2  of  the  contract  at  issue,  the  settlement  of
remainder  of the rental payments), and also the  manner  in
which such accounting will be carried out.
      In  this  context  and  beyond  the  confines  of  the
established  factual and legal findings, the  Constitutional
Court agrees with the legal views of the High Court, to  the
effect that the obligatory nature of the clause under  §  24
para. 7 of the Act on the Ownership of Flats, its absence or
invalidity   results  without  more  in  the   unconditional
invalidity of the entire contract on the transfer,  free  of
charge,  of the shares in flats under §§ 23 para. 2  and  24
para. 1 of the Act on the Ownership of Flats.
      The  regulation of contractual types also falls within
the  competence of a democratic legislature in the  area  of
the statutory regulation of private law.  The transfer, free
of  charge,  of title to shares in a flat from a cooperative
to a member of the cooperative who is the lessee of the flat
(§§ 23 para. 2 and 24 para. 1 of the Act on the Ownership of
Flats) must also, if conditions precisely prescribed by  lat
are met, be considered as just such a contractual type.   As
has  already been stated, according to § 24 para. 7  of  the
Act on the Ownership of Flats, a component of a contract  on
the  transfer of title to a unit from the cooperative is the
mutual  settlement of funds designated for the financing  of
repairs on and maintenance of the building, or the house and
unit,  as does further the funds formed from the gains  from
residential   management  that  are   appurtenant   to   the
transferred unit.
     Under § 39 of the Civil Code, a legal transaction shall
be invalid if, by its content or aim, it is in conflict with
the law or circumvents it, and under § 41 of the Civil Code,
if  the grounds of invalidity relate merely to a part of the
legal transaction, then only that part is invalid, unless it
follows from the nature or content of the legal transaction,
or  from the circumstances under which the transaction  came
into  being,  that  this part cannot  be  severed  from  the
remainder of the content.
      If  the  High  Court came to the conclusion  that  the
contract at issue lacks a clause in the under § 24  para.  7
of  the Act on the Ownership of Flats, or alternatively that
its  terms  mix  the obligation laid down in  the  statutory
provision  with the obligation arising from other  statutory
provisions  (§  24  para. 5 of the Act on the  Ownership  of
Flats), which it would be possible to adjudge rather in  the
sense  of legally relevant indefiniteness (§ 37 para.  1  of
the  Civil  Code), then it neglected to concern itself  with
the  issue whether this clause is an essential or accidental
requisite of the contractual type under §§ 23 para. 2 and 24
para.  1 of the Act on the Ownership of Flats, whether  then
the conditions are met for proceeding as laid down under §41
or of § 39 of the Civil Code.
     If then the Supreme Court, when making an evaluation of
the  issue of basic legal significance, submitted to it  for
its  adjudication  by the complainant,  concluded  that  the
determination  as to whether the contract at  issue  on  the
transfer  of title to a flat (with respect to its  Art.  VI)
contains  a  clause under § 24 para. 7 of  the  Act  on  the
Ownership  of  Flats, or that such is not  the  case,  is  a
factual  finding,  and  thus grounds  for  an  extraordinary
appeal  under  § 241 para. 3, lit. c), in the version  valid
until,  31 December 2000, the Constitutional Court  has  not
divulged  its  view in this regard.  The acceptance  of  the
ordinary  court’s conclusions on the content  of  the  legal
transaction (the contract) is a legal judgment, representing
an  authoritative  interpretation of  the  legally  relevant
manifestation of private intent, and not a factual  finding,
rather  a finding made on the basis of legal knowledge  (see
the   agreeing  ruling  no.  III.  US  280/03).    In   this
connection,  in the realm of fact belongs only  findings  of
fact  (but not the ascertainment of duties), in other words,
the  ascertainment  of the existence of a legal  transaction
itself,  the  identification of its subject, the genuineness
of  the  document (if it is made in written form),  and  the
establishment of the wording of the text, etc.
     The fulfillment of conditions for the subsumption under
a  legal norm is not made up solely of the factual findings,
rather  may be made up also of the determination of  duties.
Expressed  in other words, an adjudication of the requisites
of   a   contract   represent  the  subordination   of   the
individualized  and  concretized duties (rights)  under  the
general   and  abstract  (norms).   The  interpretation   of
contracts  (legal  transactions) is guided  by  interpretive
rules  which  are  analogous  to  those  which  govern   the
interpretation of generally binding legal enactments.
      The  wording  of  Art. VI of the  contract  at  issue,
concluded  between  the complainant  and  B.  d.  K.  s.  R,
contains  separate provisions for the remittance  of  unpaid
credits  and for the accounting of funds designated for  the
financing of repairs and maintenance of the house and  units
of flats, thus, it does not mix the duties flowing from § 24
para. 5 and from § 24 para. 7 of the Act on the Ownership of
Flats.  The wording of Art. VI para. 3, lit. b) of the cited
contract  then specially prescribes the manner of accounting
of the funds under paragraph 2 of the cited provision of the
contract.
      Due  to  the  fact  that  the  appellate  court,  when
interpreting  the  contract at issue, did not  accept  these
facts   and  proceeded  in  conflict  with  the   rules   of
linguistic, systematic, and teleological interpretation,  it
violated  § 39 of the Civil Code, in conjunction with  §  24
para. 7 of the Act on the Ownership of Flats.
      By  choosing a restrictive interpretation of the term,
“incorrect   legal  assessment  of  the  matter”,   in   the
extraordinary  appeal  the  Supreme  Court  restricted   the
relevant grounds for the extraordinary appeal, and  that  in
conflict  not  only with the meaning and purpose  of  §  241
para. 3, lit. c) of the Civil Procedure Code, in the version
valid  until 31 December 2000, but also with the meaning  of
the  concepts of legal assessment and factual finding, which
diverge in legal dogmatics.
      Apart from substantive law objections, the complainant
also  reproaches  the appellate court decision  decision  in
that  it affected her in her fundamental rights arising from
Art. 38 para. 2 of the Charter (the restriction of the right
to  put  forth  legal and factual arguments in the  matter),
consisting in the adoption of a “surprising” decision.
      The  Constitutional  Court does  not  agree  with  the
legitimacy of this criticism.  In this connection it concurs
with  the  position  taken by the party to  the  proceeding,
according  to which the issue of the validity of a  contract
on  the transfer of shares in a flat, concluded between  the
complainant and B. d. K. s. R, was the subject both  of  the
trial  and review proceedings, which follows also  from  the
evidence of the file of the Municipal Court in Prague, no. 4
Cm  164/2000, according to which the wording of Art.  VI  of
the cited contract was established at the hearing before the
High  Court in Prague.  In its approach, therefore, the High
Court  entirely accepted the safeguards which, on the  issue
of  surprising  decisions,  flow from  Constitutional  Court
jurisprudence  (see  judgment no. III. US  139/98,  III.  US
257/98, I. US 336/99), in particular due to the fact that it
did  not ascertain the entire wording of the contract  under
consideration,   rather  only  the   wording   of   selected
provisions,  indicated to the parties to the proceeding  the
legal  issue  which it considers reasonable  to  deal  with,
without  thereby violating the right of the parties  flowing
from the maxim of the equality of arms under Art. 37 para. 3
of   the   Charter.   It  thus  anticipated  the  obligation
resulting  from § 118a para. 2 of the Civil Procedure  Code,
without  this  provision, I the sense of  Art.  XI  of  Part
Twelve  of  Chapter  I, point 15 of Act No.  30/2000  Coll.,
having any impact on this appellate proceeding.
     If the Constitutional Court came to a conclusion on the
validity,  on  the plane of ordinary law,  of  the  contract
under consideration, it then considers it indispensable also
to  analyze  the arguments of the trial court, according  to
which  in the decided matter, the application of § 15  para.
1,  lit.  c) of the Bankruptcy Act is reasonable.  According
to   the  cited  statutory  provision,  if  bankruptcy   was
declared,  legal transactions of the debtor, by which  items
of  property,  rights, and other property  values  from  his
assets are transferred free of charge to a third person, are
ineffective as against the creditors, if they were  effected
in  the  six months preceding the submission of the petition
seeking  a  declaration  of  bankruptcy,  or  following  the
submission  of  this  petition  until  the  declaration   of
bankruptcy.
     The meaning of the cited statutory provision is, by the
introduction   of   the   institute   of   contesting    and
ineffectiveness  of  a  legal transaction,  to  prevent  the
transfer  of  a  debtor’s property to third  person  to  the
detriment  of  the  creditor in cases of  doubt  as  to  the
debtor’s  good faith.  However, the transfer free of  charge
of  units in flats pursuant to §§ 23 para. 2, 24 para. 1  of
the  Bankruptcy Act does not constitute such  a  case.   The
transfer  free  of  charge  in  the  given  case  is  not  a
manifestation of the free will of the debtor, rather  occurs
ex lege.
      The  Constitutional Court has,  in  a  number  of  its
judgments or positions (see position no. Pl. US-st-1/96  and
judgment  no.  Pl.  US 33/97), expressed  its  view  on  the
tension between a literal and a teleological interpretation.
It  formulated  a  starting thesis in  this  regard  in  its
judgment no. Pl. US 33/97, in which it declared that  it  is
untenable for the application of law to emerge solely from a
linguistic  interpretation; such  linguistic  interpretation
represents   merely   an   initial  approximation   to   the
application of the legal norm, it is the point of  departure
for  the  elucidation and clarification of its  meaning  and
purpose  (which  purpose  is  served  by  a  host  of  other
approaches,  such as a logical or systematic interpretation,
an  interpretation  e ratione legis,  etc.).   Then  in  its
judgment  no.  Pl. US 21/96, in the context of  assessing  a
similar matter, it stated:  “A court is not absolutely bound
to  the literal wording of a statutory provision, rather  it
may  and  must  diverge therefrom in  cases  where  such  is
required  by  serious  grounds of  the  statute’s  aim,  the
history  of  its adoption, systematic context or certain  of
the  principles which have their basis in a constitutionally
conforming legal order which is a meaningful whole.  At  the
same time, it is necessary to eschew arbitrariness, judicial
decision-making must be based upon rational arguments.”
      Consequently,  in the matter under consideration,  the
application  of § 15 para. 1, lit. c) of the Bankruptcy  Act
is  in conflict with its purpose and aim and as such must be
rejected.

VI/c Adjudication of the Constitutionality of the
Interpretation and Application of the Ordinary Law Relevant
in the Matter
It  is necessary, as a matter of constitutional law, to  lay
down  the  conditions  under  which,  when  fulfilled,   the
incorrect  application of ordinary law  by  ordinary  courts
would  result in the infringement of a fundamental right  or
basic freedom.
      The  first group of cases in which, in proceedings  on
constitutional   complaints,   the   Constitutional    Court
intervenes   into   ordinary   court   decision-making    is
represented  by those cases in which it assesses  the  issue
whether,   from   the  perspective  of  the   principle   of
proportionality,  the  ordinary  law  norm  applied  in  the
matter,   and   which  pursues  a  certain  constitutionally
protected  aim,  legitimately takes  priority  over  another
ordinary  law norm which pursues the attainment  of  another
constitutionally protected aim (for example, case  no.  III.
US 256/01 and others).
      Another  group  are those cases which involve,  not  a
conflict between two, or more, ordinary law norms that might
be  applied  in  the  matter, rather the resolution  of  the
question  of  acceptance of certain of several  interpretive
alternatives, of the same, definite, ordinary law norm  (for
example, case nos. II. US 22/94, III. US 114/94 and others)
      Finally, the third group of cases are those cases,  in
proceedings  on constitutional complaints, of the  arbitrary
application  of  ordinary law norms by  an  ordinary  court,
which   lacks   any   meaningful   substantiation   or   any
interconnection with any sort of constitutionally  protected
aim.   Illustrations are the Constitutional Court  decisions
in  which  it  asserted  that  the  ordinary  court’s  legal
conclusion  is „in extreme incongruity with the factual  and
legal  determinations that were made, or that the  reasoning
of  the  court  decision  does not follow  from  it  by  any
possible interpretation“ (see, in particular, III. US 84/94,
III. US 166/95, I. US 401/98, II. US 252/99, I. US 129/2000,
I. US 549/2000, III. US 74/02 and  III. US 694/02).
      Proceedings on constitutional complaints, then, can be
subdivided  into cases of the conflict of norms of  ordinary
law,  the conflict of interpretive alternatives, and finally
cases of the arbitrary application of ordinary law.
       In  the  matter  under  consideration  (compare  also
judgment  no. III. US 686/02) the Constitutional Court  came
to  the  conclusion that the interpretation of § 39  of  the
Civil Code, § 24 para. 7 of the Act on Ownership of Flats, §
241  odst.  3, lit. c) of the Civil Procedure Code,  in  the
version valid until 31 December 2000, and § 15 para. 1, lit.
c)   of  the  Bankruptcy  Act,  contained  in  decisions  of
appellate,  extraordinary  appellate,  and  first   instance
courts,  come into extreme incongruity with the  content  of
the  customary  interpretive methods, as well  as  with  the
standard  legal  dogma demarcated by the  content  of  legal
concepts,  and  as a result the decision under consideration
cannot   be   classified  in  the  sense  of  the  arbitrary
application of ordinary law, and thus as a violation of  the
fundamental right to due process under Art. 36  para.  1  of
the  Charter and a violation of the fundamental right to the
protection of property under Art. 11 para. 1 of the Charter.
     For the given reasons, that is, in consideration of the
violation  of  Art. 11 para. 1 and Art. 36 para.  1  of  the
Charter,  the Constitutional Court has quashed the 25  March
2003 judgment of the Supreme Court, case no. 29 Odo 560/2001-
64,  the 12 April 2001 judgment of the High Court in Prague,
file no. 13 Cmo 50/2001-37, and the 5 December 2000 judgment
of  the Regional Commercial Court in Prague, file no.  4  Cm
164/2000-15  [§  82  para. 1, para. 3 lit.  a)  of  Act  No.
182/1993 Coll., as subsequently amended].

VI/d Ancillary Issues
After  quashing  the 25 March 2003 judgment of  the  Supreme
Court,  case  no.  29 Odo 560/2001-64,  the  12  April  2001
judgment  of  the  High Court in Prague,  file  no.  13  Cmo
50/2001-37, and the 5 December 2000 judgment of the Regional
Commercial Court in Prague, file no. 4 Cm 164/2000-15, the 3
November 2003 ruling of the Municipal Court in Prague,  file
no.  99 K 21/98-969, denying consent to the non-auction sale
of precisely designated property from the bankruptcy estate,
ceases  to  have  any legal foundation, as  the  cassational
grounds  undermining the ordinary courts  decisions  in  the
proceeding also give grounds for the quashing of  the  cited
Municipal Court ruling.
      The complainant gave as her reasons for the motion  to
have the constitutional complaint heard out of order due  to
urgency  (§  39  of Act No. 182/1993 Coll., as  subsequently
amended),  as  well  as to suspend the  enforcement  of  the
contested court decisions (§ 79 para. 2 of Act No.  182/1993
Coll.),  the  possibility  of  irreparable  changes  to  the
property   in  consequence  of  the  manner  in  which   the
administrator  of  the bankruptcy estate proceeds.   In  the
given  case,  however,  the Constitutional  Court  found  no
reasons  for  proceeding in accordance with § 39  and  §  79
para.  2 of Act No. 182/1993 Coll., as subsequently amended.
For  the given reasons, the Constitutional Court has,  as  a
rule,  applied the cited provisions only in the  case  where
the   enforcement  of  the  contested  decision  would  have
irreparable   personal  consequence,  excluding   even   the
restitutional  or compensatory function of legal  liability.
For  the  reasons laid down, the Constitutional  Court  has,
pursuant to § 43 para. 2, lit. a) of Act No. 182/1993 Coll.,
as  subsequently amended, denied as manifestly unfounded the
complainant’s  motion  to have the constitutional  complaint
heard  out of order due to urgency (§ 39 of Act No. 182/1993
Coll.,  as subsequently amended), as well as to suspend  the
enforcement of the contested court decisions (§ 79  para.  2
of  Act  No.  182/1993  Coll.).   The  Constitutional  Court
concludes  that a restrictive interpretation  of  the  cited
statutory  provisions is necessary in part due to the  maxim
of  the  equality of parties to proceedings conducted before
the Constitutional Court (pursuant to Art. 37 para. 3 of the
Charter),  and  in  part due to the special  nature  of  the
institute  of proceedings on a constitutional complaint,  as
an  extensive  interpretation of the procedure  under  §  79
para.  2  of  Act No. 182/1993 Coll. would make  of  it,  de
facto, an ordinary remedial procedure.
      Pursuant  to  §  74  of Act No.  182/1993  Coll.,  the
complainant has submitted a petition proposing the annulment
of § 15 para. 1 of Act No. 328/1991 Coll., on Bankruptcy, as
subsequently  amended,  to which  she  objects  for  alleged
conflict  with the constitutionally protected  substance  of
the right of property.  Since § 15 para. 1 of the Bankruptcy
Act  is  not  applied either in the reasoning of  the  final
decision of 12 April 2001 of the High Court in Prague,  file
no.  13  Cmo  50/2001-37, or in that of the  25  March  2003
judgment  of the Supreme Court, case no. 29 Odo 560/2001-64,
rejecting  on  the  merits  the  extraordinary  appeal,  the
complainant’s petition does not fulfill the conditions of  §
74  and § 64 para. 1, lit. e) of Act No. 182/1993 Coll.,  as
subsequently amended, for which reason the petition must  be
classified   as  a  petition  submitted  by   a   manifestly
unauthorized person, which gives grounds for the  denial  of
the  petition on preliminary grounds pursuant to § 43  para.
2,  lit. b) in conjunction with § 43 para. 1, lit. c) of Act
No. 182/1993 Coll., as subsequently amended.

Notice: This judgment may not be appealed.

Brno, 6 May 2004