Pl. US 40/02
                               

1)  In  the  settled opinion of the Constitutional  Court  (see
findings  file no. Pl. US 24/99, Pl. US 5/01, Pl.  US  39/01  –
published in Collection of Decisions, vol. 18, p. 135 et  seq.,
vol. 24, p. 79 et seq. and vol. 28) an essential component of a
democratic  state governed by the rule of law is protection  of
the   freedom   of   contract,  which  is   a   derivative   of
constitutional protection of the right to property  under  Art.
11  para.. 1 of the Charter (the fundamental component of which
is  ius  disponendi). Tied to the very nature  and  purpose  of
collective bargaining, the institution of their extension, i.e.
the possibility of extending the normative over the obligation-
creating  effect  of a collective bargaining  agreement,  thus,
from  a  constitutional  law  viewpoint,  establishes  conflict
between the restriction on property rights under Art. 11 of the
Charter and the public good under Art. 6 of the European Social
Charter,   published   under   no.   14/2000   Collection    of
International  Treaties,  in connection  with  Art.  1  of  the
Constitution and Art. 27 of the Charter.
   If  the  starting point for constitutional acceptability  of
extending   the   applicability  of  higher  level   collective
bargaining  agreements is European democratic legal  experience
and  the  standards arising from it, comparison  with  European
Union  law, as well as finding a procedural mechanism to ensure
a  balance between legal protection of freedom and guaranteeing
the internal peace of human society, in the adjudicated context
the  related  aims  can  be  achieved  only  at  the  price  of
restricting property rights. However, the priority given to the
public  good over the right to property must be conditioned  on
the   legitimacy   (representativeness)   of   the   collective
bargaining  system,  so  by the relevance  of  the  contracting
parties'   market  share  in  a  given  field.   Further,   the
requirement  of  minimizing the interference in  a  fundamental
right   or   freedom,  which  is  part  of  the  principle   of
proportionality,  also gives rise to the  safeguard  that  this
measure  must  be exceptional, and the related maxims  for  the
norm  creator  to  accept  extending  the  applicability  of  a
collective   bargaining  agreement  only   in   extraordinarily
justified cases of the public interest.

2)   Thus,  an  individual  regulation  contained  in  a  legal
regulation which deprives the addressees of the possibility  of
judicial  review  of  whether  the  general  conditions  of   a
normative  framework  have  been met  concerning  a  particular
entity,  a  regulation which lacks transparent  and  acceptable
justification  within  the general possibility  of  regulation,
must  be considered inconsistent with the principle of a  state
governed  by  the rule of law (Art. 1 of the Constitution),  to
which  the  separation  of powers and  judicial  protection  of
rights  is  immanent  (Art. 81, Art. 90 of  the  Constitution).
These    derogatory    grounds   for   judicial    review    of
constitutionality    apply    fully    to    evaluating     the
constitutionality of § 7 of the Collective Bargaining  Act.  It
is  fully  up to the legislature whether it sets the  procedure
for  extending  applicability in  the  form  of  administrative
proceedings  with the possibility of judicial  review  (as  the
Constitutional  Court indicated in its resolution  of  11  July
2002  file  no.  IV.  US 587/01) or in the form  of  a  general
normative definition of an entire group of employers  to  which
the  extension applies, with the possibility of judicial review
of the fulfillment of subsumptive conditions (e.g. in a dispute
on  the exercise by an employee of claimed entitlements arising
from  a  higher  level  collective  bargaining  agreement,   or
judicial  review of administrative decisions concerning,  e.g.,
inspection of working conditions).


The  Plenum of the Constitutional Court, after oral proceedings
on  11  June 2003, decided in the matter of a petition  from  a
group  of  52  deputies  of  the Chamber  of  Deputies  of  the
Parliament of the Czech Republic, in whose name deputy A. P. is
authorized  to  act, to annul § 7 of Act no. 2/1991  Coll.,  on
Collective Bargaining, as follows:
   The  provision of § 7 of Act no. 2/1991 Coll., on Collective
Bargaining, is annulled as of 31 March 2004.


                           REASONING

I.
On 8 November 2002 the Constitutional Court received a petition
from  a group of 52 deputies of the Chamber of Deputies of  the
Parliament of the Czech Republic to annul § 7 of Act no. 2/1991
Coll., on Collective Bargaining.
   The  petitioner  first  recapitulates  the  content  of  the
contested  statutory provision, which permits the  Ministry  of
Labor  and Social Affairs (the "Ministry") to provide by  legal
regulation that a higher level collective bargaining  agreement
is  binding  on employers who are not members of  the  employer
organization which concluded the agreement. It points out  that
the   legal   framework  distinguishes  between  a   collective
bargaining  agreement concluded between the  appropriate  union
body  and  an employer (a "company" agreement) and a collective
bargaining  agreement  concluded  for  a  greater   number   of
employers  between the appropriate union body and the  employer
organization  or  organizations  (a  "higher  level  collective
bargaining agreement"), and it points to § 20 of the Labor Code
and  to  the  Collective  Bargaining Act.  In  terms  of  their
content,  it points out that these agreements are of  a  partly
normative character, in relation to employee entitlements based
on  the  employment relationship, and partly of an  obligation-
creating  nature, i.e. they set the mutual obligations  of  the
parties  to the agreement. From the point of view of evaluating
the  general character of collective bargaining agreements, the
petitioner  classifies  them with private  law  agreements,  in
which  it is typical that the parties to the agreement regulate
their  relationships voluntarily, on the basis of an expression
of  their free will. It considers a legal framework which would
limit  the  free  will of contracting parties  in  private  law
agreements  to be inconsistent with Art. 1 of the  Constitution
of the Czech Republic (the "Constitution"), which provides that
the  Czech Republic is a democratic state governed by the  rule
of  law.  The  petitioner includes the freedom  to  enter  into
private  law  relationships among the  attributes  of  a  state
governed by the rule of law.
    In  the  petitioner's  opinion,  inconsistently  with  this
requirement that Art. 1 of the Constitution places on the legal
regulation of the freedom of contractual relationships, § 7  of
the  Collective Bargaining Act permits the Ministry to  provide
by  legal  regulation (decree) that a higher  level  collective
bargaining  agreement  is  binding on  employers  who  are  not
members  of  the  employer  organization  which  concluded  the
agreement. The petitioner believes that this violates  an  age-
old  legal  principle which is part of European legal  culture,
the  principle  that a contract can regulate only  relationship
between  the parties to it, as the state is assuming the  right
to  extend the application of an entire higher level collective
bargaining agreement, in its own discretion, to subjects  other
than  those  which  concluded  it,  and  which  thus  did   not
demonstrate the intent to regulate their relationship  in  this
manner.  In  this  regard, the petitioner also  points  to  the
practice of the Ministry which, although it asks employers  who
are  not members of employer associations in writing for  their
position on extending the binding effect of the agreement, goes
ahead with extension regardless of the position they express.
   Concerning  the  obligations arising for  an  employer  from
higher  level collective bargaining agreements, the  petitioner
states  that  these  are, in particular, the  setting  of  wage
conditions,  lengthening  of convalescence  leave  and  setting
other,  as  a  rule above-standard, labor law  entitlements  of
employees,  and  these  obligations are  set  by  a  mere  sub-
statutory act (a decree), yet they are enforceable in  judicial
proceedings  (§  20 par. 3, § 207 of the Labor  Code).  In  the
petitioner's opinion, this procedure, established by § 7 of the
Collective Bargaining Act, also establishes inconsistency  with
Art.  2  para.. 4 of the Constitution and with Art. 2 para..  2
and  3 and Art. 4 para.. 1 of the Charter of Fundamental Rights
and  Freedoms (the "Charter"), which set constitutional  limits
on the ability to statutorily limit freedom, and also with Art.
11   para..  1  and  4  of  the  Charter,  in  connection  with
restriction of property rights tied to extension of the binding
nature of higher level collective bargaining agreements.
   The  petitioner also points to the fact that the institution
of   overextending  the  binding  effect  of  a  higher   level
collective  bargaining  agreement  may  also  have  unfavorable
effects on employees, because under § 4 para.. 2 let. c) of Act
no.  2/1991 Coll., a (company) collective bargaining  agreement
is  invalid if it guarantees employees wage entitlements  in  a
scope  greater  than  that  set by a  higher  level  collective
bargaining  agreement as the highest permissible, i.e.  invalid
in the amount exceeding this highest permissible scope.
   The petitioner considers another deficiency of the contested
statutory regulation to be the fact that an employer  to  which
the  binding effect of an agreement is extended has practically
no  opportunity  to  defend  itself  against  that  step.  When
extending   the   binding   effect  of  collective   bargaining
agreements the Ministry does not issue any decision which would
apply to individual employers (i.e. a decision of the nature of
an  administrative decision), against which  means  of  redress
exist.  From  the  point  of view of protecting  the  right  to
possible  procedural  means,  the petitioner  points  out  that
issuing a decree can not be considered a measure under the  Act
on  the Constitutional Court, and the process which takes place
before  issuing  a  decree extending the binding  effect  of  a
higher  level collective bargaining agreement is a  legislative
process,  and  thus,  from  the  position  of  those  on   whom
obligations  are imposed, it is not subject to  possible  legal
review.  The petitioner points out that including a  particular
employer on a list which is an appendix to the decree under § 7
of the Collective Bargaining Act is, by its nature, de facto  a
decision  which  can  interfere in the rights  of  an  employer
which,  however,  is not provided procedural  protection  under
Art. 6 para.. 1 of the Convention on Protection of Human Rights
and Fundamental Freedoms (the "Convention").
   From an empirical point of view, the petitioner states  that
in  2001 alone decrees no. 238/2001 Coll., no. 300/2001  Coll.,
no.  303/2001 Coll. and no. 417/2001 Coll. extended the binding
effect  of  seven higher level collective bargaining agreements
to  a  total  of 3,860 employers – legal entities  and  natural
persons. In 2002, as of the day the petition was filed, decrees
no.  81/2002 Coll., no. 223/2002 Coll., no. 300/2002 Coll., no.
301/2002 Coll., no. 302/2002 Coll., no. 409/2002 Coll. and  no.
410/2002  Coll.  did  so to a total of 2,282  employers.  Thus,
according  to  the  petitioner, some  higher  level  collective
bargaining  agreements  are, on the basis  of  a  sub-statutory
legal regulation, binding on a greater number of employers than
the  number  for which they were concluded. In the  petitioners
opinion,  a minority of employers thus forces its will  on  the
majority  in  a  given  sector or field, which  the  petitioner
considers inconsistent with the rights arising from Art. 26  of
the Charter.
   In  this  regard, the petitioner points to  the  fact  that,
although  under  § 7 para.. 2 of the Collective Bargaining  Act
the  binding  nature  of  a higher level collective  bargaining
agreement  can  be  extended only to an employer  with  similar
activities  and  similar  economic and social  conditions,  the
procedure applied by the Ministry does not guarantee that  this
rule  will  be observed, because – with such a great number  of
affected  employers – the individual conditions  of  individual
employers  are  not  reviewed, nor can  they  be.  Due  to  the
foregoing, a number of them may find themselves in a  difficult
economic   situation,  which  applies  particularly  to   small
businesses.
   In  terms of the certainty and understandability of the text
of  the contested statutory provision, the petitioner considers
the  expression "employers with similar activities and  similar
economic  and social conditions, with their registered  address
in  the  appropriate republic," to be disputable,  in  view  of
meeting the elements contained in it.
  The petitioner also argues with the purposes of extending the
applicability  of collective bargaining agreements.  It  points
out  that  they  consist of an effort to  create  the  same  of
comparable conditions in a competitive environment, as well  as
the   same  or  comparable  social  conditions  for  employees.
However,  in  the petitioner's opinion, extending  the  binding
effect  of  a higher level collective bargaining agreement,  in
the  manner provided in § 7 of Act no. 2/1991 Coll.,  not  only
does  not  support competition, but, on the contrary, restricts
it,  by  setting  conditions for the conduct  of  business  for
employers  who  are  not  members  of  the  relevant   employer
association  –  regardless of their specific possibilities.  If
the  state  subjects  employers who  are  not  members  of  the
relevant  employer association to a legal regime which  is  the
result  of  collective  bargaining,  then,  according  to   the
petitioner, it discriminates against these employers  and  also
indirectly  pressures  them to join the  employer  association,
which  the petitioner considers inconsistent with the right  of
the  freedom  of  association under Art. 27  para..  1  of  the
Charter.
   In view of all these arguments, the petitioner proposes that
the Constitutional Court annul § 7 of the Collective Bargaining
Act due to inconsistency with Art. 1 and Art. 2 para.. 4 of the
Constitution, Art. 2 para.. 3, Art. 4 para.. 1, Art. 11  para..
1  and 4, Art. 26 para.. 1 and Art. 27 para.. 1 of the Charter,
as  of the day this finding is promulgated in the Collection of
Laws.

II.
Under § 42 para.. 3 and § 69 of Act no. 182/1993 Coll., on  the
Constitutional  Court,  as amended by  later  regulations,  the
Constitutional Court sent the petition at issue to the  Chamber
of  Deputies  of the Parliament of the Czech Republic.  In  the
introduction to his position statement of 17 December 2002, the
Chairman  of the Chamber of Deputies of the Parliament  of  the
Czech  Republic,  PhDr.  Lubomír  Zaorálek,  states  that   the
International Labour Organization Convention no. 98, concerning
the  Application of the Principles of the Right to Organise and
to  Bargain  Collectively, (1948) provides the right  to  state
support   of  voluntary  bargaining  on  collective  agreements
between employers and employer organizations, on the one  hand,
and   employee  organizations  on  the  other  hand,  so   that
conditions  of  employment  can be regulated  in  this  manner.
Similarly,  the  European Social Charter  (1961)  requires  the
parties  to  support, where necessary and suitable,  mechanisms
for   voluntary  negotiation  between  employers  or   employer
organizations  and  employee  organizations  for  purposes   of
setting  employment  conditions through collective  agreements.
International  Labour  Organization  Recommendation   no.   91,
concerning  Collective Bargaining Agreements,  (1951)  presumes
that  the  binding effect of a collective bargaining  agreement
will  be extended to other employers an employees, even if they
did  not  themselves sign the collective bargaining  agreement;
some   conditions  are  to  be  met,  specifically,  that   the
collective  bargaining agreement already binds a representative
number  of  employers and employees, that the  application  for
extension  will  be filed by one or more employee  or  employer
organizations which are parties to a given agreement, and  that
employers  and  employees  to whom  the  binding  effect  of  a
collective  bargaining  agreement is to  be  extended  will  be
invited to state their positions.
   Starting  with  this outline, the party to  the  proceedings
concludes that international agreements give precedence to  the
regulation of minimum wages and other working conditions  being
secured  by  collective bargaining agreements (their  normative
provisions),  i.e.  precedence over  a  framework  provided  by
statutory   or  sub-statutory  regulations;  the   role   which
collective  bargaining agreements are to fulfill, in particular
as  sources of law, is tied to an important rule, the extension
of the applicability of a collective bargaining agreement. This
rule, according to the statement of the Chairman of the Chamber
of  Deputies, makes it possible to guarantee a uniform standard
of  labor law and wage conditions for groups of companies  with
similar activities, economic and social conditions, usually for
a  certain economic sector or field, and the rule also prevents
speculative behavior by certain employers, who could avoid  the
binding  effect of a collective bargaining agreement  on  their
business by not becoming members of an employer organization.
   For  these  reasons, the party to the proceedings  concludes
that  extending the applicability of a higher level  collective
bargaining  agreement, is not, in and of  itself,  inconsistent
with  international  treaties by which the  Czech  Republic  is
bound.
  According to the Chairman of the Chamber of Deputies, a legal
regulation  which extends the binding effect  of  a  collective
bargaining  agreement differs from other labor law  regulations
in  that its content is not the actual regulation of labor  law
relationships,  but in fact only the extension of  the  binding
effect of an already existing legal regulation (source of  law)
to  other  labor  law subjects, and thereby also relationships.
Thus,  according  to him, this regulation  does  not  take  the
provisions  of  a collective bargaining agreement  as  its  own
provisions;  the  collective  bargaining  agreement,  vis-ŕ-vis
affected  third  parties, does not change  into  a  ministerial
regulation  issued independently on the basis of a statute  and
within   its   bounds,  but  remains  a  collective  bargaining
agreement.
   The  position  statement  further states,  critically,  that
unlike   international   treaties  and   International   Labour
Organization   Recommendation  no.  91,  the  legal   framework
contained in § 7 of the Collective Bargaining Act is very terse
and   does   not   correspond  to  the  requirements   of   the
Recommendation.  The party to the proceedings  believes  it  is
undisputed  that  the Act itself should set certain  conditions
for  extension and not leave the matter to the absolutely  free
and  unrestrained  discretion, that  an  obligation  should  be
provided for the state administration to evaluate the need  for
extension, set criteria for evaluating that need, also criteria
for  evaluation  the representativeness of a  given  collective
bargaining  agreement,  as  well as criteria  for  setting  the
general  interest in extending its binding effect with the  aim
of  ruling out economic detriment to some employers.  For  this
purpose  the statutory framework, according to the Chairman  of
the  Chamber  of  Deputies, should ensure  that  the  necessary
determinations will be made, in particular determination of the
positions  of  those subjects which are to be affected  by  the
extension; the framework should also contain at least the  most
basic procedural rules, in particular concerning the discussion
of  the  legal regulation which is to extend the binding effect
of   a   collective  bargaining  agreement,  beyond  the  usual
legislative discussion. Despite these reservations,  the  party
to  the proceedings considers the contested statutory provision
of  §  7 of the Collective Bargaining Act to be consistent with
international treaties (with Convention no. 98, concerning  the
Application of the Principles of the Right to Organise  and  to
Bargain Collectively and with the European Social Charter),  as
well  as with Art. 2 of the Constitution and Art. 2 and Art.  4
of the Charter.
   The position statement's conclusion states that it is up  to
the  Constitutional  Court to evaluate the cited  provision  in
connection  with the filed petition and to issue an appropriate
decision.
   Under  § 42 para.. 3 and § 69 of Act no. 182/1993 Coll.,  as
amended  by  later regulations, the Constitutional  Court  also
sent  the  petition in question to the Senate of the Parliament
of the Czech Republic. In his position statement of 19 December
2002,  the  Senate  Chairman, doc. JUDr. Petr Pithart,  states,
concerning  the petitioners' reservations about the purpose  of
extending   the  binding  effect  of  higher  level  collective
bargaining  agreements, that the main purpose is  to  create  a
comparable  competitive  environment for  employers  which  are
active  in  similar  fields of activity, which  means  creating
comparable  conditions in their economic competition.  In  this
regard,  in his opinion, the public law nature of higher  level
collective bargaining agreements completely predominates, which
arises  from  the  fact that a collective bargaining  agreement
(both  a  company agreement and a higher level  agreement),  in
terms  of its normative content, is a source of law, and always
applies  to all of the relevant employer's employees, including
those  who  are  not  members of the union  organization  which
concluded the collective bargaining agreement. Because  of  the
foregoing,  he  expresses doubts about  the  arguments  of  the
petitioner,  which  derives  the  unconstitutionality  of  this
institution from something which is characteristic  of  private
law relationships and private law contracts.
   The position statement points to the fact that extending the
binding effect of higher level collective bargaining agreements
was  already  done  in the Czech Republic  –  after  developing
somewhat  roughly from the beginning of the 20th century  –  in
the  period  of  the  "pre-Munich"  republic,  when  collective
bargaining   agreements  as  understood   today   were   called
collective  employment agreements. These agreements were  first
applied  on  the  basis of the principle of subsidiarity  (i.e.
wage  and  other  agreed  conditions applied  to  the  parties'
employees  unless something else was agreed upon in  individual
employment  agreements), and subsequently  became  binding  (if
individually  agreed  upon  conditions  were  worse  than   the
conditions in the collective work agreement, the more favorable
framework  contained in the collective work agreement applied).
During  a  certain  period  the  legal  framework  permitted  a
collective employment agreement – under specified conditions  –
to be declared binding in a particular area, if the employer or
employee, or both, were not members of the organizations  which
negotiated  the collective employment agreement. That  was  the
situation, for example under government directive no.  102/1935
Coll.  of  Laws  and  Directives, which regulates  the  working
conditions   of   workers  in  textile  manufacturing   for   a
transitional period, or under government directive no. 141/1937
Coll.  of  Laws  and  Directives,  on  the  binding  effect  of
collective employment agreements.
   From  a  comparative legal viewpoint, the  Chairman  of  the
Senate  states  that a similar institution is also  applied  in
other  European countries. For example, in Germany, the Act  on
Collective  Bargaining,  in § 5, contains  a  regulation  which
permits  extending the binding nature of collective  bargaining
agreements  under  the specified conditions  to  employees  and
employers who are not members of any of the organizations which
concluded the collective bargaining agreement.
  A procedure which, according to the party to the proceedings,
to  a  certain extent can be compared to extending the  binding
effect  of collective bargaining agreements is also applied  in
European  Union  law.  Art.  139 of  the  Treaty  of  Amsterdam
provides  that  "Should management and labour  so  desire,  the
dialogue   between  them  at  Community  level  may   lead   to
contractual   relations,   including   agreements.   Agreements
concluded  at  Community level shall be implemented  either  in
accordance  with  the  procedures  and  practices  specific  to
management  and  labour and the Member States  or,  in  matters
covered  by Article 137, at the joint request of the  signatory
parties,  by  a  Council  decision  on  a  proposal  from   the
Commission."  In  recent  years, a European  Community  Council
directive was thus passed in a number of cases, the content  of
which  was a framework agreement containing regulation  of  the
relevant  area of labor law, which was concluded by  labor  and
management, the European Trade Union Confederation (ETUC),  the
Union  of  Industrial and Employers' Confederations  of  Europe
(UNICE), and the the European Centre of Enterprises with Public
Participation  (CEEP).  On  the basis  of  the  directive  thus
passed,  member  states must, in their own  jurisdiction,  pass
legal regulations or other measures which will be in accordance
with  the directive, i.e. ensure the validity and effectiveness
of  the  framework agreement in their territory. In the opinion
expressed in the statement from the Chairman of the Senate,  in
this   manner,  basically  the  binding  effect  of   framework
agreements  concluded between management and labor is  extended
to all employers in the member states. As an example, the party
to  the  proceedings cites European Council Directive 96/34/EC,
on  the  framework  agreement on parental  leave  concluded  by
UNICE,  CEEP and the ETUC, European Council Directive  97/81/EC
concerning the Framework Agreement on part-time work  concluded
by  UNICE,  CEEP  and the ETUC, and European Council  Directive
1999/70/EC  of 28 June 1999 concerning the framework  agreement
on  fixed-term  work  concluded by ETUC, UNICE  and  CEEP.  The
reasons  for  this  procedure are expressed in  detail  in  the
preambles  to  the  directives,  which  indicate,  among  other
things,  that  in certain cases such a procedure is  considered
suitable  and desirable in the European Union. In this  regard,
the position statement states that one of the reasons mentioned
in the preambles to the directives is the fact that the Council
did  not decide (i.e. a consensus was not reached) on the draft
of   the   relevant  directive  in  the  area   of   employment
relationships,  submitted  with  regard  to  interference  with
economic competition, and it called on management and labor  to
conclude  relevant agreements "with the aim of  increasing  the
competitiveness  of  companies." The party to  the  proceedings
concludes from this that the aspect of comparable conditions in
economic  competition is also accentuated within  the  European
Union, in the area of employment relationships. The Chairman of
the  Senate points out that these framework agreements  between
management and labor at the European Union level will also bind
all of our employers, or in some cases already do, because, for
example,  Directive  96/34/EC, on the  framework  agreement  on
parental  leave  concluded by UNICE,  CEEP  and  the  ETUC  was
reflected  in  the Labor Code when it was amended  by  Act  no.
155/2000 Coll., as part of the harmonization of our legal order
with European Union law.
   Concerning  the  petitioner's  reservations  concerning  the
inadequacy  of  the  legal regulation  extending  higher  level
collective   bargaining   agreements,   including   the   cited
arguments,  according to the Chairman of the  Senate,  one  can
agree  with them in principle, because no appeal can  be  filed
against  the issuance of any legal regulation can be  filed  in
administrative  proceedings or the  administrative  courts.  In
this regard, as he states further, it would evidently be useful
to  define  the mechanism of extending higher level  collective
bargaining  agreements  more closely in  the  legal  framework,
including defining the decisive criteria for evaluating whether
the  conditions  for extension have been met  in  a  particular
case.    However,    it   is   an   open    question    whether
unconstitutionality can be seen in the fact that the  statutory
framework  appears  too  concise, as the petitioner  concludes.
Such  a statutory framework can also be, in the opinion of  the
party  to  the proceedings, applied in a constitutional  manner
(by a procedure preceding the issuance of a legal regulation on
extending  the  binding  effect of a  higher  level  collective
bargaining  agreement so that the existing statutory conditions
of that extension will be fulfilled without any further steps).
Thus,  according to the Chairman of the Senate,  more  detailed
legal  regulation  would make it possible to  evaluate,  either
within the total re-codification of labor legislation currently
being   prepared  (the  new  Labor  Code  being  prepared   and
amendments  to  related laws), or even earlier, in  "routinely"
executed amendments to labor law regulations.
  Beginning with the possibilities given by § 49 para. 1 of Act
no.  182/1993  Coll., and because application of  §  7  of  the
Collective  Bargaining  Act directly affects  the  Ministry  of
Labor  and  Social Affairs, the Constitutional Court turned  to
the  Ministry  with a request for a position statement  on  the
petition at issue.
   In  its position statement of 23 December 2002, the Ministry
states, concerning extending the binding effect of higher level
collective  bargaining  agreements,  that  this  has  become  a
component  of  modern  legal  orders  of  democratic   European
countries, and its use is widespread in various forms  in  many
states,  e.g.  in  Austria,  Belgium,  France  and  Germany  (a
detailed  overview is contained in an appendix to the  position
statement).  The  purpose of the institution of  extending  the
binding   nature   of  collective  bargaining  agreements   is,
according  to  the  Ministry, an effort to prevent  unjustified
competitive advantage for those employers who resist collective
bargaining, or bargain collectively but do not want to  provide
their  employees the advantages which are usual and appropriate
at similar employers, whereby they create for themselves a more
advantageous cost of labor and a better market position at  the
expense  of  their employees. At the same time,  extending  the
binding effect of higher level collective bargaining agreements
is   recognized  as  a  state  measure  to  support  collective
bargaining  under International Labour Organization  Convention
no.  98,  concerning the Application of the Principles  of  the
Right  to  Organise and to Bargain Collectively  (no.  470/1990
Coll.).
   Concerning the inconsistency, alleged by the petitioner,  of
the  contested statutory provision with Art. 2 para. 4  of  the
Constitution  and  Art. 2 para. 3 and Art. 4  para.  1  of  the
Charter, the Ministry states that the state imposes obligations
under  the  Charter through its bodies, and that the expression
"on  the  basis of law" must be understood so that "obligations
may be imposed by a statute or a norm other than that which  is
expressed  in a statute, but only if that norm where authorized
thereto  by  a regulation with at least the legal  force  of  a
statute."  Likewise,  "the  bounds  determining  imposition  of
obligations  may be," according to the Ministry, "set  only  by
regulations  with at least the legal force of a  statute."  The
Collective  Bargaining Act, which in § 7 para. 1  authorizes  a
legal  regulation (decree) to extend the binding  effect  of  a
higher  level collective bargaining agreement, i.e.  to  impose
obligations,  must  be  considered a statute  which  determines
these  bounds;  in  §  7  para. 2 it provides  the  bounds  for
imposing  obligations, and permits extension only to  employers
who  have  similar activities and similar economic  and  social
conditions.
   In  the  Ministry's  opinion, the  state  does  not  proceed
capriciously when extending the binding nature of higher  level
collective  bargaining agreements if such extension  must  meet
statutory conditions. The position statement also states,  with
reference  to Constitutional Court resolution file no.  IV.  US
587/01,  that  §  7  of  the  Collective  Bargaining   Act   is
incomplete, and as a result the Ministry, in the recent period,
on  the basis of dialogue with management and labor, has sought
to  complete the wording of the Act by a procedure agreed  upon
in  the Council of Economic and Social Agreement. Applying  the
condition  of  "similar activities" for extending  the  binding
effect of a higher level collective bargaining agreement is  at
present  based  on  data  from the Administrative  Register  of
Economic  Subjects/Entities of the Ministry of  Finance,  which
gives  the activities of economic entities under the Industrial
Classification of Economic Activities, maintained by the  Czech
Statistical  Office, which uses employers'  data  as  a  basis.
Another criterion for the evaluation of individual entities  by
the Ministry is the number of employees, which is verified from
three  independent sources (data from the parties to the higher
level   collective  bargaining  agreement  in   question,   the
Administrative Register of Economic Entities of the Ministry of
Finance,   and  the  Register  of  the  Czech  Social  Security
Administration),  and  the binding effect  of  a  higher  level
collective  bargaining agreement is not  extended  to  entities
with fewer than 20 employees.
   In  practice,  according  to the Ministry,  the  process  of
extending   the  binding  effect  of  higher  level  collective
bargaining  agreements is begun by at least one of the  parties
submitting  a properly justified petition. If both  parties  do
not  submit  the petition jointly, the position  of  the  other
party must be attached to it. If the other party does not agree
with   the   petition,  this  disagreement  is  submitted   for
evaluation to the consulting body of the Ministry of Labor  and
Social  Affairs  –  the  Commission for Extending  the  Binding
Effect  of  a  Higher Level Collective Bargaining Agreement  to
Other  Employers (the "Commission"). The Commission is composed
of three representatives of employers and three representatives
of  the  unions, who are appointed after agreement and  at  the
proposal  of  the top bodies of the organizations of  employers
and the unions. It is presided over by the deputy minister who,
however,  does not vote. Although in the current  practice  the
sides  in  the Commission have always agreed, if  there  is  no
agreement,  then  the  decision  falls  to  the  minister.  The
Ministry  also  evaluates whether the higher  level  collective
bargaining agreement contains provisions which are inconsistent
with  legal  regulations; if it finds such inconsistencies,  it
conducts negotiations with the parties to correct them.
   The  Ministry  calls on employers to whom extension  of  the
binding  effect of a collective bargaining agreement  has  been
proposed  to  take  a  position  which  is  evaluated  by   the
Commission.  It also informs them that if it does  not  receive
their  position  statement  by  a  stated  deadline,  they  are
presumed to have consented with the proposed extension  of  the
binding effect. The Ministry considers this mechanism a certain
protection  for  employers  who may, for  competitive  reasons,
hesitate  to  give information about employees'  above-standard
advantages  or about their economic intentions. If  it  is  not
proved  that  a  request  for  a position  has  not  been  duly
delivered to a particular employer, the binding effect  is  not
extended  to  it. The Commission evaluates the  fulfillment  of
conditions required by the Collective Bargaining Act separately
with  each  employer to which the binding effect  of  a  higher
level collective bargaining agreement is extended, and presents
a recommendation to the minister.
   In  the  conclusion of its position statement, the  Ministry
states that the draft decree on extending the binding effect of
a  collective  bargaining  agreement  goes  through  the  usual
legislative  process,  i.e.  discussion  with  all   commenting
parties  and  then in the bodies of the Government  Legislative
Council,   or   in  the  Government  Legislative  Council,   in
accordance with the government's legislative rules.

III.
Under   §   68   para.  2  of  Act  no.  182/1993  Coll.,   the
Constitutional  Court,  in decision making  in  proceedings  to
annul  statutes  and  other legal regulations,  evaluation  the
content  of  these  regulations from  the  viewpoint  of  their
consistency with the constitutional order, or with statutes, in
the  case  of  a  different  legal regulation,  and  determines
whether  they  were  passed and issued  within  the  bounds  of
constitutionally    provided    jurisdiction    and    in     a
constitutionally  prescribed  manner.  If  the   Constitutional
Court,   within   its   review   of   norms,   evaluates    the
constitutionality  of the jurisdiction of a norm-creating  body
and  the  constitutionality  of the norm-creating  process,  it
takes   as  its  basis  §  66  para.  2  of  the  Act  on   the
Constitutional Court, under which a petition in proceedings  to
annul statutes and other legal regulations is inadmissible if a
constitutional act or an international agreement with which the
reviewed   regulations  are  inconsistent  according   to   the
petition,  ceased to be valid before the petition was delivered
to  the Constitutional Court. The foregoing indicates that with
legal  regulations issued before the Constitution of the  Czech
Republic,   Act  no.  1/1993  Coll.,  went  into  effect,   the
Constitutional  Court  is  authorized  to  review  only   their
consistency with the existing constitutional order, but not the
constitutionality of the procedure in which they  were  created
and observance of norm-creating jurisdiction. (See finding file
no. Pl. US 9/99, published in Collection of Decisions, vol. 16,
p. 13-14.)
   This  interpretation of § 68 para. 2  of  Act  no.  182/1993
Coll.,  applies fully to the adjudicated matter, where Act  no.
2/1991 Coll. was approved by the former Federal Assembly of the
CSFR  on  4  December 1990, and went into effect on 1  February
1991,  i.e. before the Constitution of the Czech Republic  went
into  effect; the contested § 7 of the Act was not affected  by
any  of the amendments to it (i.e. Acts no. 519/1991 Coll., no.
118/1995 Coll., no. 155/1995 Coll., no. 220/2000 Coll. and  no.
151/2002 Coll.).

IV.
The  text  of  §  7 of Act no. 2/1991 Coll., contested  by  the
petition, is the following:

                             "§ 7"
   (1) The Ministry of Labor and Social Affairs of the republic
may   provide,  by  legal  regulation,  that  a  higher   level
collective  bargaining agreement is also binding  on  employers
who   are  not  members  of  the  employer  organization  which
concluded the agreement.
    (2)  The  binding  effect  of  a  higher  level  collective
bargaining  agreement  can  be  extended  under  the   previous
paragraph only to employers with similar activities and similar
economic and social conditions with their registered address in
the territory of the relevant republic and for which the higher
level collective bargaining agreement is not binding."

V.
The  legal  institution of collective bargaining agreements  is
established in the Czech legal order by, in particular, § 20 to
22,  § 30, § 32, § 35, § 60a, § 73, § 74, § 83a, § 85, § 88,  §
92, § 95, § 96, § 99a, § 102, § 105, § 111, § 119, § 120, § 124-
126,  § 128, § 129, § 131, § 140, § 143 and § 200 of the  Labor
Code and by Act no. 2/1991 Coll., on Collective Bargaining,  as
amended  by later regulations. Collective bargaining agreements
are  the result of collective bargaining between management and
labor. The purpose of legal regulation of collective bargaining
in  the  European Context, and within that also  of  collective
bargaining agreements, is to ensure social conciliation and  to
create  a  mechanism  for  on-going  social  communication  and
democratic  procedural resolving of possible conflicts  between
employers  and  employees. The system of collective  bargaining
reflects  the development of European democracy in  the  second
half  of  the  19th  and first half of the 20th  centuries;  it
reflects  the search for a mechanism for peaceful,  non-violent
resolution of the tensions which endanger domestic peace.
   The  realistic  functioning of  this  mechanism  comes  from
acceptance  of  the result of social bargaining  by  the  state
(under certain conditions, in Czech law contained in, e.g. §  4
of  the  Collective Bargaining Act), i.e. giving the  normative
content of collective bargaining agreements the status of being
a  source of law; the agreements then give rise to entitlements
which are exercisable in court.
   The  mechanism of collective bargaining is also  applied  in
areas  other than labor law relationships. An analogous example
is  §  17  para.  2 of Act no. 48/1997 Coll., on Public  health
Insurance,  as  amended by later regulations, under  which  the
regulation of substantive performance in providing health  care
to  insured parties is given by a framework agreement which  is
the   result   of   negotiations  between  representatives   of
associations  of health insurance companies and representatives
of  the  relevant group health facilities represented by  their
professional  associations,  where  the  individual   framework
agreements  are  submitted  to the Ministry  of  Health,  which
evaluates  them in terms of consistency with legal  regulations
and the public interest and then issues them as a decree.
   In  a  free society, in which neither employees or employers
can be considered to have an obligation to associate instead of
the right to do so (Art. 27 of the Charter), the institution of
collective   bargaining,  resulting  in  collective  bargaining
agreements,  is  regularly  tied  to  the  extension  of  their
normative  applicability beyond the framework of an obligation-
creating jurisdiction. The mechanism of this extension  can  be
conceptually  contained  even  in  the  collective   bargaining
agreement  itself,  without such extension then  requiring  the
passage  of  another  normative act (an example  is  the  legal
framework in Great Britain), or this mechanism assumes  that  a
special  normative  act  will be issued which  establishes  the
extension of applicability. The European conceptual standard in
this  regard  is  based on an assumption that  the  concept  of
collective  bargaining agreements in the sense  of  legal  acts
binding  only the parties would not make it possible to achieve
the basic aim of collective bargaining.
   If the aim of collective bargaining is to be a mechanism  of
social  communication and democratic procedural  resolution  of
potential conflicts which endanger domestic peace, then  it  is
also  tied to a requirement of legitimacy (representativeness).
This  is  considered  to be, for example in  the  German  legal
framework  (§ 12 para. 1 of Tarifvertragsgesetz) the  limit  of
50%  of  employers operating in a given field. In other  words,
the  minister  of  labor  and social  affairs  of  Germany  may
proclaim   a   particular   collective   bargaining   agreement
(Tarifvertrag) to be generally binding only if at least 50%  of
the  employers  in the given field took part in  concluding  it
within the participating employer associations.

V/a
The  objections  of  the  petitioner, the  group  of  deputies,
against  the  constitutional  deficiencies  in  §  7   of   the
Collective Bargaining Act can be divided into four groups.  The
first  are objections concerning the restriction of contractual
freedom   of  employers  not  participating  in  higher   level
collective  bargaining agreements, the second is  the  lack  of
judicial  protection  for these employers,  the  third  is  the
objection  of uncertainty of the contested statutory provision,
and  finally  the fourth is the restriction on the  freedom  of
association.

V/b
In  the  settled  opinion  of  the  Constitutional  Court  (see
findings  file no. Pl. US 24/99, Pl. US 5/01, Pl.  US  39/01  –
published in Collection of Decisions, vol. 18, p. 135 et  seq.,
vol. 24, p. 79 et seq. and vol. 28) an essential component of a
democratic  state governed by the rule of law is protection  of
the   freedom   of   contract,  which  is   a   derivative   of
constitutional protection of the right to property  under  Art.
11  para. 1 of the Charter (the fundamental component of  which
is  ius  disponendi). Tied to the very nature  and  purpose  of
collective bargaining, the institution of their extension, i.e.
the possibility of extending the normative over the obligation-
creating  effect  of a collective bargaining  agreement,  thus,
from  a  constitutional  law  viewpoint,  establishes  conflict
between the restriction on property rights under Art. 11 of the
Charter and the public good under Art. 6 of the European Social
Charter,   published   under   no.   14/2000   Collection    of
International  Treaties,  in connection  with  Art.  1  of  the
Constitution and Art. 27 of the Charter.
   The  extension of applicability of a higher level collective
bargaining  agreement,  by its generally  economic  nature,  is
price  regulation, by regulating the wages and work  conditions
of  employees  (the positive law definition of the  concept  of
price  regulation under Act no. 526/1990 Coll., on  Prices,  as
amended  by  later  regulations, is,  however,  narrower).  The
Constitutional   Court  delineated  a  certain   constitutional
framework in relation to the legislature for the permissibility
of price regulation in its previous case law. It considered the
safeguards  for  this  permissibility in  the  context  of  the
acceptability  of  setting  the value  of  a  point  in  health
insurance,  the acceptability of rent regulation,  and  finally
the  acceptability  of production quotas for  agricultural  and
food products.
   In  the  finding  in the matter file no. Pl.  US  24/99,  in
connection  with  setting  the  value  of  a  point  in  health
insurance,  the  Constitutional  Court  stated:  "An  essential
component of a democratic state governed by the rule of law  is
protection of the freedom of contract, which is a derivative of
the constitutional protection of property rights under Art.  11
para.  1  of  the Charter (whose fundamental component  is  ius
disponendi).  Therefore,  price regulation  is  an  exceptional
measure, and is acceptable only under quite limited conditions.
Although the fundamental right contained in Art. 26 para. 1  of
the  Charter  can be exercised, under Art. 41 para.  1  of  the
Charter, only within the bounds of an implementing statute, for
the  legislature,  or  for a norm creator,  this  case  too  is
subject  to  the  limit set by Art. 4 para. 4 of  the  Charter,
under  which,  when  applying  provisions  on  limitations   on
fundamental rights and freedoms their meaning and purpose  must
be  preserved. State (public) regulation, based on taking  into
account  important facts (in this area the amount of  insurance
premium  collected, the level of expenses in  providing  health
care,  etc.),  must,  when setting the price,  also  take  into
account  the opportunity to create profits. The consequence  of
the absence of this maxim during price regulation can be making
a  certain  field  of entrepreneurial activity  impossible  and
creating  a  state  monopoly, i.e. affecting  the  meaning  and
purpose  of the fundamental right arising from Art. 26  of  the
Charter."
   In  the  finding  in the matter file no.  Pl.  US  3/2000  –
published in Collection of Decisions, vol. 18, p. 287 et  seq.,
the  Constitutional Court again addressed the question of price
regulation,  this  time  in  connection  with  evaluating   the
constitutionality of legal regulation of rent. It took  as  its
starting  point  Art.  1  para. 2 of  Protocol  no.  1  to  the
Convention, which provides states the right to pass  such  laws
as  they  consider necessary for the regulation of the  use  of
property in accordance with the general interest, and also  the
case  law of the European Court for Human Rights. According  to
the  case  law,  such  statutes are  especially  necessary  and
usually  in  the field of housing, which, in modern  societies,
becomes a central issue of social and economic policy, and  for
that  purpose  the  legislature must have  a  wide  "margin  of
appreciation"  (evaluation),  both  in  determining  whether  a
public   interest   exists  authorizing  the   application   of
regulatory (control) measures, and concerning the selection  of
detailed  rules  for applying such measures.  As  the  European
Court  for  Human rights emphasized in the case James  et  al.,
state  interference  must  respect the  principle  of  a  "fair
balance"  between  the requirement of the general  interest  of
society  and the requirement to protect the fundamental  rights
of  the  individual.  There  must be a  reasonable  (justified)
proportionality  relationship between the means  used  and  the
aims  pursued.  Thus,  in this matter the Constitutional  Court
accepted  possible  price  regulation  of  rent,  but  on   the
condition   of   applying  the  principle  of   proportionality
(comprehensively, concerning all components of the principle of
proportionality,  see Constitutional Court findings,  file  no.
Pl.  US  4/94,  Pl.  US  15/96, Pl. US  16/98  –  published  in
Collection of Decisions, vol. 2, p. 57 et seq., vol. 6, p.  213
et   seq.   and  vol.  13,  p.  177  et  seq.).  Although   the
Constitutional  Court  recognized the  presence  of  the  first
component,  i.e. the suitability of the means used in  relation
to  the  aim pursued, it found that the principle of  necessity
had  not  been met, i.e. the subsidiarity of the means used  in
relation to other possible means, from the point of view of the
fundamental  right  limited  thereby  (in  the  given   matter,
property  rights): "In order for rental building owners  to  be
able to meet their stated obligations, and so that the right of
the  individual  to  adequate housing  under  Art.  11  of  the
International Covenant on Economic, Social and Cultural  Rights
(the  "Covenant")  to thus have a realistic chance,  one  could
have  chosen  the path taken by the legislature  of  the  First
Republic,  which  in § 9 para. 4 of Act no. 32/1934  Coll.,  as
amended by later regulations, permitted the raising of rent  on
the grounds of compensation of expenses incurred for occasional
or   extraordinary  necessary  repair  and  renovation  of  the
building."   On   the  basis  of  the  cited   arguments,   the
Constitutional Court concluded that Art. 4 para. 3 and 4 of the
Charter, were violated, in connection with Art. 11 para.  1  of
the  Charter.  From  a  general viewpoint,  the  Constitutional
Court,  in  the  finding in question, also  formulated  another
criterion  for  evaluating  the  constitutionality   of   price
regulation:  "Price  regulation, if it is  not  to  exceed  the
bounds of constitutionality, must not evidently lower the price
so  much  that  the  price,  in view of  all  demonstrated  and
necessarily  incurred expenses, would eliminate the possibility
of  at  least  recouping them, because in that  case  it  would
actually  imply  denial of the purpose  and  all  functions  of
ownership."
   Peripherally  to the constitutional safeguards  for  setting
quotas  for the manufacture of food and agricultural  products,
in  findings  file  no.  Pl.  US 39/01  and  Pl.  US  5/01  the
Constitutional Court emphasized that neither the constitutional
order   nor  international  agreements  on  human  rights   and
fundamental  freedoms forbid the legislature from limiting  the
amount  of  production, distribution or consumption of  values.
Therefore,   the  legislature  may  (within   the   bounds   of
constitutionally guaranteed basic principles, human rights  and
freedoms)  in  its discretion introduce price  or  quantitative
regulation  of production in a certain branch of  the  economy,
define  or  influence the kind and number of entities operating
in  it,  or  limit  contractual freedom  in  the  placement  of
production  in  the market or in the purchase of raw  materials
and  production facilities. The Constitutional  Court  did  not
find  the  free market free of all regulation to be a value  of
constitutional  importance. It pointed to  the  limits  on  the
freedom  to  conduct business in the European  Union,  where  a
market  economy  is  directly declared to be  a  constitutional
principle  in the establishment treaty. It emphasized  that  an
entitlement  to achieve a certain price in the market  is  not,
however,  a fundamental right. It pointed out that a production
quota system is a form of control of the use of property, which
is  introduced do to the public interest. It also  referred  to
the  case law of the European Court of Justice. In its judgment
in  Metallurgiki  Halyps  A.E. v  Commission  of  the  European
Communities  (258/81),  the  Court  emphasized  that  community
limitations on steel production, although they can endanger the
profitability of a company, are not a violation of the right to
own  property.  It pointed to the fact that the European  Court
for Human Rights has never evaluated the general legal measures
of  member states of the Council of Europe, which regulated the
volume  of  economic production, in view of  the  compatibility
with  the  European standard of the fundamental  right  to  own
property.  It  pointed  out  that  the  current  case  law   of
constitutional  and  supreme courts of  European  Union  member
states and other democratic states governed by the rule of  law
does  not  indicate  that limiting production  for  reasons  of
stabilizing market prices at a certain level, if fairly imposed
on  all  existing  producers, would be considered  incompatible
with  the  national standard of property ownership. Of  course,
this  statement  does  not rule out their  receiving  political
criticism,  which is strong. However, the Constitutional  Court
did  not  find  a  reason to interpret Art. 11 of  the  Charter
differently.  It  considered  the  introduction  of  production
quotas  in the adjudicated cases to be justified, as it  serves
the  public interest, which it identified as a guarantee  of  a
minimum   price   in  an  environment  where  state   subsidies
contribute to an increase in production which demand would  not
cause.  State intervention in agriculture is motivated  by  its
social,    economic   and   ecological   idiosyncrasies.    The
Constitutional Court acknowledged that production quota systems
for  agricultural  products exist in the  European  Union,  and
rejected  the  idea that the domestic standard of human  rights
would   require   a  pure  market  economy,   free   of   state
intervention.  It  expressed restraint concerning  the  request
that  it  subject to strict control, from the point of view  of
its  necessity  and  real need, a legal framework  whereby  the
state  intervenes  in  the  economy.  It  emphasized  that  the
Parliament  of the Czech Republic, as the political body  which
bears political responsibility vis-ŕ-vis voters for recognizing
problems  in the economy and selecting instruments  to  resolve
them, has jurisdiction to choose economic policy.
   In  the  matter  of the constitutionality  of  §  7  of  the
Collective  Bargaining Act, the Constitutional Court  concluded
that  it  was justified to diverge from the previous  findings,
file  no.  Pl.  US  5/01  and Pl. US 39/01,  and  to  test  the
acceptability  of the priority of the public interest,  arising
from  protection of values protected by Art. 6 of the  European
Social  Charter,  published  under no.  14/2000  Collection  of
International  Treaties,  in connection  with  Art.  1  of  the
Constitution and Art. 27 of the Charter, in conflict  with  the
right to own property under Art. 11 of the Charter. In cases of
conflict it is necessary to set conditions under which, if met,
priority  goes to one fundamental right or freedom, and  others
under which, if met, priority goes to another fundamental right
or  freedom,  or a particular public good (on the principle  of
proportionality see the settled case law of the  Constitutional
Court,  in  particular findings file no. Pl. US  4/94,  Pl.  US
15/96,  Pl. US 16/98). Fundamental in this regard is the  maxim
under  which  a fundamental right or freedom can be  restricted
only in the interest of another fundamental right or freedom or
a  public  good. Measuring conflicting fundamental  rights  and
freedoms  or  public goods against each other is based  on  the
following  criteria: The first is the criterion of suitability,
i.e.  evaluating whether the institution restricting a  certain
fundamental  right makes it possible to reach the  aim  pursued
(protection of another fundamental right or public  good).  The
second  criterion for comparing fundamental rights and freedoms
is  the  criterion  of necessity, consisting of  comparing  the
legislative  means  which  restricts  a  fundamental  right  or
freedom with other measures which make it possible to reach the
same  aim,  but  which  do  not affect fundamental  rights  and
freedoms,  or  which  affect them with a lower  intensity.  The
third  criterion  is comparing the gravity of both  conflicting
fundamental  rights or public goods. These fundamental  rights,
or  public goods, are prima facie equal. Comparing the  gravity
of  conflicting fundamental rights, or public goods (after  the
conditions of suitability and necessity have been met) consists
of  weighing  empirical, systemic, contextual  and  value-based
arguments.  An  empirical argument can  be  understood  as  the
factual  gravity of a situation which is tied to the protection
of  a  certain  fundamental right. A  systemic  argument  means
weighing   the  purpose  and  classification  of  the  affected
fundamental  right  or  freedom in the  system  of  fundamental
rights and freedoms. A contextual argument can be understood as
the other negative effects of restricting one fundamental right
as  a  result  of  giving  priority to another.  A  value-based
argument  means  weighing the positive aspects  of  conflicting
fundamental rights n view of the accepted hierarchy of values.
   Within  the  structure of this principle, the Constitutional
Court,  in its case law, does not apply only the postulates  of
suitability, necessity and proportionality in the narrow sense,
but   also  the  postulate  of  minimizing  interference   with
fundamental  rights (see finding Pl. US 4/94): "Thus,  one  can
state that if it is concluded that giving priority to one  over
another  of two conflicting fundamental rights is justified,  a
necessary condition for the final decision is also to  use  all
possibilities to minimize the interference in one of them. This
conclusion  can  also be derived from Art. 4  para.  4  of  the
Charter, in the sense that fundamental rights and freedoms must
be preserved not only when applying the provision on the bounds
of fundamental rights and freedoms, but also analogously in the
event of their restriction as a result of conflict."
   In  the  adjudicated matter, the institution  of  collective
bargaining   and   the  connected  effect   of   extension   of
applicability  of  collective bargaining agreements  meets  the
conditions  for  acceptance  arising  from  the  safeguards  of
suitability  and  necessity.  It  is  an  effective  means  for
achieving  the aims pursued (social conciliation) and  it  also
meets  the  safeguard of analyzing multiple possible  normative
means  in  relation to the intended aim and their  subsidiarity
from   the   point  of  view  of  restricting  constitutionally
protected values – of a fundamental right or public good (e.g.,
from   the  point  of  view  of  comparing  the  extension   of
applicability  of a collective bargaining agreement  and  state
regulation  outside  the  system of collective  bargaining,  an
example of which is setting the minimum wage under § 111  para.
4 of the Labor Code).
  The comparison of both conflicting constitutionally protected
values,  from  systemic, value-based, contextual and  empirical
points  of view, in and of itself makes it possible to reach  a
conclusion   to   accept  the  institution  of   extension   of
applicability  of  collective bargaining  agreements,  although
only on the condition of meeting certain safeguards.
   If  the  starting point for constitutional acceptability  of
extending   the   applicability  of  higher  level   collective
bargaining  agreements is European democratic legal  experience
and  the  standards arising from it, comparison  with  European
Union  law, as well as finding a procedural mechanism to ensure
a  balance between legal protection of freedom and guaranteeing
the internal peace of human society, in the adjudicated context
the  related  aims  can  be  achieved  only  at  the  price  of
restricting property rights. However, the priority given to the
public  good over the right to property must be conditioned  on
the   legitimacy   (representativeness)   of   the   collective
bargaining  system,  so  by the relevance  of  the  contracting
parties'   market  share  in  a  given  field.   Further,   the
requirement  of  minimizing the interference in  a  fundamental
right   or   freedom,  which  is  part  of  the  principle   of
proportionality,  also gives rise to the  safeguard  that  this
measure  must  be exceptional, and the related maxims  for  the
norm  creator  to  accept  extending  the  applicability  of  a
collective   bargaining  agreement  only   in   extraordinarily
justified cases of the public interest.
  From the point of view of these conditions from the principle
of  proportionality, § 7 of the Collective Bargaining Act  must
be  considered  inconsistent with Art. 11 and Art.  26  of  the
Charter,  in connection with Art. 4 para. 4 of the Charter,  as
it  did not meet the requirement of defining the bounds of  the
representativeness of the collective bargaining system as  part
of  comparing conflicting fundamental rights and public  goods,
and   further,  from  the  point  of  view  of  minimizing  the
restriction  of  fundamental  rights  it  did  not   meet   the
requirement that such measures be exceptional.

V/c
The   provision  of  §  7  of  the  Collective  Bargaining  Act
authorizes  the  Ministry, by decree,  to  extend  the  binding
effect  of  a higher level collective bargaining agreement  for
employers  who  are  not  members  of  the  relevant   employer
associations  if they conduct similar activities, have  similar
economic  and social conditions as the contracting  parties  to
the  agreement,  and  have  their  registered  address  in  the
republic.
   The  Ministry  extends  the applicability  of  a  collective
bargaining  agreement by decree in the entire period  when  the
Collective Bargaining Act is in effect by stating in  it  that,
for  a  precisely identified higher level collective bargaining
agreement, its binding effect is hereby extended for  employers
listed  in  an appendix, where the appendix contains a  precise
enumeration of employers with their business name, address  and
ID number (see, e.g., decree no. 410/2002 Coll.).
  Thus, in practice, fulfillment of the statutory authorization
contained  §  7 of the Collective Bargaining Act by  a  decree,
i.e. by a generally binding legal regulation, takes place by  a
regulation applied to precisely individualized entities,  which
is typical for the application of law.
   The  current  practice  thereby deviates  from  one  of  the
fundamental  material elements of the concept of a  law  (legal
regulation), which is universality . Let us remember  that  the
requirement  of  the  universality of a  law  is  an  important
component of the principle of the sovereignty of law, and  thus
also of a state governed by the rule of law.
   Arguments in the favor of the universality of a  law,  or  a
legal  regulation,  as  the Constitutional  Court  has  already
pointed out in the finding in the matter file no. Pl. US  12/02
(to  be  published in Collection of Decisions,  vol.  29),  are
these:  separation  of  powers,  equality,  and  the  right  to
independent judge.
   The  first of the arguments against laws, legal regulations,
concerning  individual cases is the principle of the separation
of  powers, or the separation of the legislative, executive and
judicial power in a democratic state based on the rule of  law:
"Passing  laws  concerning  individual  cases  meets  the  most
resistance in the area of application of rights. The right to a
lawful judge and the independence of legal protection also rule
out  individual legislative directives in areas where they  are
not  protected  by the principle ‘nulla poena sine  lege'  (and
here  lex  can  meaningfully  be only  a  general  and  written
statement  of law)." (H. Schneider, Gesetzgebung, 2nd  edition,
Heidelberg  1991,  p.  32).  Article  I  Section   9   of   the
Constitution  of  the USA states provides in this  regard:  "No
Bill of Attainder ... shall be passed."
    Thus,  an  individual  regulation  contained  in  a   legal
regulation which deprives the addressees of the possibility  of
judicial  review  of  whether  the  general  conditions  of   a
normative  framework  have  been met  concerning  a  particular
entity,  a  regulation which lacks transparent  and  acceptable
justification  within  the general possibility  of  regulation,
must  be considered inconsistent with the principle of a  state
governed  by  the rule of law (Art. 1 of the Constitution),  to
which  the  separation  of powers and  judicial  protection  of
rights  is  immanent  (Art. 81, Art. 90 of  the  Constitution).
These    derogatory    grounds   for   judicial    review    of
constitutionality    apply    fully    to    evaluating     the
constitutionality of § 7 of the Collective Bargaining  Act.  It
is  fully  up to the legislature whether it sets the  procedure
for  extending  applicability in  the  form  of  administrative
proceedings  with the possibility of judicial  review  (as  the
Constitutional  Court indicated in its resolution  of  11  July
2002  file  no.  IV.  US 587/01) or in the form  of  a  general
normative definition of an entire group of employers  to  which
the  extension applies, with the possibility of judicial review
of the fulfillment of subsumptive conditions (e.g. in a dispute
on  the exercise by an employee of claimed entitlements arising
from  a  higher  level  collective  bargaining  agreement,   or
judicial  review of administrative decisions concerning,  e.g.,
inspection of working conditions).

V/d
The Constitutional Court has also addressed, in a number of its
findings,  the  question  of  the conditions  under  which  the
uncertainty and lack of understandability of a legal regulation
must  be considered inconsistent with the principle of a  state
governed  by  the  rule of law, and thus under what  conditions
these become grounds for annulment. In its finding file no. Pl.
US  6/2000 (Collection of Decisions, vol. 21, p. 195 et  seq.),
it   stated  in  this  regard:  "If,  under  Art.  1   of   the
Constitution, the Czech Republic is a democratic state governed
by  the rule of law, that means – among other things – that its
legal  order  is  supposed  to  follow  the  principle  of  the
foreseeability  of the consequences of a legal  regulation  and
that  regulation's certainty and understandability. Only a  law
whose  consequences can be clearly foreseen corresponds to  the
cited  concept of a democratic state governed by  the  rule  of
law."  The  court has already stated the factors for testing  a
legal   provision's  constitutionality  with  regard   to   the
requirement of certainty and understandability in finding  file
no.  Pl.  US 9/95 (Collection of Decisions, vol. 5, p.  107  et
seq.):  "the uncertainty of one of the provisions  of  a  legal
regulation must be considered inconsistent with the requirement
of legal certainty and thus also with a legal state governed by
the  rule  of  law  (Art. 1 of the Constitution)  only  if  the
intensity  of  that  uncertainty rules out the  possibility  of
setting the normative content of that provision with the use of
the usual interpretative procedures."
    These  factors  must  be  applied  in  connection  to   the
requirements  of  constitutionality, which  the  Constitutional
Court  imposes  on  the legislature when it  sets  implementing
legal provisions.
   According to the legal opinion contained in finding file no.
Pl.  US  45/2000 (Collection of Decisions, vol. 21, p.  261  et
seq.) constitutional definition of derived norm creation by the
executive  rests  on the following principles:  "Another  legal
regulation"  must be issued by an authorized  entity,  may  not
interfere n matters reserved to statute (thus, it can  not  set
primary  rights and obligations), and must indicate  the  clear
will  of  the legislature to create a regulation which is  over
the  statutory  standard (thus, room must  be  opened  for  the
sphere of "another legal regulation"). In finding file no.  Pl.
US  3/95  (Collection of Decisions, vol. 4, p. 91 et seq.)  the
Constitutional Court provided the condition of certainty of the
statutory   bounds  of  "another  legal  regulation"   in   the
authorizing provision: "Fulfillment of conditions of a  special
regulation  which are not specified in more detail,  and  which
then   become  ex  post  constitutive  elements  of  a  legally
protected  subject, creates the impression  that  it  would  be
possible  to formulate the legislature's authorization  of  the
executive power in other areas of the life of the society  with
equal uncertainty."
   The  provision  of  §  7  of the Collective  Bargaining  Act
identifies  the  state  body whose norm creating  authority  it
establishes,  and  defines  a class of  possible  extension  of
applicability  of  a  collective bargaining  agreement  by  the
elements  of  similar activities, similar economic  and  social
conditions,  and  a registered address in the  Czech  Republic.
Although  very  general,  one can assume  that  this  framework
offers   an  adequate  interpretative  framework  for   setting
conditions  for  extension in connection to a  specific  higher
level  collective  bargaining  agreement  with  regard  to  the
viewpoint of the similar position of employers who are  members
of employer associations and those who are not.
   From  the  point  of  view  of the  petitioners'  objections
concerning  the uncertainty of § 7 of the Collective Bargaining
Act,  the Constitutional Court states that the wording  of  the
contested statutory provision fails to meet not the requirement
of certainty, but the requirement of completeness, which arises
for  statutory  authorization of the extension of applicability
of  a  higher  level collective bargaining agreement  from  the
principle  of proportionality, by the deficiency in  regulating
the   representativeness  of  collective  bargaining  and   the
extraordinariness  of  a  measure restricting  the  fundamental
right  to  property, and which arises for it from the maxim  of
ensuring a fundamental right to judicial protection.

V/e
The  petitioners' objection concerning the restriction  of  the
freedom  of association applies to restriction of the  negative
aspect of that freedom, i.e. the right to freely decide not  to
be  a member of a particular association, and the corresponding
ban on forcing anyone to join an association.
   If  it  were possible to agree with this objection from  the
point  of  view of the current wording of § 7 of the Collective
Bargaining   Act,   which,  in  terms  of  the  proportionality
principle  suffers from the lack of a definition of the  bounds
of  representativeness  of collective  bargaining,  when  these
bounds  are  established  the  criticism  that  extending   the
applicability of a higher level collective bargaining agreement
is  inconsistent with the right to freedom of association loses
its relevance.

V/f
In  view of all the reasons laid out, the Constitutional  Court
annulled  §  7  of  the  Collective  Bargaining  Act   due   to
inconsistency with Art. 11 para. 1, Art. 26 in connection  with
Art.  4 para. 4 of the Charter and Art. 1, Art. 81 and Art.  90
of the Constitution.
   Aware  of  the  fact that annulment of the  cited  statutory
provision without a commensurate delay in effect vacantia legis
would  result  in a constitutionally undesirable incompleteness
in  the  Act, by postponing the effect of the annulment finding
under § 70 para. 1 of Act no. 182/1993 Coll., to 31 March 2004,
the  Constitutional  Court  created  sufficient  time  for  the
democratic  legislature to constitutionally implement  Act  no.
2/1991  Coll.,  on Collective Bargaining, as amended  by  later
regulations.

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

Brno, 11 June 2003