Decided 24 June 2003 - Pl. US 44/02
                               
                “Inequality in Bankruptcy Act”

HEADNOTES
One can not a priori assume that the legislature, in passing  §
12a  par.  5, second sentence, of the Bankruptcy and Settlement
Act,  intended  to violate Art. 96 par. 1 of the  Constitution.
Therefore, one also can not assume that by providing protection
for  the  property of a group of creditors who, on  its  basis,
file  an  appeal against a decision to deny bankruptcy  due  to
insufficient  assets  and document that they  have  a  monetary
receivable  against  the debtor, it also intended  to  give  an
unjustifiably different procedural position as compared to  the
group of other creditors-parties.
Although in the case of the contested sentence the statute does
not expressly state that a creditor making use of the right  to
appeal  is limited by the state of the proceedings at the  time
he  joined them, one can not conclude, merely because of  that,
that  he  is  not  limited by that state. On the  contrary,  in
accordance   with   the   requirement   of   a   constitutional
interpretation,  it is necessary to assume  that  the  creditor
filing  an  appeal under § 12a par. 5, second sentence  of  the
Bankruptcy and Settlement Act by filing an appeal, enters  into
already   on-going  proceedings  analogously   to   “additional
applicants”  who  also enter the proceedings  after  they  have
begun.
The  proceedings  must  be  taken as  a  whole,  including  the
proceedings  on  the  appeal. If it is possible  to  reach  the
constitutional conclusion that the appellant is entering the on-
going  proceedings  as a party with equal rights,  he  must  be
given a deadline to file an appeal only until such time as  the
proceedings on the bankruptcy application are still continuing.
Thus,  he  can  file an appeal only within a period  calculated
from  the delivery of the decision by the first level court  to
the (last) party.
As  the Constitutional Court concluded in its judgment file no.
Pl.  US  36/01, published as no. 403/2002 Coll., the enshrining
in  the  Constitution  of  a general  incorporative  norm,  and
thereby  overcoming  a dualistic concept  of  the  relationship
between international law and domestic law (constitutional  Act
no.  395/2001 Coll.), can not be interpreted to the effect that
it would remove the reference point of ratified and promulgated
international  agreements  on  human  rights  and   fundamental
freedoms   for   the  evaluation  of  domestic   law   by   the
Constitutional  Court,  with possible derogative  consequences.
The scope of the concept of the constitutional order can not be
interpreted  only  with  regard to  Art.  112  par.  1  of  the
Constitution,  but  also  in view of  Art.  1  par.  2  of  the
Constitution.  The  Constitutional Court  also  confirmed  this
conclusion  in  its further decision-making (cf. judgment  file
no. I. US 752/02).
The  inception of insolvency (§ 1 par. 2) is connected  without
differentiation   with   the  debtor’s   obligations   or   the
receivables  of creditors, monetary or non-monetary.  The  only
requirement is that the obligations/receivables be “due.” A due
receivable  is a property value under Art. 1 of the  Additional
Protocol,  as it meets the conditions imposed by the ECHR  case
law  on  the  concept  of “legitimate expectation,”  which  the
creditor must have that his receivable against the debtor  will
be  realized,  and is in effect transformed into the  effective
exercise  of  the  property  right  (a  receivable  made  fully
specific,  current,  and enforceable). The contested  sentence,
which  expressly  recognizes the  right  to  appeal  against  a
decision  to  deny  the  application  for  bankruptcy  due   to
insufficient  assets only to creditors with  receivables  of  a
monetary nature, disadvantages creditors who can document  only
a   non-monetary  receivable.  This  introduces  an  inequality
between  the  creditors  under  the  contested  provision,   an
inequality   which   is  not  reasonably   justified   and   is
discriminatory,  which  is  inconsistent  with   the   ban   on
discrimination  imposed by Art. 14 of  the  Convention  on  the
Protection of Human Rights and Fundamental Freedoms. In view of
the explicitly stated condition of a receivable being monetary,
there  is  no room for a constitutional interpretation  of  the
contested sentence.

JUDGMENT
The  Plenum  of  the  Constitutional Court, composed  of  JUDr.
Vojtech  Cepl,  JUDr.  Frantisek Duchon, JUDr.  Milos  Holecek,
JUDr.  Pavel  Hollander, JUDr. Vladimir Jurka,  JUDr.  Vladimir
Klokocka,  JUDr.  Jiri  Malenovsky,  JUDr.  Jiri  Mucha,  JUDr.
Antonin  Prochazka,  JUDr. Pavel Varvarovsky,  JUDr.  Vlastimil
Vyborny, JUDr. Eliska Wagnerova and JUDr. Eva Zarembova,  ruled
on  a  petition  from the Supreme Court of the Czech  Republic,
panel  no. 29, represented by the Panel Chairman, JUDr.  Zdenek
Krcmar, seeking the annulment of § 12a par. 5, second sentence,
of  Act  no.  328/1991 Coll., on Bankruptcy and Settlement,  as
amended by later regulations, as follows:
1.§  12a  par. 5 second sentence of Act no. 328/1991 Coll.,  on
Bankruptcy  and  Settlement, as amended by  later  regulations,
expressed  by the word “monetary,” is annulled as  of  the  day
this judgment is promulgated in the Collection of Laws.
2.The remaining part of the petition is denied.

REASONING
I.
On 2 December 2002 the Constitutional Court received a petition
from  panel no. 29 of the Supreme Court of the Czech  Republic,
in  which the petitioner seeks the annulment of § 12a  par.  5,
second  sentence,  Act no. 328/1991 Coll.,  on  Bankruptcy  and
Settlement,  as amended by Act no. 122/1993 Coll., no.  42/1994
Coll.,  no.  74/1994  Coll., no. 117/1994 Coll.,  no.  156/1994
Coll.,  no.  224/1994  Coll., no. 84/1995  Coll.,  no.  94/1996
Coll.,  no.  151/1997  Coll., no. 12/1998  Coll.,  no.  27/2000
Coll.,  no.  30/2000  Coll., no. 105/2000 Coll.,  no.  214/2000
Coll., no. 368/2000 Coll., no. 370/2000 Coll., and no. 120/2001
Coll. (also the “Bankruptcy and Settlement Act”), expressed  by
the  words  :  “A decision to deny the application  to  declare
bankruptcy due to insufficient assets may also be appealed by a
creditor  who proves that he has a monetary receivable  against
the debtor.”
      The  petitioner stated that it is reviewing , under  file
no.  29  Odo  184/2001, a creditor’s appeal on a point  of  law
against  a resolution of the High Court in Prague of 26 January
2001, file no. 2 Ko 172/2000-32, in the matter conducted at the
Regional   Court  in  Pilsen  under  file  no.  26  K   72/2000
[application  by  the  debtor Golf and Country  Club,  a.s.  in
liquidation,  with  its  registered  office  in  Karlovy  Vary,
Petrin 3/1165, postal code 360 01, Company ID no. 61 05  88  23
(the  “debtor”), for a declaration of bankruptcy]. In reviewing
this  appeal  on a point of law, the petitioner concluded  that
the  Act  which is to be applied to the matter is  inconsistent
with  the  Constitution  of the Czech Republic.  Therefore,  it
seeks  annulment  of  that Act under Art.  95  par.  2  of  the
Constitution  and § 64 par. 4 Act no. 182/1993  Coll.,  on  the
Constitutional Court, as amended by later regulations.
      The  Supreme  Court  was  led to  this  petition  by  the
following reasons. The debtor’s liquidator filed an application
for  bankruptcy  with  the  Regional  Court  in  Pilsen  on  27
September  2000,  on  the grounds that the  company  was  over-
indebted and had no assets. The Regional Court, by decision  of
4   October  2000,  file  no.  26  K  72/2000-12,  denied   the
application for bankruptcy. That decision was contested  by  an
appeal from the creditor, Ceskoslovenska obchodni banka,  a.s.,
with its registered office in Prague 1 – Nove Mesto, Na Prikope
854/14,  Company ID no. 00 00 13 50. The High Court  in  Prague
denied the appeal by decision of 26 January 2001, file no. 2 Ko
172/2000-32, considering the bank, under § 218 par. 1  let.  b)
of  Act  no.  99/1963 Coll., the Civil Procedure  Code,  as  in
effect  before 1 January 2001 (the “CPC”), an entity  which  is
not authorized to file an appeal.
      The petitioner states that § 12a par. 5 of the Bankruptcy
and  Settlement Act gives standing to file an appeal against  a
decision  to  deny  an  application  for  bankruptcy   due   to
insufficient assets to the existing parties to the proceedings,
if  these are the petitioner and other petitioners, as well  as
to  a  creditor  who  proves that he has a monetary  receivable
against   the   debtor.  It  thus  relies   on   the   standard
interpretation   of  participation  in  the  first   phase   of
bankruptcy proceedings presented by court practice on the basis
of the opinion of the civil law and commercial collegium of the
Supreme  Court, published as no. 52/1998 in the  Collection  of
Court Decisions and Opinions. According to the cited opinion, §
90 of the CPC is not applicable in bankruptcy proceedings, even
proportionately.  The  Bankruptcy and  Settlement  Act  has  an
independent provision which defines the parties to proceedings,
and the circle of parties to proceedings is further defined  by
defining the persons authorized to file an application (another
application).  Therefore, it is not  appropriate  to  define  a
party to bankruptcy proceedings differently. However, neither §
12a  par.  5, second sentence, of the Bankruptcy and Settlement
Act  (also  referred to as the “contested sentence”  nor  other
provisions  of the Act provide an answer to certain fundamental
questions  in  this regard. Primarily, it is  not  possible  to
determine at what time the period for filing an appeal   begins
to  run for the persons defined in that provision. The decision
against  which they are to appeal is not delivered to them.  It
is  also not clear when that period expires. Further, there can
be   doubts  as  to  whether  the  status  of  the  proceedings
applicable  to such appellants is the status at the  time  when
their appeal reaches the court. This is expressly provided  for
other  applicants by the Bankruptcy and Settlement Act in  §  4
par.  4. This allegedly creates room for the proceedings before
the  appeals court (in conflict with the principle of two-level
proceedings) to become proceedings of the first level. The  Act
does  not accord the right to appeal to everyone who claims  to
be  a  creditor of the debtor, but only to a person who  proves
his receivable against the debtor. It is evident that by filing
an  appeal  the relevant person becomes a party to the  appeals
proceedings.  However, if he does not at  the  same  time  file
another  application  (§  4  par.  4  of  the  Bankruptcy   and
Settlement Act), it is not clear in what manner and  with  what
procedural rights and obligations he will take part in the  new
proceedings  before the court of the first level in  the  event
that  his  appeal  is  successful,  the  decision  to  deny  is
reversed, and the matter is returned to the court of the  first
level for further proceedings.
      The  petitioner  claims that the contested  provision  is
therefore inconsistent with Art. 1 of the Constitution and Art.
37  par.  3  of the Charter of Fundamental Rights and  Freedoms
(the   “Charter”).  The  abovementioned  questions   lead   the
petitioner   to  conclude  that  the  contested   sentence   is
inconsistent  with the principle of legal certainty.  According
to  the petitioner, the principle of equality of the parties is
violated  because the contested sentence results  in  different
treatment   of  the  parties  to  the  bankruptcy  proceedings.
However,  the  different  treatment is  not  supported  by  any
statutory  viewpoint  which  would  justify  it.  Finally,  the
petitioner also claims that a person who, as a creditor with  a
financial receivable against the debtor, enters the proceedings
only  by  filing  an appeal against the decision  to  deny  the
application  for  bankruptcy,  under  the  contested  sentence,
either  becomes a party to the bankruptcy proceedings  only  in
the  appeal  stage, or becomes the same type of  party  to  the
proceedings as an additional applicant under § 4 par. 4 of  the
Bankruptcy and Settlement Act (including for proceedings before
the  court of the first level after reversal of the first level
court’s  decision as a result of the appeal).  In  both  cases,
however,   compared  to  an  appellant  who  is  an  additional
applicant,  the  appellant under the  contested  sentence  must
document  his  standing to appeal by “documenting”  (verifying)
the  monetary receivable against the debtor. The appeals  court
is  thereby  also placed in the role of a court  of  the  first
instance  (it  reviews, acting as a court  of  first  instance,
whether  the appellant is the debtor’s creditor, regardless  of
the  fact  that the only substantive argument on the  basis  of
which  a  decision  to  deny a bankruptcy  application  can  be
reversed  in  appeal proceedings can consist  of  refuting  the
conclusion  that  the debtor clearly has insufficient  assets).
Unlike  an  appellant  who  is  an  additional  applicant,   an
appellant  under the contested sentence is not limited  in  his
procedural rights by the state of the proceedings at  the  time
when his appeal reached the court (the law does not impose this
limitation  on  him,  although  the  need  for  it  may  become
important after reversal of the first level court’s decision by
the  appeals court, in the new proceedings before the court  of
the first level).

II.
The Constitutional Court, under § 69 par. 1 of Act no. 182/1993
Coll.,  on  the  Constitutional  Court,  as  amended  by  later
regulations,  requested  opinions  on  the  petition  from  the
Chamber  of  Deputies and the Senate of the Parliament  of  the
Czech  Republic, as parties to the proceedings. The Chamber  of
Deputies and the Senate provided opinions on the petition.
…..

III.
The Constitutional Court first, in accordance with § 68 par.  2
of  the  Act on the Constitutional Court, reviewed whether  the
statute   whose   provision  the  petitioner   claims   to   be
unconstitutional  was passed and issued within  the  bounds  of
constitutionally    provided    jurisdiction    and    in     a
constitutionally prescribed manner.
      The Constitutional Court determined that the statute  was
passed  and issued in a constitutionally prescribed manner  and
within  the  bounds of constitutionally provided  jurisdiction,
and  that  the rules provided in Art. 39 par. 1 and  2  of  the
Constitution were observed.
      In  view  of the fact that further clarification  of  the
matter  could not be expected from oral proceedings, the  court
asked  the  parties to the proceedings whether they  agreed  to
waive  them  (§  44  par.  2 Act no.  182/1993  Coll.,  on  the
Constitutional Court), with the provision that if they did  not
send  an express statement to the Constitutional Court  by  the
stated  deadline, the court would assume that  they  agreed  to
waive oral proceedings.
      The  Chairman  of  the Chamber of Deputies  informed  the
Constitutional  Court in his opinion on the petition,  that  he
agreed  with handling the matter without oral proceedings.  The
Chairman of the Senate also stated, by letter of 13 June  2003,
that  he agreed to waive oral proceedings. In view of the  fact
that  before setting the date for issuing this judgment it  was
not whether the petitioner actually received the query from the
Constitutional Court under § 44 par. 2 Act no. 182/1993  Coll.,
on  the Constitutional Court, this was verified by telephone on
24  June 2003. The petitioner informed the Constitutional Court
that  it agreed to waive oral proceedings (cf. official  record
of 24 June 2003, p. 30 of the file). It then did not respond to
the query in writing.
      In this situation, the Constitutional Court believed that
the  conditions of § 44 par. 2 Act no. 182/1993 Coll.,  on  the
Constitutional Court, were met, and waived oral proceedings.

IV.
In  the petition, the petitioner seeks the annulment of  §  12a
par.  5, second sentence, of the Bankruptcy and Settlement Act,
under  which  “A  decision to deny the application  to  declare
bankruptcy  due to insufficient assets may also be appealed  by
a  creditor  who  proves  that he  has  a  monetary  receivable
against the debtor.”
      Under § 1 par. 1 of the Bankruptcy and Settlement Act the
purpose of this Act is to arrange the property relationships of
a  debtor  who  is  insolvent. Arranging the debtor’s  property
relationship must be understood to mean settling the claims  of
the  debtor’s  creditors  under  conditions  set  by  the  Act.
Likewise  the  amendment of the Bankruptcy and  Settlement  Act
(Act  no. 105/2000 Coll.), according to the background  report,
is  aimed at, among other things, strengthening the position of
creditors.  The contested sentence also does not  deviate  from
this  legitimate  aim  of  providing  increased  protection  to
creditors’ property, as it strengthens the procedural  position
of  creditors  who  were  not  yet parties  to  the  bankruptcy
proceedings  and  could not appeal the  decision  to  deny  the
bankruptcy application due to insufficient assets.
      The  petitioner primarily sees the contested sentence  as
inconsistent with Art. 37 par. 3 of the Charter of  Fundamental
Rights and Freedoms, under which all parties to proceedings are
equal.  As  the Constitutional Court said in a recent judgment,
file no. Pl. US 19/02, in which it also considered the issue of
equality  of parties in bankruptcy proceedings, in a  different
context, this provision of the Charter is supposed to guarantee
equal procedural rights and obligations of the specific parties
in  particular proceedings. The petitioner’s petition of course
seeks  abstract inspection of the contested norm,  though  with
the  background of a particular case. That case is known to the
Constitutional Court only from reports and it is naturally  not
its  task  to  consider  it in any way  in  these  proceedings.
Therefore,  the  Constitutional  Court  reviewed  the   present
petition  through  the  prism of  Article  96  par.  1  of  the
Constitution,  which  sets  forth  the  general  principle   of
equality  of  the parties in proceedings with the same  subject
matter.
      In  the  cited  judgment, file  no.  Pl.  US  19/02,  the
Constitutional Court granted the petition, as it found that the
legislature   impermissibly  recognized  different   procedural
rights and obligations for parties to proceedings with the same
subject  matter. The Constitutional Court also did not  find  a
possibility  for  overcoming  the  unconstitutionality  of  the
contested  provision  (§  24  par.  4  of  the  Bankruptcy  and
Settlement  Act)  through  an  interpretation  which  would  be
constitutional.
      The  petitioner  claims that the  contested  sentence  is
uncertain  and  violates the principle of legal certainty,  and
that  it  leads to different treatment of parties to bankruptcy
proceedings. It does not define the beginning of the period for
filing   an  appeal  against  a  court  decision  denying   the
application for bankruptcy due to insufficient assets, and does
not  determine  what  position persons authorized  to  file  an
appeal  will  have  in proceedings after  such  a  decision  is
reversed.  In  contrast to an appellant who  is  an  additional
applicant,  appellants under § 12a par. 5, second sentence,  of
the  Bankruptcy and Settlement Act must document their standing
to  file  an  appeal by “documenting” their monetary receivable
against  the  debtor.  The contested  sentence  also  does  not
mention whether and in what way the rights of these persons are
limited by the fact that they are only entering the proceedings
in  this  part. According to the petitioner appellants under  §
12a  par.  5, second sentence, of the Bankruptcy and Settlement
Act are not limited in their procedural rights by the state  of
the  proceedings  at  the time when their  appeal  reaches  the
court,  as the Act does not impose such limitation on them  (in
contrast to “additional applicants”).
    
V.
The  objection relating to the indefiniteness of the  contested
sentence  is  related  to the requirement  that  a  statute  be
foreseeable.  It can be said generally that the  indefiniteness
of  a  provision  in a legal regulation must be  considered  in
conflict with the requirement of legal certainty, and thus also
with a state governed by the rule of law (Art. 1 par. 1 of  the
Constitution  of  the  CR),  only  if  the  intensity  of  that
uncertainty  rules  out  the  possibility  of  determining  its
normative  content with the help of the usual  interpretational
steps (cf. Constitutional Court judgment file no. Pl. US 9/95).
In  other  words, a certain degree of uncertainty  in  a  legal
regulation  is a logical consequence of the nature of  a  legal
norm, being a general scale regulating the behavior of subjects
of law. The Constitutional Court points to the settled case law
of the European Court of Human Rights (the “ECHR”), under which
the required degree of precision in a statute depends primarily
on  the nature of the relationships which it governs, but  also
on the number and nature of the persons at whom it is aimed. It
is  considered natural that courts “finish shaping” legal norms
which  can  not  expressly  take into  account  the  wealth  of
relationships and situations for which they are to be used. The
degree  of precision and foreseeability of a statute  must,  of
course,  be  considerably higher where the statute specifically
permits  the  public  power  to interfere  in  the  rights  and
freedoms  of the individual and opens up room for impermissible
arbitrariness, and especially where the public power is applied
secretly,  without  the supervision of  the  public  (see  ECHR
judgment in the matter Kruslin v. France, 1990, § 30).
      The wider subject governed by the contested sentence (the
course  of  bankruptcy proceedings) does not, in terms  of  the
foregoing,  place  any  increased  demands  on  the  degree  of
precision,  and  so  it can legitimately be expected  that  the
court   will   remove  possible  unclear  points  through   its
interpretation.
      The  Constitutional Court believes that the  petitioner’s
objections   can,  to  a  large  extent,  be  overcome   by   a
constitutional interpretation. The basis for its interpretative
deliberations was the following starting point. One can  not  a
priori  assume that the legislature, in passing § 12a  par.  5,
second sentence, of the Bankruptcy and Settlement Act, intended
to  violate Art. 96 par. 1 of the Constitution. Therefore,  one
can not assume that by providing protection for the property of
a  group of creditors who, on its basis, file an appeal against
a  decision  to deny bankruptcy due to insufficient assets  and
document  that  they  have a monetary  receivable  against  the
debtor,  it  also  intended to give an unjustifiably  different
procedural position as compared to the group of other creditors-
parties.  This constitutionally consistent assumption  is  also
borne  out  by  other parts of the Act’s text. For  example,  a
creditor  who  files  an application for bankruptcy  must  also
document that he has a (due) receivable against the debtor (§ 4
par.  2  of  the  Bankruptcy  and  Settlement  Act).  The  same
condition  must be met by an additional applicant, joining  the
proceedings and filing an application for bankruptcy concerning
the  same  debtor  before  the court rules  on  the  bankruptcy
application (§ 4 par. 4 in conjunction with § 4 par. 2  of  the
Bankruptcy and Settlement Act).
      Therefore,  we  can not, without anything further,  agree
with  the petitioner’s claim, based on the logical interpretive
argument  a  contrario, under which the unconstitutionality  of
the  contested sentence lies in, among other things,  the  fact
that  it does not determine the position of a person authorized
to  file  an  appeal  in the proceedings after  reversal  of  a
decision  by which a court denies an application for bankruptcy
due  to insufficient assets, and does not determine in what way
the  rights of these person are limited by the fact  that  they
are  not entering the proceedings until this phase, unlike  the
explicit  regulation of these issues in relation to “additional
applicants.” This argument can not succeed in competition  with
the  legitimate assumption that the legislature did not  intend
to  legislate  in  an  unconstitutional  manner,  and  reach  a
constitutional  interpretation within proceedings  through  the
obligations of the courts. In the past the Constitutional Court
has  repeatedly  ruled  that  in a situation  where  a  certain
provision    of    a    legal   regulation   permits    various
interpretations,   one  of  which  is   consistent   with   the
constitutional laws of the Czech Republic, whereas  others  are
inconsistent  with  them, there are no grounds  to  annul  that
provision.  In  that situation, it is the  task  of  all  state
bodies   to   interpret  the  provision  in   question   in   a
constitutional  manner (cf. judgment file  no.  Pl.  US  5/96).
Although in the case of the contested sentence the statute does
not expressly state that a creditor making use of the right  to
appeal  is limited by the state of the proceedings at the  time
he  joined them, one can not conclude, merely because of  that,
that  he  is  not  limited by that state. On the  contrary,  in
accordance   with   the   requirement   of   a   constitutional
interpretation,  it is necessary to assume  that  the  creditor
filing  an  appeal under § 12a par. 5, second sentence  of  the
Bankruptcy and Settlement Act by filing an appeal, enters  into
already   on-going  proceedings  analogously   to   “additional
applicants”  who  also enter the proceedings  after  they  have
begun. Therefore, it is necessary to analogously apply to him §
4  par. 4, the part of the sentence after the semi-colon, under
which the state of the proceedings when an additional applicant
joins is decisive for that applicant.
      A  constitutional interpretation can also  remove  doubts
concerning  the deadline for filing an appeal. The  proceedings
must  be  taken  as a whole, including the proceedings  on  the
appeal.   If   it  is  possible  to  reach  the  constitutional
conclusion   that  the  appellant  is  entering  the   on-going
proceedings as a party with equal rights, he must  be  given  a
deadline  to  file  an  appeal only  until  such  time  as  the
proceedings on the bankruptcy application are still continuing.
Thus,  he  can  file an appeal only within a period  calculated
from  the delivery of the decision by the first level court  to
the (last) party. The same conclusions are basically reached by
both  Z.  Krcmar,  in  his commentary  to  the  Bankruptcy  and
Settlement  Act  (IFEC Praha, 2000, p. 38), and  by  commentary
authors  JUDr. Ing. Jaroslav Zelenka, Ph.D., and  JUDr.  Jolana
Marsikova (The Bankruptcy and Settlement Act, Commentary, LINDE
Praha, a.s., 2002, p. 316).
      The  petitioner further states that creditors who  joined
proceedings may, under the first sentence of § 12a par.  5,  of
the  Bankruptcy  and  Settlement Act, file  an  appeal  without
regard to whether they have documented their receivable. If the
petitioner  is  trying  to  use this argument  to  support  its
conclusions on the unconstitutional disadvantaging of creditors
who  have not joined the proceedings and who, in contrast, must
document  their  receivables during the appeal  (§  12  par.  5
second sentence), we can not agree. Every creditor who files an
application  for bankruptcy has an obligation to  document  his
receivable (§ 4 par. 2 of the Bankruptcy and Settlement Act  ).
If the contested sentence also imposes the same obligation on a
particular  category  of creditors, this  is  not  evidence  of
inequality, but, on the contrary, equality among creditors. The
petitioner’s  objection evidently relates not to the  contested
second  sentence of § 12a par. 5, but to the first sentence  of
the  same  section  and the same paragraph, which  prima  facie
permits  an  “additional applicant” under § 4  par.  4  of  the
Bankruptcy and Settlement Act who establishes his participation
in  the bankruptcy proceedings only after the relevant decision
is issued to file an appeal against it, without documenting his
receivable.  Nonetheless, the petitioner did not  contest  this
first  sentence, and the Constitutional Court has no reason  to
specifically consider interpretation of it.
    
VI.
Thus,   the  Constitutional  Court  did  not  agree  with   the
petitioner’s  arguments  presented  in  the  present  petition.
However,  it points out that under its settled case law  it  is
bound  only  by the proposed judgment in the petition  to  open
proceedings.  However,  it  is  not  bound  by  the  petition’s
reasoning.  Therefore, it is not inconsistent with its  mission
it  if reviews the contested provision from other viewpoints as
well  (cf.  e.g.  judgment  I. US 89/94).  Therefore,  it  also
considered the contested sentence beyond the framework  of  the
arguments  in  the petition, from the point of  view  that  the
creditor  is  supposed  to,  simultaneously  with  the  appeal,
document his receivable, which must be a monetary one. It  also
took   into   account  possible  violation  of   ratified   and
promulgated international treaties on human rights and freedoms
by  which the Czech Republic is bound. As it concluded  in  its
judgment  file  no.  Pl. US 36/01, published  as  no.  403/2002
Coll.,   the  enshrining  in  the  Constitution  of  a  general
incorporative norm, and thereby overcoming a dualistic  concept
of  the relationship between international law and domestic law
(constitutional Act no. 395/2001 Coll.), can not be interpreted
to  the  effect  that  it would remove the reference  point  of
ratified  and  promulgated international  agreements  on  human
rights  and fundamental freedoms for the evaluation of domestic
law  by  the  Constitutional Court,  with  possible  derogative
consequences.  The  scope of the concept of the  constitutional
order can not be interpreted only with regard to Art. 112  par.
1 of the Constitution, but also in view of Art. 1 par. 2 of the
Constitution.  The  Constitutional Court  also  confirmed  this
conclusion  in  its further decision-making (cf. judgment  file
no. I. US 752/02).
      The  Constitutional Court again points to one of the main
aims  of the Bankruptcy and Settlement Act, protection  of  the
rights  of  the  creditors of a debtor who  becomes  insolvent.
Under  §  4  par.  1 of the Bankruptcy and Settlement  Act,  an
application for bankruptcy can be filed by the debtor or any of
the  creditors. The inception of insolvency (§  1  par.  2)  is
connected without differentiation with the debtor’s obligations
or  the receivables of creditors, monetary or non-monetary. The
only  requirement is that the obligations/receivables be “due.”
Using  a  teleological, but systematic, interpretation  of  the
Bankruptcy  and  Settlement Act  (§  1  par.  2  is  among  the
“introductory  provisions”) the group of  creditors  under  the
contested  sentence  is  subject  to  the  condition   of   the
receivables being “due.”
      Every  natural person or legal entity has  the  right  to
peaceful  enjoyment of his/its property (Art. 1 par. 1  of  the
Additional  Protocol to the Convention for  the  Protection  of
Human   Rights   and  Fundamental  Freedoms,  the   “Additional
Protocol”). The enjoyment of the rights and freedoms set  forth
by  the  Convention  for the Protection  of  Human  Rights  and
Fundamental Freedoms must be secured without discrimination  on
any  ground  such  as  sex, race, colour,  language,  religion,
political   or  other  opinion,  national  or  social   origin,
association with a national minority, property, birth or  other
status  (Art. 14 of the Convention for the Protection of  Human
Rights and Fundamental Freedoms).
     A “due receivable” is a property value under Art. 1 of the
Additional Protocol, as it meets the conditions imposed by  the
ECHR case law on the concept of “legitimate expectation,” which
the  creditor must have that his receivable against the  debtor
will  be  realized,  and  is  in effect  transformed  into  the
effective  exercise  of the property right (a  receivable  made
fully  specific,  current,  and enforceable)  (see,  e.g.,  the
decision  on acceptability in the matters Malhous v. the  Czech
Republic   of   13  December  2000,  part  B;  Gratzinger   and
Gratzingerova v. the Czech Republic of 10 July 2002, §§ 68  and
72).
      In  view of the guarantees provided for the right to  use
property  and  protection  of  it  and  the  right  not  to  be
discriminated  against  in  the  peaceful  enjoyment  of  one’s
property, we can admit the conclusion that creditors authorized
under the Bankruptcy and Settlement Act could be only creditors
with  due  “monetary” receivables. Creditors with  non-monetary
receivables  can  not  be  referred  only  to  the   phase   of
proceedings after a declaration of bankruptcy, as, in contrast,
is  claimed  without further explanation by JUDr.  Zelenka  and
JUDr.  Marsikova  in  their commentary, p. 18.  Their  position
would  be  discriminatory  in  comparison  to  creditors   with
monetary  receivables, as it would unjustifiably advantage  the
protection  of  monetary property in contrast  to  non-monetary
property.  The  relevant  provisions  of  the  Bankruptcy   and
Settlement  Act  must  be interpreted in  accordance  with  the
guaranteed  rights  of all creditors. The  contested  sentence,
which  expressly  recognizes the  right  to  appeal  against  a
decision  to  deny  the  application  for  bankruptcy  due   to
insufficient  assets only to creditors with  receivables  of  a
monetary nature, disadvantages creditors who can document  only
a   non-monetary  receivable.  This  introduces  an  inequality
between  the  creditors  under  the  contested  provision,   an
inequality   which   is  not  reasonably   justified   and   is
discriminatory. In view of the explicitly stated condition of a
receivable   being   monetary,  there  is   no   room   for   a
constitutional interpretation. Z. Krcmar, in his commentary  to
this  Act, also reached an analogous conclusion concerning  the
discriminatory  nature  of  the  contested  sentence  in   this
context,  although  he  did apply it in  the  present  petition
(Krcmar,  Z.:  The Bankruptcy and Settlement Act, IFEC  Prague,
2000, p. 38).
       Therefore,   for   the   abovementioned   reasons,   the
Constitutional  Court under § 70 par.  1  of  the  Act  on  the
Constitutional  Court, as amended by later regulations,  annuls
the  contested § 12a par. 5 second sentence, of the  Bankruptcy
and  Settlement Act, expressed by the word “monetary,”  due  to
inconsistency  with Art. 1 of the Additional  Protocol  to  the
Convention  for the Protection of Human Rights and  Fundamental
Freedoms  and  Art. 14 of the Convention for the Protection  of
Human  Rights  and Fundamental Freedoms, as  of  the  day  this
judgment  is  promulgated  in  the  Collection  of  Laws.   The
remaining  part  of  the petition is denied,  in  view  of  the
abovementioned reasons (§ 70 par. 2 of the Act).

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

Brno, 24 June 2003




Dissenting Opinion
of  Constitutional Court judge Eliska Wagnerova to the judgment
of 24. June 2003, file no. Pl. US 44/02

I  do not agree with the majority opinion insofar as it did not
grant the petition to annul § 12a par. 5 second sentence of Act
no.  328/1991 Coll., on Bankruptcy and Settlement, as  amended,
in  its  full extent. On the contrary, I agree with the reasons
stated  in  the  judgment concerning the  unreasonableness  and
discriminatory  nature  of  differentiating  receivables   into
monetary  and  non-monetary. In other words, I agree  with  the
evaluation   of  substantive  law  aspects  of  the   contested
provisions,  but  I  have  reservations  about  evaluating  the
equality of the position of parties to specific proceedings  in
a purely procedural sense.
      The Constitutional Court reviewed the contested provision
in  the  form  of  specific review of norms, as proceedings  on
review  of a norm were opened at the instigation of the Supreme
Court  (thus, it was not a matter of abstract review of a norm,
as  the judgment states, in the sense of classification used by
European  legal scholarship – see, e.g. Cappeletti/Ritterspach,
Die   gerichtliche  Kontrolle  der  Verfassungsmassigkeit   der
Gesetze  in rechtsvergleichender Sicht, JoR 1071 or Ch. Starck,
Verfassungsgerichtsbarkeit in Westeuropa, 1986). In my view, it
is necessary to agree with the Supreme Court that the contested
provision  violates  the  principle of procedural  equality  in
certain  specific proceedings, contained in Art. 37 par.  3  of
the  Charter  of Fundamental Rights and Freedoms, because  this
case  concerns  the  procedural  right  of  parties  to  single
specific proceedings. As the judgment says, the states  of  the
court proceedings at the first level and the appeal level  must
be  seen  as  a  whole, and a segment of  the  parties  to  the
proceedings has the possibility to exercise its rights only  in
part  of the proceedings, without the possibility of filing  an
appeal.
      For this reason, the arguments contained in judgment  Pl.
US  19/02 concerning Art. 96 par. 1 of the Constitution can not
be  used.  If  the  Constitutional  Court,  in  that  judgment,
concluded  that the then-contested provision of the  Bankruptcy
and  Settlement  Act was unconstitutional  on  the  grounds  of
conflict with Art. 96 par. 1 of the Constitution, the  more  so
does  the  unconstitutionality of the provision reviewed  today
come  to the forefront, if it is inconsistent with Art. 37 par.
3  of the Charter. The subjective law contained therein, though
for purposes of reviewing norms transferred into the form of  a
principle, by which a norm is measured, strengthens the  effect
of applying this principle. It is evident that a court decision
made  with  the application of the contested provision  can  be
cast in doubt before the Constitutional Court in proceedings on
a constitutional complaint, which will raise the objection that
the court has interfered in subjective law arising from Art. 37
par. 3 of the Charter.
      If  a  “legal norm” contained in Art. 37 par.  3  of  the
Charter takes both forms, i.e. both the form of a principle and
the  form  of  a  subjective right,  Art.  96  par.  1  of  the
Constitution  is limited only to expression in the  form  of  a
principle, with no subjective right standing behind it. And  if
a   contested  norm  is  inconsistent  with  such  a  provision
contained in the constitutional order, it must be subjected  to
a  much  stricter test than in a case where the contested  norm
conflicts  merely  with  a  principle  representing   only   an
objective right.
      Paradoxically, the majority opinion increased the  circle
of  addressees of the contested legal norm (creditors) who will
be  in  an  unequal  position  with other  parties  (particular
applicants) of bankruptcy proceedings who exercise their rights
in   such  proceedings  at  two  levels.  In  my  opinion,  the
Constitutional  Court has thus not only failed  to  remove  the
unconstitutionality of the contested legal  framework,  as  the
Supreme  Court proposed, but by slightly turning the  angle  of
view at the substantive law aspect of the contested legal norm,
which  the Supreme Court did not share or raise, re-formed  the
contested legal norm.

Brno, 7 July 2003