DECISION OF THE CONSTITUTIONAL COURT OF UKRAINE

of June 10, 2003 No. 11-rp/2003

On case on the constitutional representation of 47 People's Deputies of Ukraine concerning compliance of the Constitution of Ukraine (constitutionality) of the Law of Ukraine "About introduction of the moratorium on forced realization of property" (case on the moratorium on forced realization of property)

Case No. 1-11/2003

NAME OF UKRAINE

Constitutional court of Ukraine as a part of judges of the Constitutional Court of Ukraine:

Selivon Nikolay Fedosovich - the chairman,

Evgrafov Pavel Borisovich,

Ivashchenko Vladimir Ivanovich,

Kostitsky Mikhail Vasilyevich,

Malinnikova Lyudmila Fiodorovna,

Mironenko Alexander Nikolaevich,

Nemchenko Vasily Ivanovich,

Wheaten Valery Grigoryevich,

Rozenko Vitaly Ivanovich,

Savenko Nikolay Dmitriyevich,

Victor Egorovich's buffoons,

Timchenko Ivan Artemyevich - the judge-speaker,

Silent Vladimir Pavlovich,

Tkachuk Pavel Nikolaevich,

Chubar Lyudmila Panteleevna,

Shapoval Vladimir Nikolaevich,

with the assistance of Svintsitsky Anatoly Vladimirovich - the representative for the order of the person of law on the constitutional representation; Matveev Vladimir Osipovich - the representative of the Verkhovna Rada of Ukraine, the People's Deputy of Ukraine, the vice-chairman of Committee of the Verkhovna Rada of Ukraine concerning economic policy, management of the national economy, property and investments; Selivanov Anatoly Aleksandrovich - the Permanent representative of the Verkhovna Rada of Ukraine in the Constitutional Court of Ukraine; the representatives recruited in consideration of the case: The president of Ukraine - Nosov Vladislav Vasilyevich - the Permanent representative of the President of Ukraine in the Constitutional Court of Ukraine, the Miller Oleg Vladimirovicharukovoditel Departament of institution policy of the Ministry of Economy and European Integration of Ukraine; The Cabinet of Ministers of Ukraine - Pavlikovsky Lada of Anatolyevna - the Deputy State secretary of the Ministry of Justice of Ukraine; The Cabinet of Ministers of Ukraine and Fund of state-owned property of Ukrainyparfenenko Dmitry Nikolaevich - the vice-chairman of Fund of state-owned property of Ukraine, Barabash of Andrey Nikolayevichanachalnik of department of normative legal support and codification of Legal management of Fund,

N2864-III considered at plenary meeting case on the constitutional representation of 47 People's Deputies of Ukraine concerning compliance of the Constitution of Ukraine (constitutionality) of the Law of Ukraine "About introduction of the moratorium on forced realization of property" of November 29, 2001 (In? домост? Verkhovno ї For the sake of Ukra§ni, 2002, N 10, the Art. 77).

Reason for consideration of the case according to Articles 39, 40 Laws of Ukraine "About the Constitutional Court of Ukraine" became the constitutional representation of 47 People's Deputies of Ukraine.

The basis for consideration of the case according to Articles 71, to 75 Law of Ukraine "About the Constitutional Court of Ukraine" is availability of dispute on compliance of the Constitution of Ukraine (constitutionality) of the Law of Ukraine "About introduction of the moratorium on forced realization of property".

Having heard the judge-speaker Timchenk I. A., Svintsitsky A. V. explanations., Matveeva V. Y., Selivanova A. O., Nosov V. V., Melnik O. V., Pavlikovskaya L. A., Parfenenko D. M., Barabash A. M. and having researched case papers, the Constitutional Court of Ukraine established:

1. The person of law on the constitutional representation - 47 People's Deputies of Ukraine - appealed to the Constitutional Court of Ukraine with the petition to consider question concerning compliance of the Constitution of Ukraine of the Law of Ukraine "About introduction of the moratorium on forced realization of property" (further - the Law) which before enhancement of the mechanism of forced realization of property determined by the laws of Ukraine establishes the moratorium on application of forced realization of property of the state companies and economic societies in which authorized capitals the share of the state constitutes at least than 25 percent. People's Deputies of Ukraine consider such which do not answer the Constitution of Ukraine, Law provisions, in particular parts four of article 13 of the Constitution of Ukraine - all persons of law of property are equal before the law; parts three (in representation the part three is called part two) Article 42 - deprivation of subjects of business activity of "non-state pattern of ownership of opportunity to compete with the state companies and economic societies"; Article 50 - everyone has the right to the environment, safe for life and health, and to compensation of damage caused by violation of this right; Article 124 parts five - judgments are made by courts name of Ukraine and are mandatory in all territory of Ukraine.

Owing to operation of the specified Law, according to the person of law on the constitutional representation, there was situation in case of which the constitutional principle of equality of all persons of law of property and housekeeping is broken that is shown in exclusive protection of the rights of the state companies and economic societies with 25 percent part of state-owned property in their authorized funds in the form of their release from accomplishment of property obligations for benefit of the authorized persons including which were injured owing to wrongful activity of these companies. And this circumstance makes impossible implementation of judgments of property nature by the Public executive service and in production process of cases on bankruptcy concerning such state companies and economic societies.

2. In the letter in the Constitutional Court of Ukraine the Chairman Verkhovnoy For the sake of Ukraine noted that realization is right upon the demand of authorized persons of rather state company or economic society in which authorized capital there is share of the state which arises in case of accomplishment of certain works, the conclusion of civil agreements and so forth, can be limited (is delayed) if it is required by interests of the Ukrainian people and ensuring economic safety of the state.

The president of Ukraine considers that, having implemented the Law certain restrictions for compulsory acquisition of state-owned property, the state thereby exercised the right to own, use and dispose of the property and prohibited only certain ways of alienation of real estate units and other fixed assets of production of the companies. And the satisfaction of requirements of creditors, including on accomplishment of judgments, is possible at the expense of part of other property and non-property assets of the debtor.

The line item stated in explanations of the Chairman of the Verkhovna Rada of Ukraine, the President of Ukraine, and also the Cabinet of Ministers of Ukraine comes down to the fact that temporary introduction of the moratorium on forced realization of property does not contradict the Constitution of Ukraine.

In the letter of the Ministry of Economy and European Integration of Ukraine it is that the moratorium was imposed as temporary measure for the period before legal settlement of procedure for carrying out forced realization of property, in particular before introduction of corresponding changes in legislative the act on the brought-up questions (the laws of Ukraine "About enforcement proceeding", "About recovery of solvency of the debtor or recognition by his bankrupt".

The chairman Fonda of state-owned property of Ukraine specifies that the Law does not exempt the state companies from property liability as for operation of the moratorium creditors are given opportunity to meet the requirements for the realization account of current assets of the specified companies, and also property which is not used in productive activity of the company. Operation of the moratorium does not extend to that part of property assets of the company which are considered as current assets, namely: money and their equivalents which are not limited in use; other assets intended for realization or consumption during operating cycle or within twelve months from day of creation of balance.

Besides, the Chairman Fonda of state-owned property of Ukraine specifies, article 50 of the Law of Ukraine "About enforcement proceeding" provides priority of the address of claim to property of the debtor: first of all - at the expense of the debtor and other values; in the second - on other property belonging to the debtor, except for property on which according to the law penalty cannot be imposed.

Representatives of the person of law on the constitutional representation and the Verkhovna Rada of Ukraine, and also the representatives of the President of Ukraine recruited in consideration of the case, executive bodies at plenary meeting supported the line items on the brought-up question stated respectively in the constitutional representation and in written explanations in the Constitutional Court of Ukraine.

3. Solving dispute of the questions which are rather brought up in the constitutional representation, the Constitutional Court of Ukraine proceeds from the following.

3.1. For the period before enhancement of the mechanism of forced realization of property determined by the laws of Ukraine the moratorium on application of forced realization of property of the state companies and economic societies in which authorized capitals the share of the state constitutes at least than 25 percent is established by the law (further the companies).

The law as about it it is specified in its preamble, is aimed at providing economic safety of the state, non-admission of destruction of complete property complexes of the state companies, protection of interests of the state during realization of property of economic societies in which authorized capitals the share of the state constitutes at least than 25 percent.

Under the Constitution of Ukraine (Article 17) ensuring economic safety of Ukraine is one of the most important functions of the state, case of all Ukrainian people, as well as providing social orientation of economy (Article 13).

Forced realization of property of the companies in the Law is understood as alienation of real estate units and other fixed assets of production which provide maintaining productive activity by these companies, and also shares (parts, shares) which state in property of other economic societies owns and are contributed to authorized capitals of these companies if such alienation is performed in the way:

- addresses of claim to property of the debtor according to decisions which are subject to accomplishment by the Public executive service;

- sales of the property in production process of cases on bankruptcy determined by the relevant articles of the Law of Ukraine "About recovery of solvency of the debtor or recognition by his bankrupt" concerning recognition of the debtor by the bankrupt, opening of the liquidating procedure and sale of property of the company.

3.2. Bases of legal regulation of the relations of property and its form are established by the Constitution of Ukraine. The fundamental law of Ukraine, in particular, determines subjects and objects of the property right (Articles 13, of 41, of 142, of 143), equality of persons of law of property before the law (Article 13) is fixed, guarantees of the property right and obligation of owners (Articles 13, 41), regulations that the property shall not be used to the detriment of the person and society (Article 13).

The legal regime of property, according to Item 7 parts one of article 92 of the Constitution of Ukraine, is determined only by the laws of Ukraine which establish its features. At the legislative level the relations of property are governed by the Civil code of the Ukrainian SSR, the laws of Ukraine "About property", "About the companies in Ukraine", "About entrepreneurship", "About economic societies" and so forth.

The constitutional court of Ukraine in subitem 3.1 of motivation part of the Decision of February 12, 2002 of N3-rp/2002 on the case of power industry noted that according to the Fundamental Law of Ukraine the state similarly protects all patterns of ownership, and each of them can have the features connected with legislatively certain conditions and the bases of origin or termination of the property right. This legal line item of the Constitutional Court of Ukraine is based that only the laws of Ukraine determine legal regime of property at the heart of which - the constitutional provisions concretized in the laws which may contain also certain features of legal regime of these or those patterns of ownership. One of such features of legal regime of state-owned property is also the moratorium on property compulsory acquisition of the companies established for certain period.

3.3. Apparently from case papers, need of adoption of law is caused by imperfection of the mechanism of forced realization of property.

On contents of article 2 of the Law the moratorium does not extend to alienation of personal and other estate of the companies that does not provide maintaining their productive activity, and also for sale of real estate units and other means of production which provide productive activity of debtor enterprise in the procedure of its sanitation (article 20 of the Law of Ukraine "About recovery of solvency of the debtor or recognition by his bankrupt".

The person of law on the constitutional representation considers that introduction to the moratorium on forced realization of property of the companies contradicts provisions of article 13 of the Constitution of Ukraine concerning equality of all persons of law of property before the law. The constitutional court of Ukraine notes that legal status of persons of law of different patterns of ownership is based on the single constitutional principles. At the same time legal status of each of them has features which characterize this or that person of law of property as such. The state provides protection of the rights of all persons of law of property as in what is general for them, and in its features according to the laws which operation extends to them.

Considering stated, the Constitutional Court of Ukraine came to conclusion that provisions of the Law on introduction of the moratorium on forced realization of property of the companies do not contradict article 13 of the Constitution of Ukraine.

3.4. The person of law on the constitutional representation considers that the Verkhovna Rada of Ukraine, having implemented the Law the moratorium on forced realization of property, broke part third of article 42 of the Constitution of Ukraine as other persons of law of property owing to adoption of law are deprived of such form of protection of the interests during realization of property as establishment of the moratorium on its compulsory acquisition.

According to part three of article 42 of the Constitution of Ukraine the state provides protection of the competition in business activity, does not allow monopoly abuse in the market, illegal restriction of the competition and unfair competition. Questions of the economic competition in Ukraine are regulated by number of the laws, including the Law of Ukraine "About protection of the economic competition" of January 11, 2001 which determines the competition as competition between subjects of housekeeping for the purpose of obtaining thanks to own achievement of benefits over other subjects of housekeeping owing to what consumers, subjects of housekeeping have opportunity to choose between several sellers, buyers, and the certain subject of housekeeping cannot determine conditions of turnover of goods in the market.

The constitutional court of Ukraine considers that the Law does not contain provisions which illegally limit the competition, allow unfair competition in business activity or monopoly abuse in the market or dispossess other persons of law on protection in case of realization of their property.

3.5. People's Deputies of Ukraine consider that the Law was adopted also in defiance of the constitutional right of the personality affirmed in article 50 of the Constitution of Ukraine on the environment and compensation, safe for life and health, of the harm done by violation of this right as based on article 1 of the Law the citizen loses opportunity to meet the requirements at the expense of property of the companies which rather forced realization the moratorium is imposed.

However it is impossible to agree with such approval as the Law does not exempt the company from liability for the harm done to citizens. In case of violation of their right to the environment, safe for life and health, harm first of all at the expense of property to which the moratorium concerning its forced realization does not extend, and in the cases determined by the legislation - due to ecological insurance or means of the Government budget of Ukraine can be compensated.

3.6. As it is specified in the constitutional representation, establishment of the moratorium on the address of claim to property of debtors of the state companies and economic societies does "actually optional" accomplishment of judgments of property nature by them. Besides, according to the person of law on the constitutional representation, at the same time there is impossible implementation of judgments of property nature and in production process of cases on bankruptcy of rather state companies and economic societies that contradicts provision of part five of article 124 of the Constitution of Ukraine according to which judgments are mandatory in all territory of Ukraine.

The constitutional court of Ukraine recognizes that the Law does not violate the constitutional requirement of obligation of judgments. The decisions of the courts about property compulsory acquisition of the companies made before adoption of law are not cancelled by it, they remain in force, and their accomplishment stops before enhancement of the mechanism of forced realization of property. I.e. The law establishes the term of their accomplishment extended for this period.

Considering it, statement of the person of law on the constitutional representation is unreasonable that the disputed Law contradicts article 124 of the Constitution of Ukraine.

Proceeding from given and being guided by Articles 147, 150 Constitutions of Ukraine, Articles 51, of 61, of 63, of 65, 73 Laws of Ukraine "About the Constitutional Court of Ukraine", the Constitutional Court of Ukraine solved:

1. Recognize such which answers the Constitution of Ukraine (is constitutional), the Law of Ukraine "About introduction of the moratorium on forced realization of property" of November 29, 2001 by N2864-III.

2. The solution of the Constitutional Court of Ukraine is mandatory in the territory of Ukraine, final and cannot be appealed.

The solution of the Constitutional Court of Ukraine is subject to publication in "In? to snik Konstituts? yny to Ukra§ni's Court" and in other official publications of Ukraine.

 

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