Speech by the President Ineta Ziemele in bilateral meeting with the Judges of Constitutional Court of Austria
Professor, PhD Ineta Ziemele
President of the Constitutional Court of the Republic of Latvia
Vienna 2 July 2019
Safeguarding the rule of law and democracy – the role of the Constitutional Court
Ladies and Gentlemen!
Recent judicial pronouncements concretizing the rule of law
A country with strong constitutional checks and balances is more immune to internal and external challenges. The Constitutional Court has defined in its judgments that by ensuring the rule of law the Court ensures and builds the public trust in state institutions and the state as such. At a historical juncture where Latvia finds itself the issue of public trust in state institutions is very important.
The Court has also repeatedly explained that in a state governed by the rule of law the Constitutional Court ensures a proper balance between the rights of a person on the one hand and the rights and interests of the society on the other. At times, it also has to balance the conflicting rights of two individuals. When such conflicts are in the end decided by an independent judiciary, the trust in the functioning of the rule of law is ensured.
The Court in its recent case law has fine-tuned the principle that the legislative process must be such that the society becomes convinced that the chosen solution represents the best possible compromise in a democracy. Or, in other words, laws must be lawful. They must build confidence in the society that the need to restrict the fundamental rights has been carefully assessed. Thus, the legislative process must not only comply with the formal requirements as concerns the procedure of adopting the law, but it must also promote the confidence of persons in the state and law.
Role of the Constitutional Court
Every year the Court receives between 300 and 400 applications. Absolute majority of these applications come from individuals. Among the initiated cases over 50-60% originate from constitutional complaints of individuals concerning fundamental rights. An average of 20 decisions and judgments are delivered every year. Roughly half of the judgments declare the contested legal norm incompatible with Satversme.
In terms of statistics an important observation emerges. It is the people who have been moving the process of strengthening the rule of law in Latvia because an absolute majority of the cases that the Court had initiated over the years have been based on constitutional complaints by individuals. The other important players are the Ombudsman, the courts (administrative and general jurisdiction), 20 or more members of the Parliament which typically come from the opposition, and the municipalities. As to the 20 members of the Parliament, it can be argued that the application to the Constitutional Court is a strategy with a political purpose. Be it as it may, it is a sign of a mature democracy where political disagreements in the Parliament are settled in a form of a decision rendered from the point of view of the Constitution by an independent Court.
I believe that one of the delicate issues in a system with a constitutional court is the relationship between the court and the legislator. Of course, the principle of separation of powers which is at the basis of a state governed by the rule of law predetermines that the law which binds everyone in the society can only be adopted by a legislator freely elected in periodic elections.
The Court has emphasized that it cannot replace the legislator; however, the Court has not only the right but also an obligation to remedy such situations that are legally contrary to the Constitution. It is the responsibility of the Constitutional Court to ensure that the legal system is compliant with the Constitution. In fact, it is another element of the rule of law, i.e., the compliance of all legal norms with the Constitution.
I would like to mention several recent cases that have strengthened the rule of law in Latvia.
1. Case on compulsory lease where the Court asserted the importance of the judgments of the Court
2. Case on public access to the information concerning the remuneration of state officials and employees where the Court disclosed the principle of good legislation as part of the rule of law.
3. Case on regulations adopted by the Bank of Latvia which raises a more classical aspect of rule of law, i.e., the competence and legitimacy to issue generally binding norms by other constitutional bodies than the legislator.
1. Case on compulsory lease[1]
1.1. Facts of the case
Contested norms in the Law on Privatisation of State and Local Government Residential Buildings stipulated that if the parties cannot agree otherwise, the land plot lease fee for the owner of a privatised apartment or an artist’s workshop, would be 3 to 5 % a year of the cadastral value of land.
The applicants noted that they owned either land plots or undivided shares of land plots on which multi-apartment buildings that belonged to other persons were situated. The relationship of compulsory land lease exists between the applicants and the owners of the aforementioned buildings. It is stated in the applications that the contested norms significantly decrease the revenue of the landowners from their property and that such restriction on the right to property is not proportionate.
The legal relationship of compulsory lease of divided property has existed in the Latvian legal system for a long period of time – for more than 25 years. This regulation on the legal relationship was created in the course of land reform and privatisation of state and local government property when the property rights to land of the former owners or their successors was restituted; however, prior to restoring the independence of the Republic of Latvia multi-apartment buildings had been built on the land in question.[2]
The legislator has chosen the compulsory land lease as a measure for regulating the legal relationship between the landowners and the owners of the building located on the land. In view of the particularities of the specific legal relationship and the economic situation in the state, the legislator decided to regulate the compulsory lease fee by legal acts, i.e., differently from free market relationships, to control the way in which the landowner used his property.[3]
1.2. Assessment of the Court
The Constitutional Court ruled that the contested norms which as of 1 January 2018 decreased the amount of compulsory land lease are incompatible with Article 105 of the Constitution.
In general, the Constitutional Court could not conclude from the legislative materials for adopting the contested norms that the Parliament had duly assessed the impact of the restriction on fundamental rights of the land owners as well as the apartment owners and had indicated arguments to the effect that the intended solution complied with the case-law of the Constitutional Court.[4]
The Constitutional Court found that prior to adopting the contested norms the legislator did not have at its disposal due analysis and substantiation of the constitutionality of the restriction of the land owners’ right to property included in these norms in view of the already available Constitutional Court’s case-law on the matters of compulsory lease. Thus, the contested norms cannot be considered as having been adopted in proper legislative procedure.[5]
The Court underscored: if in the course of adopting a legal norm, arguments were presented regarding its possible incompatibility with legal norms of a higher legal force or the case-law of the Constitutional Court regarding the respective matter, the legislator should have examined these arguments.[6]
2.Case on public access to information concerning the remuneration of state officials and employees[7]
2.1. Facts of the case
The case was initiated with respect to norms that envisage that information about the remuneration of officials and employees of state and local government institutions must be published on the homepages of these institutions and kept there for at least eight years.
The case was initiated on the basis of an application by the employees of several state‑established higher education institutions.
The norms in question were contested against the Article 96 of the Constitution that provides everyone for the right to inviolability of his or her private life, home and correspondence. The applicants submitted that publication of such information and its prolonged availability on the internet, which identifies a particular person and characterises his financial situation restricts their fundamental right to privacy.
Applicants alleged that the contested provisions had not been introduced by a law adopted in due procedure, because in the adoption of the law the objections made by the President of the State, as well as other institutions and persons against such a restriction of fundamental rights had not been taken into account. The restriction was said to lack a legitimate aim because the same aim of transparency of state budget expenditure could be attained also by other, less restrictive, means, for example by not indicating the name of the employee, but only the position. Moreover, the legitimate aim for keeping the information on the homepage of the institution of higher education for so long was said to be unsubstantiated and incomprehensible. Likewise, it was alleged that the restriction was not proportionate. Even if the contested norms had a legitimate aim, they would not be appropriate for reaching such an aim. The applicants stated that the benefit gained by society did not exceed the harm inflicted on the applicants’ rights and lawful interests.
2.2. Assessment of the Court
The Court adopted a judgment declaring that the contested norms did not comply with the Constitution.
The Court reiterated that the right to privacy that is stipulated in the Article 96 of the Constitution covers also personal data of individuals. This provision has to be interpreted in connection with the General Data Protection Regulation of the EU[8] which defines such handling of data as processing of personal data.[9] However, before assessing the proportionality of the contested norms, the Court first assessed if these norms have been adopted in a proper procedure. The Court concluded that the contested norms had not been adopted in a proper procedure and used the opportunity to clarify the principle of good legislation.
The Court noted that the Parliament, when exercising its legislative rights, enjoys freedom of action to the extent that the general principles of law and other norms of the Constitution are not violated. Rule of law is one of the general principles of law derived from the notion of a democratic state, and it imposes certain requirements on the legislative process.[10]
The Court reiterated that the legislative process must respect the general principles of law, the procedural preconditions and requirements regulated in the Constitution and the Rules of Procedure of the Parliament, also regarding the process of adoption of the draft laws related to the state budget (the contested norms had been adopted in the package of laws relating to the annual state budget).[11]
The Court also reaffirmed that from the principle of a state governed by the rule of law in a democratic state certain requirements arise with regard to the legislative process. The legislator must assess the compliance of the envisaged legal norms with the legal norms of a higher legal force, including the Constitution, international law and EU legislation. The legislator has to harmonise the draft legislation with the already existing legislation in force in accordance with the principle of a rational legislator.[12]
In the course of the adoption of the legal norm, the legislator has to evaluate the arguments regarding the possible non-compliance of this norm with the case-law of the Constitutional Court on the respective issue.[13]
In general, the legislator should examine draft laws openly during sessions of the Parliament and meetings of Parliamentary commissions, including the possibility of consultation and ensuring that members can exercise their right to speak and vote.[14]
The intended legal framework should, where appropriate, be based on explanatory studies. When creating new legal norms, the legislator must, especially in cases where fundamental rights are restricted, where necessary, rely on social impact assessment studies of the planned legal framework. Legislator must consider the measures necessary for the implementation and enforcement of this legal framework, as well as the risk forecasts expressed by the specialists in the field.[15]
It is precisely the discussion of the proposals that makes it possible to assess whether there are alternatives to the proposed legal framework. In addition, the legislator must inform the public about the intended legal framework in a timely and appropriate manner.[16]
The Court also endorsed that these requirements to the legislator are the main, but not the only, elements of the principle of good legislation derived from the principle of rule of law. Among other things, the existence of such requirements ensuring good legislation make it possible to understand why restrictions on fundamental rights adopted by the legislator are permissible in a democratic state based on the rule of law.[17]
According to the preamble of the Constitution, the activities of the state, inter alia the legislative process, should be aimed at sustainable development. Namely, the legislative process must focus on the development of a sustainable legal framework.
The branches of power of a democratic state based on the rule of law, including the legislator, must seek to increase the trust of the people in the state and the law, as well as contribute to the understanding of the democratic process so that it grows. Compliance with the principle of good legislation contributes to this objective.[18]
The Court stated that given that the contested norms were included in the package of laws relating to the annual state budget, the Parliament had all rights to do so; however, only in respect of legislation that relates to the corresponding financial year and is closely linked to the use of public finances. If a draft law or proposal do not meet these criteria, the Parliament should exclude it from the said package of laws. The Court concluded that because the contested norms did not correspond to these criteria, they could not have been adopted in the package of laws relating to the state budget.[19]
In addition, the Court reiterated that, given the fact that the President had previously objected to the intended legal regulation, the Parliament could not seek to avoid the review of the constitutionality of this legal framework and compliance with the internal the legal system by including the contested norms in another draft law. Such a situation would not be in line with the principle of good legislation, the principle of interinstitutional loyalty and the principle of good faith. It would also contradict the principle of interinstitutional loyalty derived from the principle of separation of powers and the institutions of a democratic state under the rule of law must respect each other. Therefore, during the adoption of the contested norms, the Parliament was obliged to evaluate the objections previously raised by the President of the State against amendments with similar provision, but to another law (State Administration Structure Law). Moreover, in accordance with the principle of good lawmaking, this assessment should be such as to make it possible to identify the reasons for the rejection of the President’s objections. The Parliament had not assessed the said objections in substance at all.[20]
The Court also concluded that the Parliament did not assess the contested draft norms against the new provisions of the General Data Protection Regulation to avoid the situation when a provision is not in conformity with the principle of loyalty of the EU Member States and makes it difficult to achieve the aims of the EU. The loyalty of the Member States, in accordance with Article 68 of the Constitution, has to strengthen democracy. The scope of the principle of good lawmaking includes respect for the law of the European Union that strengthens democracy, thus contributing to the adoption of a sustainable legal framework.[21]
Finally, the Court concluded that the principle of good legislation was not observed during the adoption of the contested norms. The above infringements by the Parliament were to be regarded as essential in the present case and its context. The Court pointed out that there were reasonable doubts that if the legislator had assessed the objections and opinions expressed in the legislative procedure in connection with the restriction of the fundamental rights contained in the contested norms, a different decision might have been taken as a result of the legislative process. Thus, the Court concluded that the restriction of the fundamental rights included in the contested norms had not been provided by a law that was adopted in due procedure and hence it did not comply with Article 96 of the Constitution.[22]
3.Case on regulation of the Bank of Latvia[23]
3.1. Facts of the case
The case was on the compliance of paras. 19 and 20 of the Bank of Latvia Regulation no. 141 of 15 September 2014 “Requirements Regarding Prevention of Money Laundering and Financing of Terrorism in Buying and Selling Foreign Currency Cash” with Articles 1 and 64, as well as the first sentence of Article 91 of the Constitution.
The applicant was a company, which as part of its business activities was engaged in buying and selling foreign currency.
The contested norms that provide that companies that are trading in cash have the obligation to identify the client, were said to apply only to capital companies engaged in trading cash, but not to apply to credit institutions which provide identical services.
In the sector of trading cash two following groups can be discerned: 1) capital companies which are engaged in trading cash; 2) credit institutions which provide the service of trading cash as one type of financial services.[24]
The applicant argued that the feature which points to the fact that both the aforementioned groups are in similar and according to concrete criteria comparable circumstances should be linked to the operations of both groups in the same market, i.e., that of services of trading cash. Moreover, the subjects belonging to both groups are companies which should be regarded as competitors.[25]
Bank of Latvia argued that the aforementioned groups of persons are not in similar and according to concrete criteria comparable circumstances, since within the system for preventing money laundering and financing of terrorism credit institutions are always separated from other financial institutions. This separation is based upon the assessment of the risk of money laundering and financing of terrorism.[26]
3.2. Assessment of the Court
The Bank of Latvia had adopted the contested norms which envisaged differential treatment, on the basis of Article 47(3) of Law “On the Prevention of Money Laundering and Terrorism Financing”. The Applicant submitted that the Bank of Latvia does not have the right to issue external regulatory enactments; but, if such a right were recognised, then the Bank of Latvia, in adopting the contested norms, had exceeded the authorisation granted in law. Thus, the Constitutional Court had to establish whether differential treatment has been established by law.[27]
To assess whether the contested norms had been adopted in a proper procedure, the Court had to verify whether the right of the Bank of Latvia as an autonomous institution of public administration to issue external legislative acts follows from the Constitution.[28]
Among others, the principle of separation of powers which manifests itself as division of the state power into legislative, executive and judicial power follows from the concept of a democratic republic enshrined in Article 1 of the Constitution.[29] Separation of powers has the purpose of ensuring a person’s fundamental rights and a democratic state order, guaranteeing a system of checks-and-balances between institutions of state power.[30] The principle of separation of powers must ensure the implementation and protection of the fundamental values of a democratic state governed by the rule of law.[31] [32]
Pursuant to Article 64 of the Constitution the right to legislate, i.e., the right to regulate an issue by law, is vested into the Parliament, as well as into the people, in the procedure and scope established by the Constitution. The case under review pertains only to the issue of the actions by the Parliament as the legislator. Pursuant to the principle of separation of powers, the adoption of laws on issues of state policy falls within the legislator’s competence. To ensure an effective exercise of the state power, exceptions to the principle of the legislator’s supremacy are permissible. These exceptions follow from the Constitution. Their purpose is to make the legislative process more effective, as well as to respond faster and more adequately to the needs for amendments to legal regulation.[33]
The applicant argued that the regulation established by the contested norm comprises issues the deciding on which falls solely within the legislator’s competence. Whereas the Bank of Latvia noted that, in adopting the contested norms, it had acted within the limits of competence granted by the legislator.[34]
When acting as a legislator, the Parliament does not have the right to transfer to the executive the competence to decide upon issues which according to the Constitution fall only within the exclusive competence of the Parliament itself.[35] The legislator, in authorising the executive power to elaborate regulation on a particular issue, may not cause a risk that the balance between the legislative power and the executive power might tip to the side of the executive power to the extent that it might jeopardize the principle of separation of powers and, thus, also the essence of a democratic state order.[36] In deciding on authorisation, the legislator has the duty to consider the significance of the particular issue and connection thereof with the fundamental rights.[37] The Bank of Latvia may not adopt regulations on issues which have not been decided in full by the legislator itself. Thus, the Constitutional Court had to establish which issues in the particular field had been decided by the legislator itself.[38]
The Bank of Latvia has the right to adopt external legislative acts only insofar this right has been transferred to it by law. The Bank of Latvia has the right to issue a legislative act only if the legislator has clearly defined the content and limits of the authorisation. Legislative acts that are subordinated to law may not include legal norms which cannot be considered as being supplementary aid for implementing a norm of a law. The legislator has the right to authorise the Bank of Latvia or other autonomous institutions of public administration to elaborate the regulation necessary for implementing a law only insofar as it specifies the requirement of the law or establishes a procedure for implementing it.[39]
The executive power also must understand the authorisation granted by the legislator not only as one concrete, laconic legal norm, but as the very substance and purpose of the law. The purpose of the authorisation should be understood as what the legislator has attempted to achieve by granting the right to regulate the particular issue.[40]
The Court concluded that the Bank of Latvia in adopting the contested norms had acted contrary to the principle of separation of powers and had exceeded the authorisation granted by the legislator. Hence, the contested norms had been issued ultra vires and were incompatible with Articles 1 and 64 of the Constitution.[41]
If the contested norms have been issued ultra vires, then the differential treatment that they comprise has not been established by law and therefore is incompatible with the first sentence of Article 91 of the Constitution.
Conclusions: rule of law and democracy
The whole point of rule of law is to ensure that there is no abuse of power, that there are equal opportunities and that proper attention is paid to those who are vulnerable. The essence of democracy is a free human being. It is therefore that it is extremely important to what standard as concerns the legislative process and the setting of restrictions on human rights do we hold the legislature. We are aware that it is delicate and that constitutional courts in some way are part of political social processes but it is imperative that there is such a body that takes a final decision.
Constitutional Court in its recent judgment reiterated that knowledge of a state language embraces all the democratic debate of an individual and is a precondition of a democratic participation for all of the society. Involvement in civil society, non-segregation, democratic participation are common goods.
Although an effective exercise of a person’s rights and freedoms is best possible under democracy, the exercise of these personal rights must not be directed against the independence of the state and the principles of a democratic state under the rule of law. Thus, the state may need to take special measures to guarantee the stability and effectiveness of its democratic system. The Court recognised this need in a case in which it had to resort to the concept of militant democracy.
[1] Judgment of 12 April 2018 in case no. 2017-17-01 on compliance of Article 1 of the Law “Amendments to the Law on Privatisation of State and Local Government Residential Buildings” adopted on 1 June 2017, and of the Law “Amendments to the Law on Land Reform in the Cities of the Republic of Latvia” adopted on 22 June 2017, with Articles 1 and 105 of the Constitution of the Republic of Latvia.
[2] Case no. 2017-17-01, para. 21.1.
[3] Case no. 2017-17-01, para. 21.1.
[4] Case no. 2017-17-01, para. 22.3.
[5] Case no. 2017-17-01, para. 22.3.
[6] Case no. 2017-17-01, para. 22.3.
[7] Judgment of 6 March 2019 in case no. 2018-11-01 on Compliance of Article 3(9.2)(1) and (2) of the law “On Remuneration of Officials and Employees of State and Local Government Authorities” with Article 96 of the Constitution of the Republic of Latvia.
[8] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)
[9] Case no. 2018-11-01, paras. 16.1, 16.2.
[10] Case no. 2018-11-01, paras. 18, 18.1.
[11] Case no. 2018-11-01, paras. 18, 18.1.
[12] Case no. 2018-11-01, paras. 18, 18.1.
[13] Case no. 2018-11-01, paras. 18, 18.1.
[14] Case no. 2018-11-01, paras. 18, 18.1.
[15] Case no. 2018-11-01, paras. 18, 18.1.
[16] Case no. 2018-11-01, paras. 18, 18.1.
[17] Case no. 2018-11-01, para. 18.1.
[18] Case no. 2018-11-01, para. 18.1.
[19] Case no. 2018-11-01, para. 18.2.
[20] Case no. 2018-11-01, paras. 18.3.1, 18.3.
[21] Case no. 2018-11-01, paras. 18.4.1, 18.4.2.
[22] Case no. 2018-11-01, para. 18.5.
[23] Judgment of 2 March 2016 in case no. 2015-11-03.
[24] Case no. 2015-11-03, para. 18.
[25] Case no. 2015-11-03, para. 18.
[26] Case no. 2015-11-03, para. 18.
[27] Case no. 2015-11-03, para. 20.
[28] Case no. 2015-11-03, para. 21.1.
[29] See the judgement of 1 October 1999 in case no. 03-05(99), para. 1 of the motives part.
[30] See, for example, the judgement of 20 December 2006 in case no. 2006-12-01, para. 6.1.
[31] See the judgement of 18 December 2013 in case no. 2013- 06-01, para. 11.
[32] Case no. 2015-11-03, para. 21.
[33] Case no. 2015-11-03, para. 21.1.
[34] Case no. 2015-11-03, para. 22.
[35] See the judgement of 14 October 2015 in case no. 2015- 05-03, para. 10.
[36] See Judgement of 11 January 2011 in Case No. 2010-40-03, Para 10.2
[37] See Judgement of 14 October 2015 by the Constitutional Court in Case No. 2015-05- 03, Para 10
[38] Case No. 2015-11-03, para 22.1.
[39] Case No. 2015-11-03, para 23.1.
[40] Case No. 2015-11-03, para 23.2.
[41] Case No. 2015-11-03, para 24.