A Case Initiated regarding Restrictions t Payment of Guaranteed Compensation to the Board Members of a Credit Institution
On 10 January 2014 the 1st Panel of the Constitutional Court initiated a case “On the Compliance of Para 4 of Section 17 of Deposit Guarantee Law with the first sentence of the Satversme of the Republic of Latvia”.
Contested Norm
Para 4 of Section 17 of Deposit Guarantee Law provides that the guaranteed compensations shall not be paid for deposits of shareholders of a deposit taker, who have qualifying holdings in the deposit taker, the chairperson and members of the council, board of directors, the head of the internal audit service, the company controller and other employees of a deposit taker who are authorised to conduct the planning, management and control of the operations of the credit institution and who are liable for it. The norm is contested insofar it applies to the board members of the credit institution.
Norm of Higher Legal Force
The first sentence of Article 91 of the Satversme: “All human beings in Latvia shall be equal before the law and the courts.”
The Facts
The case is initiated on the basis of the constitutional complaint submitted by Svetlana Ovčiņņikova. The applicant had been a board member at the share company AS “Latvijas Krājbanka”, she had deposits in this bank. After the operations of the bank were suspended, the applicant had been unable to receive the guaranteed compensations for the deposits; the decision to refuse disbursement of compensation to her had been founded upon the contested norm.
The applicant holds that this norm violates the principle of equality and disproportionally restricts her fundamental rights. The norm might have a legitimate aim, i.e., it perhaps promotes appropriate actions by the board member of the credit institution, not permitting unavailability of deposits. However, the norm affects both those members of the board, who by their actions have facilitated or at least have not prevented that the deposits become unavailable, and those members of the board, who are responsible for such aspects in the functioning of a credit institution, which do not affect deposits and their unavailability, and who had neither the information, nor the authorisation to prevent the occurrence of unavailability of deposits.
Legal Proceedings
The Constitutional Court has asked the Saeima to provide a reply on the facts of the case and legal substantiation by 10 March 2014.
The term for preparing the case is 10 June 2014. The Court shall decide upon the procedure and the date for hearing the case after the case has been prepared.
Linked case: 2014-02-01