A judgment in the case on norms of the Credit Institutions Law regulating transfer of credit institutions has been adopted
The Constitutional Court has adopted a judgment in the case No. 2010-60-01 “On Compliance of Article 59.2, Article 59.3, Article 59.4, Article 117 (4) Indent 3, Article 173 (4) and Article 185 (1) Prim of the Credit Institutions Law with Article 1, Article 90, Article 91, Article 92 and Article 105 of the Satversme of the Republic of Latvia”.
Article 1 of the Satversme provides that Latvia is an independent democratic republic; Article 90 of the Satversme provides that everyone has the right to know his or her rights; Article 91 ensures equality before the law and the courts, whilst Article 92 establish the right to a fair court. According to Article 105 of the Satversme, everyone has the right to own property.
The contested norms establish conditions, according to which credit institutions are transferred to possession or use of other persons. The norms provide, among the rest, for the necessity to receive permission from the Financial and Capital Market Commission to implement transfer of a credit institution, as well as the fact that in certain cases transfer of credit institutions cannot be recognized as null and void. Members of the 9th Saeima who submitted the application indicated that the only aim of adopting of the contested norms was to ensure the possibility for a credit institution to avoid fulfilling a part of its liabilities.
The Constitutional Court has recognized that the contested norms do comply with Article 1, Article 90, Article 92, and Article 105 of the Satversme of the Republic of Latvia:
- As to the opinion of the applicant, namely, that the contested norms infringe the principle of legitimate expectations, the Court established that no transitional period has been established for introduction of the norms. However, no transfer of any credit institution took place at the moment when the norms were adopted; therefore, the legislator did not have the necessity to establish a transitional period for persons to be able to adapt to the new procedure. Consequently, in such cases, protection of substantial interests of the State and observance of the freedom of action of the legislator are of greater importance.
- As to a possible breach of Article 90 of the Satversme, the Court indicated that this article establishes the right of a person to receive information on his or her rights and duties, as well as the duty of the State to ensure this information. The contested norms have been proclaimed according to procedure established by law and they are available to public. However, the right of a creditor to receive information on a civil law transaction does not pertain to the scope of Article 90 of the Satversme.
- However, as to the opinion of the applicant regarding unclear character of the contested norms, the Court indicated that a norm shall be recognized as unclear only if its true sense cannot be established by applying various methods of interpretation. The content of the contested norms can be clearly understood in the result of applying interpretation methods.
- As to compliance of the contested norms with Article 92 of the Satversme, the Court concluded that the aim of the restriction (transfer of credit institutions cannot be recognized as null and void) is to ensure finitude of transfer of a credit institution at crisis, which, for its part, protects rights of other persons and welfare of the society. The contested norms ensure that a credit institution experiencing financial problems is transferred to another operating credit institution that would be able to ensure solvency of the first and prevent it from returning to the previous state.
- The court also indicated that the contested norms do not prohibit persons, in case of an unlawful infringement, to address a court; neither infringe they the right of persons to receive compensation and recover losses if the unlawful case is proven.
- When assessing compliance of the contested norms with Article 105 of the Satversme, the Court concluded that the norms do not establish expropriation of property without indemnification or deprivation of any guaranteed income from the categories of persons mentioned in the application. Likewise, the contested norms do not provide that any party of transaction, be it a transferer or receiver of a company, would be entitled not to fulfill any liabilities of its liabilities. Consequently, the contested norms do not restrict the right to own property.
The Court terminated proceedings in respect to compliance of the contested norms with Article 91 of the Satversme because possible inequality of persons might occur in the result of application of the contested norms. The jurisdiction of the Constitutional Court permits assessing only a legal norm as such, rather than compliance of action of persons who applied the norm with the Satversme. Consequently, this part of the claim is incommensurate with the jurisdiction of the Constitutional Court.
The judgment of the Constitutional Court is final and not subject to appeal. It has already come into effect.
Linked case: 2010-60-01