U-I-95/95

Reference no.:
U-I-95/95
ECLI:
ECLI:SI:USRS:1997:U.I.95.95
Act:
Measures for the Rehabilitation of the Economic Situation of TAM Maribor d.d. and their Dependent Companies and Avtomontaže AM BUS d.o.o., Ljubljana Act (Official Gazette RS, no. 20/95 and 70/95) (ZSTAMAB), para. 2 of article 6.
Operative provisions:
The provision of the second paragraph of article 6 of the Measures for the Rehabilitation of the Economic Situation of TAM Maribor d.d. and their Dependent Companies and Avtomontaže AM BUS d.o.o., Ljubljana Act, according to which claims of the Institute for Pension and Invalidity Insurance against TAM Maribor d.d. to a level of 698,520,780 tolars and against Avtomontaže AM BUS d.o.o., Ljubljana, to a level of 100,247, 558 tolars are converted into capital shares in each of the cited companies, is not in conflict with the Constitution .
Abstract:
The Republic of Slovenia founded the Institute for Pension and Invalidity Insurance of Slovenia as a public institute for providing pension and invalidity insurance in conformity with article 50 of the Constitution . The Pension and Invalidity Insurance Act determined sources of financing its activities, and the state (founder) is competent to determine the level of funds, the Institute is thus restricted to forming proposals for determining the levels of individual sources.

The Institute for Pension and Invalidity Insurance of Slovenia has the status of a legal person and has jurisdiction for independently administering and managing the funds obtained on the basis of statutorily defined sources.

By the statutorily compulsory conversion of debts into capital shares, the legislator did not abolish the rights of the Institute for Pension and Invalidity Insurance of Slovenia which it obtained with the falling due of these debts, but transformed its rights obtained under civil law into capital. By the conversion of debts into corporate rights, the legislator encroached on sources from which pension and invalidity insurance is regularly financed, and thus on the initiator's right independently to administer and manage these resources.

Since the state as founder of the Institute is responsible for its operation and for balancing the level of sources of funds for financing pension and invalidity insurance with the needs of those entitled and the financial capacities of those liable, and since as founder it has subsidiary responsibility for the obligations of the Institute, the legislator did not violate the Constitution (article 2) by the conversion, the legislation of which was dictated by the public interest (in order to prevent the bankruptcy of debtors and in order to retain the majority of jobs of the debtors' employees).

The Institute for Health Insurance of Slovenia is a person in civil law and is not meant to carry out activities on the market in order to obtain income. The legislator did not thus violate article 74 of the Constitution by the legislating of compulsory conversion.

The impugned provisions of the statutory transformation of the initiator's obligation rights into corporate rights do not have retroactive effect, but future effect. The impugned provision of the law did not prevent and did not make more difficult the validation of anticipated rights of those entitled to mandatory health insurance, so the legislator did not violate article 155 of the Constitution with the legislation of the provision of the second paragraph of article 6 of the Measures for the Rehabilitation of the Economic Situation of TAM Maribor d.d. and their Dependent Companies and Avtomontaže AM BUS d.o.o., Ljubljana Act. In a case in which a measure of the legislator would negatively affect the guaranteeing of pension and invalidity insurance, the state, on the basis of articles 50 and 51 of the Constitution, is bound to make up the deficiency from public funds, even though this would exceed the committed budgeted item.

The constitutionality of the impugned provision ZPIZ must be assessed from the point of view of those reasons which dictated it at the time of its legislation, and not from the point of view of later events that the legislator could not envisage. In the case in which after the implementation of the conversion of debts, the bankruptcy of the debtor was instituted, this has no significance for the judgement of the constitutionality of the measure.

The impossibility that a creditor exact payment of debts due from a debtor is a result of a constitutionally permissible conversion, and with it the extinguishing of debts, so it is not in conflict with article 23 of the Constitution .
Password:
Public institute, encroachment on statutory independence and its source of financing.
Healthcare, constitutional law concern of the state in guaranteeing basic healthcare.
Companies, converting debts into corporate rights.
Right to legal protection.
Public institute, founders' rights.
Retroactivity, statutory provisions, on anticipated rights of legal subjects.
Constitutional Court, assessment of suitability of a statutory arrangement.
Principle of a state ruled by law and a social state.
Right to social security.
Free business initiative.
Concurring opinion of a constitutional judge.
Dissenting opinion of a constitutional judge.
Legal basis:
Constitution , articles 2, 23, 50, 74 and 155
Pensions and Invalidity Act (ZPIZ), articles 6, 219, 220 and 275.
Institutes Act (ZZ), article 49
Constitutional Court Act (ZUstS), article 21
Document in PDF:
The full text:
U-I-95/95
1.12.1997

DECISION

At a session held on 4 December 1997, in a proceeding for assessing constitutionality commenced on the initiative of the Institute for Pension and Invalidity Insurance of Slovenia, represented by Slavica Gašperlin, the Constitutional Court

reached the following decision:

The provision of the second paragraph of article 6 of the Measures for the Rehabilitation of the Economic Situation of TAM Maribor d.d. and their Dependent Companies and Avtomontaže AM BUS d.o.o., Ljubljana Act (Official Gazette RS, no. 20/95 and 70/95), according to which claims of the Institute for Pension and Invalidity Insurance against TAM Maribor d.d. to a level of 698,520,780 tolars and against Avtomontaže AM BUS d.o.o., Ljubljana, to a level of 100,247, 558 tolars are converted into capital shares in each of the cited companies, is not in conflict with the Constitution.

Reasoning

A.

1. The initiator mutatis mutandis impugns the second paragraph of article 6 of the Measures for the Rehabilitation of the Economic Situation of TAM Maribor d.d. and their Dependent Companies and Avtomontaže AM BUS d.o.o., Ljubljana Act (hereinafter: ZUS TAM), according to which claims of the Institute for Pension and Invalidity Insurance against TAM Maribor d.d. amounting on 31 December, 1994 to a level of 698,520,780 tolars and against Avtomontaže AM BUS d.o.o., Ljubljana, to a level of 100,247, 558 tolars are converted into capital shares or shares in these businesses. The initiator believes that by the legislation of the cited provision of ZUS TAM, the legislator worsened the position of the initiator as bearer and implementor of pension and invalidity insurance in the Republic of Slovenia and thus the possibility of realising the right to social security of citizens. The impugned statutory provision in the initiator's opinion is in conflict with the principle of a state ruled by law and a social state (article 2 of the Constitution ). Up to 31 December 1994, the initiator had the right to exact payment of contributions due from the debtors by judicial means, and the legislator is claimed to have prevented this with the impugned provision, which is claimed to have been in conflict with article 155 of the Constitution. In conflict with article 74 of the Constitution, the legislator is claimed to have forced the initiator to accept capital shares in the cited business subjects.

2. According to the claims of the initiator, the contributions of insurees and employers is their main source of finance in the structure of all income. The regular payment of contributions and control and exacting debts are, according to the initiator's claims, important factors for collecting funds which ensure them liquidity and undisturbed business. The legislator is claimed to have already worsened the financial position of the initiator with interventions to date on the system of pension and invalidity insurance, when it deferred payment of contributions due from individual persons liable. Introducing measures whereby liabilities due are changed into capital shares may according to the initiator's claims lead to a state which could threaten the implementation of the system of pension and invalidity insurance.

3. The initiator proposes that the Constitutional Court accept the initiative and annul the impugned second paragraph of article 6 ZUS TAM.

4. The National Assembly (hereinafter: DZ) did not respond to the claims of the initiator.

B.

5. The Constitutional Court accepted the initiative and in view of the fulfilment of the conditions of the fourth paragraph of article 26 of the Constitutional Court Act (Official Gazette RS, no. 15/94 - hereinafter ZUstS) immediately continued with deciding on the matter itself.

6. In the second paragraph of article 50, the Constitution charges the state with arranging pension and invalidity insurance and care for its operation. In order to carry out these obligations, the Pension and Invalidity Insurance Act was adopted (Official Gazette RS, no. 12/92, 5/94 and 7/96 - hereinafter: ZPIZ) and with it the initiator was founded (first paragraph of article 6 ZPIZ) as a public institute. According to the second paragraph of article 6 ZPIZ, the initiator is a public person, and its rights, obligations and responsibilities regulated by ZPIZ and statute. Resources for the provision of pension and invalidity insurance are guaranteed to the initiator by insurees and employers, and for some categories of insurees determined by law, funds or partial funds are provided by the state from the budget. In addition to the resources cited, the activities of the initiator are also financed by funds from the privatisation of companies, from ownership of property and management of housing, from the restitution of property on the basis of denationalisation and from funds obtained from other sources (article 219 ZPIZ). In conformity with article 220 ZPIZ, the initiator is obliged to create business and obligatory reserves funds. The obligatory reserve fund is intended to cover possible losses which could be established with final accounts, and its amount must be at least 30% of the planned monthly expenditure for the payment of receipts from pension and invalidity insurance. The initiator is entitled independently to administer and manage the funds intended for pension and invalidity insurance. According to article 275 ZPIZ, the initiator has jurisdiction to propose the level of contribution for pension and invalidity insurance, to decide on policies for adjusting payments under pension and invalidity insurance, to adopt a programme of activities and a financial plan, to introduce measures for ensuring the material base and possibilities for professional retraining and the employment of invalids, to decide on business policies of the capital and housing funds, to determine measures and criteria for forming and the level of payments for the recreation of invalids, etc.

7. By the legislation of the impugned provision, the legislator encroached on the initiator's right in the framework of administering and managing funds for pension and invalidity insurance to exact contributions due from TAM Maribor and AM BUS Ljubljana and to decide itself on possible postponement, reduction or write-off of claims against these companies.

8. With the encroachment on the rights of the initiator independently to administer and manage funds for pension and invalidity insurance, or by encroachment on sources of funds determined by statute for financing pension and invalidity insurance, the legislator did not violate the Constitution . In article 50, the Constitution charges the state with care for the arrangement and operation of pension and invalidity insurance. In order to carry out this constitutional task, the state founded the initiator with ZPIZ, as a public institute, and with the same regulation defined sources of funds for financing its activities. In this, as founder, it retained the right to determine the level of individual sources; the initiator was restricted in this to forming proposals only. The right of a founder to decide on the level of individual sources of funds derives from its role, determined in article 50 of the Constitution, and from article 49 of the Institutes Act (Official Gazette RS, no. 12/91 - hereinafter: ZZ), according to which it has (subsidiary) responsibility for the obligations of an institute. Such a legal position of the state as founder of the initiator enables concurrent adjustment of sources of funds which is dictated on the one hand by the extent of rights of claimants under pension and invalidity insurance under ZPIZ, and on the other hand material circumstances created by those liable to payment of contributions. This relation is partially balanced through the compulsory reserve fund, which the initiator is obliged to create under ZPIZ. Disproportionalities which exceed the capacities of settling the initiator's debts from the reserve fund, the state has the right and obligation to arrange through specifying sources of funds or through its own responsibility to settle the initiator's obligations. From the described nature of the relation between the state as founder of the initiator and the initiator, it thus follows that the state may in a case in which it has well-founded material reasons for this, with individual measures encroach on sources of funds determined for financing the initiator's public service in the sphere of pension and invalidity insurance and in connection with this, on its statutory independence.

9. The legislator had well-founded material reasons for the measure legislating the impugned provision, and it did not in this behave arbitrarily. In addition, the measure which the legislator legislated with the compulsory conversion of the initiator's claims into capital shares in the two companies is not disproportionate with the aim which it outlined. From the finding of the board of management of the company TAM Maribor and the findings of the Government as proposer of ZUS TAM, it derives that the unsettled debts of TAM Maribor and its dependent companies and AM BUS Ljubljana, exceeded by several times the real market value of their assets and that four fifths of the real estate assets of the company TAM and its dependent companies are burdened with mortgages in favour of bank creditors. Together with such a legal state of assets of the company TAM and the fact that the costs of the bankruptcy procedure and the claims of workers under the heading salaries are paid first from the bankruptcy mass, creditors whose claims were not protected by mortgage would not have any real possibility of receiving payment of their claims. The Government, as proposer of the impugned law, considered that it was not possible to expect that the indebted subject could cover established losses and pay uncovered obligations with business and income within a period of five to ten years. At the same time, the Government ascertained that on the basis of market demand for the products of the company TAM, a possibility existed that work could be retained in the company TAM for around 2,200 workers, and in the company AM BUS Ljubljana, 500 workers (Reporter no. 7/95). By the conversion of the initiator's claims into shares in the company TAM or into business shares of the company AM BUS Ljubljana, and with other measures determined by the impugned law, the legislator attempted to prevent the introduction of bankruptcy of over- indebted companies. The prevention of the introduction of bankruptcy was in the public interest, in order to rehabilitate the business position of these companies and preserve the jobs of the majority of the workers employed in these companies. At the same time, the legislator prevented the imminent danger that in the event of execution or in the case of bankruptcy, the initiator would lose the rights which it had in relation to the overindebted companies under the heading unpaid contributions.

The legislator thus prescribed the measures in the public interest, so it is not in conflict with the principle of a state ruled by law and a social state (article 2 of the Constitution ). In the case of the bankruptcy of the company TAM or AM BUS, namely, the initiator would, as creditor of undisputed claims due, undoubtedly have had a more favourable position in law than in the case of being a corporate claimant, but from the balance data it is clear that it could not realistically expect to validate its claim in a bankruptcy procedure.

10. At the same time, it is necessary to find that the initiator drew attention only to the possibility that in the event of the legislator continuing with prescribing such measures, its financial position could worsen, with nothing did it show that because of the measure legislating the impugned provision, the guaranteeing of rights under pension and invalidity insurance would be prevented or made difficult. The Constitutional Court does not doubt that the impugned measure affected the initiator's current financial position, but in view of the actual circumstances which dictated its legislation, this influence is only apparent. Because of the complete unliquidity and overindebtedness of the debtors, the claims of the initiator at the time of introduction of the measure were unenforceable.

The state is bound to cover from public funds a possible deficit which, as a result of unenforceable claims, or because of the legislation of the measure of conversion of claims, is claimed to be shown in guaranteeing the rights of claimants under pension and invalidity insurance under ZPIZ, even if this would overstep the specific funds devoted in the budget for covering the initiator's debts.

11. The Circuit Court in Mariborinstituted bankruptcy proceedings against the company TAM and its daughter companies on 3 July 1996, but this fact cannot affect the judgement of constitutionality of the impugned provision. It is similarly unimportant for an assessment of constitutionality of the disputed provision whether at the time of instituting bankruptcy, the conversion had been realised or not. The constitutionality of the disputed measure must be assessed from the point of view of those reasons which dictated it at the time of its legislation, and not from the point of view of later events, which the legislator could not envisage.

12. The initiator is a person of public law intended to perform a public service in the sphere of pension and invalidity insurance. As a person of civil law, it does not have a profit- making character and is not meant to perform activities on the market in order to make a profit. Its rights, obligations and responsibilities are defined by law or by statute, so the legislator, by the legislation of the impugned provision did not violate the initiator's rights under article 74 of the Constitution .

13. In the first paragraph of article 155, the Constitution forbids the retroactivity of legal acts. Only individual provisions of a law may have retroactive effect, provided that this does not encroach on the obtained rights of legal subjects, and if this is required in the public interest. The retroactive effect of individual statutory provisions may only be determined by the law itself. There is retroactive effect of a regulation or its provisions when a moment prior to the introduction of the law is determined for the commencement of its use, and such an effect of a regulation or its provisions encroaches on the legal position or legal facts which were created at the time of validity of a previous statutory norm. The constitutional principle of confidence in the law (article 2 of the Constitution) does not only protect obtained rights but to a specific extent also anticipated rights. In the case being heard, therefore, the Constitution protects also rights under pension and invalidity insurance determined by ZPIZ on the basis of article 50 of the Constitution . By the impugned provision, the legislated conversion of the initiator's obligation rights does not have retroactive effect but forward effect. The initiator did not show that because of the measure possibilities were curtailed of guaranteeing rights under pension and invalidity insurance and that it cannot thus implement them in the extent and according to the content determined in ZPIZ.

There would only be an encroachment on the anticipated rights of the initiator and the rights of claimants to pensions and invalidity payments which would be in conflict with the Constitution in a case in which, because of the effect of the impugned provision of ZUS TAM, the initiator could not guarantee payment of pensions and invalidity payments to the extent and at the level determined by ZPIZ, and the state could not guarantee the initiator the difference lacking. From the above mentioned, it derives that the impugned provision ZUS TAM is not in conflict with article 155 of the Constitution and also not with article 50 of the Constitution .

14. The initiator claims that the legislator prevented it from enforcing repayment of debts due from the companies TAM and AM BUS by the legislated compulsory conversion of debts, but does not state what kind of activities it had already performed in this connection prior to the introduction of the measure. As has already been said, the legislator had well-founded reasons for the legislation of the conversion and did not behave in conflict with the Constitution . The impossibility of a court enforcement of the claims is thus only a consequence of the conversion of extinguished debts, and thus does not signify an encroachment on the initiator's constitutional right to judicial protection under article 23 of the Constitution .

15. The Constitutional Court did not find in favour of the asserted violations of the Constitution and therefore decided as is evident from the judgement proper of this decision.

C.

16. The Constitutional Court adopted this decision on the basis of article 21 of ZUstS, composed of: president Dr. Lovro Šturm and judges Dr. Peter Jambrek, Dr. Tone Jerovšek, Mag. Matevž Krivic, Mag. Janez Snoj, Dr. Janez Šinkovec, Franc Testen, Dr Lojze Ude and Dr. Boštjan M. Zupančič. The resolution was adopted by six votes against three. Judges Jambrek, Jerovšek and Šturm voted against. Judge Krivic gave a concurring, and judge Jerovšek a dissenting opinion.


P r e s i d e n t:
Dr. Lovro Šturm
Type of procedure:
review of constitutionality and legality of regulations and other general acts
Type of act:
statute
Applicant:
Institute of Pension and Invalidity Insurance of Slovenia
Date of application:
30.05.1995
Date of decision:
04.12.1997
Type of decision adopted:
decision
Outcome of proceedings:
establishment – it is not inconsistent with the Constitution/statute
Document:
AN01392