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Content updated: 21-05-2019 13:01

The provision of the Code of Civil Procedure providing for no distribution of litigation costs arising from application to the Constitutional Court, the administrative court, or the Court of Justice of the European Union ruled unconstitutional

14-12-2018

By its ruling passed today, the Constitutional Court has recognised that Paragraph 6 of Article 93 of the Code of Civil Procedure is in conflict with Paragraph 1 of Article 30 (“A person whose constitutional rights or freedoms are violated shall have the right to apply to a court) and Paragraph 1 of Article 109 (“In the Republic of Lithuania, justice shall be administered only by courts”) of the Constitution, as well as with the constitutional principles of a state under the rule of law and justice.

The Supreme Court of Lithuania, the petitioner, was considering a civil case initiated by a closed joint-stock company against a state enterprise. In that case, the Supreme Court of Lithuania decided to refer to the Court of Justice of the European Union (CJEU) for a preliminary ruling regarding the interpretation of the provisions of European Union law. Following the preliminary ruling by the CJEU, the civil proceedings were resumed and the Supreme Court of Lithuania ruled in favour of the applicant. The applicant filed an application claiming the payment of the litigation costs incurred in the preliminary ruling proceedings before the CJEU, including the fees of representation by a lawyer and travel costs.

The Constitutional Court noted that, stemming from Paragraph 1 of Article 109 of the Constitution and the constitutional principles of a state under the rule of law and justice, the prohibition for the legislature to establish such a legal regulation that would deny the powers of a court to administer justice means, among other things, that the legislature must not establish a legal regulation that would preclude a court from resolving, in a fair manner, the issue of the distribution of litigation costs among the parties where the court takes into account all circumstances of the case. The fair distribution of the costs among the parties depends on the good faith of the parties, the reasonableness and necessity of the costs incurred by them, the extent to which their claims have been satisfied after the court has settled the case, and other relevant circumstances, among other things, on whether certain costs are incurred due to the fact that the court, seeking to adopt a fair, reasoned, and well-founded decision in the case, fulfils its constitutional duty to apply to the Constitutional Court or another court with jurisdiction for assessing whether a legal act applicable in the case is in compliance with higher-ranking legislation, or its constitutional duty to refer to the CJEU for a preliminary ruling.

In this context, the Constitutional Court also noted that the right of a person, as entrenched in Paragraph 1 of Article 30 of the Constitution, to apply to a court for the defence of violated rights or freedoms, implies the legitimate expectation that the court, after the impartial and fair examination of the case, will adopt a reasoned and well-founded decision, among other things, regarding the distribution of litigation costs. In order to ensure the effective implementation of the right of a person to the judicial defence of his/her violated constitutional rights and freedoms, it is imperative that a court, with a view to adopting a fair, reasoned, and well-founded decision in the case, in the event that it has doubts regarding the compliance of a legal act applicable in the case with higher-ranking legislation or doubts regarding the interpretation or validity of the applicable EU law, properly fulfils its constitutional duty to apply to the Constitutional Court or another court with jurisdiction for assessing whether a legal act applicable in the case is in compliance with higher-ranking legislation, or properly fulfils its constitutional duty to refer to the CJEU for a preliminary ruling. No legal regulation governing the distribution of the costs incurred by the parties as a result of the above-mentioned application by the court may create the preconditions for the unjustified restriction of the right of a person, which is consolidated in Paragraph 1 of Article 30 of the Constitution, to apply to a court for the defence of his/her violated constitutional rights and freedoms.

Having summarised the impugned and related legal regulation, the Constitutional Court held that Paragraph 6 of Article 93 of the Code of Civil Procedure laid down the imperative provision under which litigation costs were not distributed among the participants in proceedings where such costs were incurred as a result of application by the court to the Constitutional Court, the EU competent judicial authority, or the administrative court, including those costs incurred as a result of the said application by the court that were necessary and reasonable. It was stated in the ruling that the impugned provision of the Code of Civil Procedure was an exception to the general rule, laid down in Paragraphs 1–3 of Article 93 of this Code, concerning the distribution of litigation costs among the parties; according to this general rule, the litigation costs incurred by the party in whose favour a decision is given are ordered to be paid by the other party in proportion to the part of the claims satisfied by the court. Under Paragraph 6 of Article 93 of the Code of Civil Procedure, the litigation costs arising from application by a court to the Constitutional Court, the EU competent judicial authority, or the administrative court were borne by the participant of the proceedings who had incurred them regardless of the extent to which the court had satisfied his/her claims, and irrespective of the circumstances referred to in Paragraph 4 of Article 93 of the Code of Civil Procedure – the procedural conduct of the parties and the reasons giving rise to the litigation costs.

In view of this, the Constitutional Court found the impugned legal regulation to preclude a court, taking into account all circumstances of the case, from fairly resolving the issue of the distribution of the costs incurred by the parties as a result of application by the court to the Constitutional Court or another court with jurisdiction for assessing whether a legal act applicable in the case is in compliance with higher-ranking legislation, or as a result of reference by the court to the CJEU, where, in deciding the said issue, the court takes into account, among others, the good faith of the parties, the reasonableness and necessity of the costs, and other significant circumstances, such as the importance of the questions referred to the CJEU for the legal system and the need for a preliminary ruling in order to solve the case under consideration.

Therefore, the Constitutional Court drew the conclusion that the impugned legal regulation had disregarded the prohibition, stemming from Paragraph 1 of Article 109 of the Constitution and the constitutional principles of a state under the rule of law and justice, on establishing a legal regulation that would deny the powers of courts to administer justice. The said legal regulation also denied the legitimate expectation implied by the right of a person, as entrenched in Paragraph 1 of Article 30 of the Constitution, to apply to a court for the defence of violated rights or freedoms, i.e. the legitimate expectation that the court, after the impartial and fair examination of the case, will adopt a reasoned and well-founded decision, among other things, regarding the distribution of litigation costs; thereby the impugned legal regulation created the preconditions for unreasonably restricting the said constitutional right of the person.

The Constitutional Court also interpreted that a court, considering a case, has the constitutional duty to apply to the Constitutional Court or another court with jurisdiction for assessing whether a legal act applicable in the case is in compliance with higher-ranking legislation in the event that it has doubts regarding the compliance of a legal act applicable in the case with higher-ranking legislation, among others (and primarily), with the Constitution, as well as the constitutional duty to refer to the CJEU for a preliminary ruling in the event that it has doubts regarding the interpretation or validity of the EU legal provisions applicable in the case.

The Constitutional Court noted that the duty, stemming from Paragraph 1 of Article 109 of the Constitution and the constitutional principle of justice, for a court to adopt a fair decision, among other things, implies its duty to follow law and apply it properly when examining a case. Thus, under the Constitution, in considering a case, a court should apply only those legal acts that are in compliance with the Constitution, while EU law should be properly applied in the areas regulated by EU law.

The Constitutional Court emphasised that Paragraph 2 of Article 110 of the Constitution provides that, in the event of doubts whether an applicable legal act (part thereof) passed by the Seimas, the President of the Republic, or the Government or adopted by referendum is in compliance with a higher-ranking legal act, among others (and primarily), with the Constitution, a court has the duty to apply to the Constitutional Court requesting it to assess the compliance of that legal act with the Constitution or laws. In addition, Paragraph 1 of Article 110 of the Constitution and the constitutional principles of the rule of law and a state under the rule of law entail that, once a court has doubts whether a legal act applicable in a case before it is in compliance with higher-ranking legislation, among others (and primarily), with the Constitution, in cases where the assessment of such a legal act against its compliance with the Constitution and laws is not assigned under the Constitution to the jurisdiction of the Constitutional Court, the said court has the duty to apply to the court (administrative court) exercising the jurisdiction to assess the compliance of this legal act with higher-ranking legislation.

The Constitutional Court also pointed out that, under Article 1 of the Constitutional Act on Membership of the Republic of Lithuania in the European Union, which is a constituent part of the Constitution, the Republic of Lithuania, as a Member State of the EU, shares with or confers on the EU the competences of its state institutions in the areas provided for in the EU founding Treaties to the extent that it would, together with the other Member States, jointly meet its membership commitments in those areas, as well as enjoy membership rights. Under Paragraph 2 of the said constitutional act, the norms of EU law are a constituent part of the legal system of the Republic of Lithuania; where it concerns the EU founding Treaties, the norms of EU law are applied directly, while in the event of the collision of legal norms, they have supremacy over the laws and other legal acts of the Republic of Lithuania. The Constitutional Court has also stressed that full participation by the Republic of Lithuania, as a Member State, in the EU is a constitutional imperative based on the expression of the sovereign will of the Nation; full membership by the Republic of Lithuania in the EU is a constitutional value. The constitutional imperative of full participation by the Republic of Lithuania in the EU also implies the constitutional obligation of the Republic of Lithuania to properly implement the requirements of EU law.

In view of this, the Constitutional Court held that, Paragraph 1 of Article 109 of the Constitution, the constitutional principle of justice, the constitutional imperative of full participation by the Republic of Lithuania in the EU, as well as Articles 1 and 2 of the Constitutional Act on Membership of the Republic of Lithuania in the European Union, give rise to the duty of a court, in order to properly apply the provisions of EU law in the particular case before it, to refer to the CJEU for a preliminary ruling in the event of doubts regarding the interpretation or validity of the said provisions of EU law.

The full text of this ruling of the Constitutional Court can be found on the website of the Constitutional Court at https://www.lrkt.lt/lt/teismo-aktai/paieska/135/ta1883/content.