![PDF ikona](fileadmin/Default_theme/Images/filetypes/pdf.png)
HEADNOTES
In
this case § 61 of Act no. 155/1995 Coll., on Pension Insurance, by
referring to an international agreement, imposes a different manner of
calculating the amount of an early pension, depending on the criterion
of the location of a citizen’s employer’s registered address. If a Czech
citizen (with permanent residence in the CR) was employed in the Slovak
Republic at that time, in terms of pension insurance this is considered
“employment abroad,” which has negative consequences for his pension
entitlements in the Czech pension insurance system.
The Constitutional Court considers differentiation between citizens of
the Czech Republic, which is based on a fiction that employment in the
Slovak Republic of the then joint Czechoslovak state is “employment
abroad,” to be discriminatory, as it is not supported by “objective” and
“reasonable” grounds.
The CR’s international obligations vis-à-vis the SR, whose effects are
also aimed into the past an into the legal situations of their citizens,
which were created and developed inside Czechoslovakia and the
Czechoslovak legal order, must respect certain constitutional bounds.
The complainant met the condition of a minimum number of years of
insurance required by § 31 para. 1 of Act no. 155/1995 Coll. in the time
when the joint Czechoslovak state existed. The Constitutional Court
believes that application of an international agreement on the basis of §
61 of that Act can not lead to retroactively denying him fulfillment of
that condition. This is inconsistent with the principle of legal
certainty and the foreseeability of law, which form the very basis of
the concept of a state governed by the rule of law. The concept of a
state governed by the rule of law must be understood not in isolation,
but in connection to the constitutional requirement of respect for the
rights and freedoms of the human being and the citizen, as is stated in
Art. 1 para. 1 of the Constitution. This constitutional requirement of
respect for rights and freedoms must also be preserved when applying an
international agreement, all the more so because international law
itself honors the principle that “ratification of international
agreements does not affect more advantageous rights, protection and
conditions provided and guaranteed by domestic legislation” (see
Constitutional Court judgment of 24 May 1995, published under no.
164/1995 Coll.).
The
Constitutional Court is not authorized to evaluate the
constitutionality of an already ratified international agreement. On the
other hand it is required to be guided by Article 88 para. 2 of the
Constitution, under which the judges of the Constitutional Court are
bound in their decision making only by the constitutional order and the
statute under par 1. The Agreement between the CR and the SR on Social
Security is not an agreement which could be considered a component of
the constitutional order (see Constitutional Court judgment of 25 June
2002, published under no. 403/2002 Coll.). It is also not an agreement
under Art. 10 of the Charter, in the version before the
“Euro-amendment.” As its preamble clearly indicates, its purpose was not
to secure the fundamental rights and freedoms of citizens. The parties
were guided by “the desire to regulate their relationships in the area
of social security.” Therefore, the Constitutional Court can not accept
as constitutional an application of one of its provisions which would
result in a situation which is not in accordance with the Charter or the
Constitution as parts of the constitutional order.
CZECH REPUBLIC
CONSTITUTINAL COURT
JUDGMENT
IN THE NAME OF THE CZECH REPUBLIC
A
Panel of the Constitutional Court decided, in the matter of the
petitioner J.H., on a constitutional complaint against a verdict of the
High Court in Olomouc of 21 March 2002, ref. no. 2 Cao 249/2001-27, with
the participation of the High Court in Olomouc as a party to the
proceedings and the Czech Social Security Administration, Prague 5, as a
subsidiary part to the proceedings, as follows:
The verdict of the High Court in Olomouc of 21 March 2002, ref. no. 2 Cao 249/2001-27, is annulled.
REASONING
In
a timely filed constitutional complaint, which reached the
Constitutional Court on 20 June 2002 and otherwise met the conditions
prescribed by Act no. 182/1993 Coll., on the Constitutional Court, as
amended by later regulations (the “Act on the Constitutional Court”),
the complainant contested the verdict of the High Court in Olomouc cited
in the heading. He claims that the High Court’s decision did not
respect the principle of observing obligations arising from accepted
international agreements, denied the complainant the right to material
security in old age in an amount corresponding to the length of the
insured period, and the level of income and taxes and insurance premiums
deducted from it, and thereby violated Article 1 of the Charter of
Fundamental Rights and Freedoms (the “Charter”), which guarantees
citizens’ equal rights. He petitioned the Constitutional Court to annul
the contested verdict.
For
its discussion and decision in the matter, the Constitutional Court
requested the file of the Regional Court in Brno, file no. 41 Ca
201/2000, from which it determined the following:
The
Czech Social Security Administration in Prague (the “subsidiary party”)
by its decision of 22 November 1999, with effect as of 1 July 1999,
assigned the complainant a partial early old age pension of CZK 494 per
month (with effect as of 1 August 1999 it increased it to CZK 514 per
month), on the grounds that the amount of the pension corresponds to the
period insured in the Czech Republic from 1 August 1995 to 30 June
1999. The complainant then applied for an increase in the pension,
asking that his period of employment in the joint state until 31
December 1992 also be included. On 26 October 2000 the subsidiary party
rejected his application on the grounds that periods of employment until
31 December 1992 are, under the Agreement on Social Security concluded
between the CR and the SR under no. 228/93 Coll. (the “Agreement”),
Slovak periods. The complainant filed an appeal against this decision.
The Regional Court in Brno, by a verdict of 6 June 2001, ref. no. 41 Ca
201/2000-15, confirmed the contested decision. It based its legal
opinion on the determination that the complainant worked from 16 October
1962 to 31 July 1995 for an employer whose registered address was in
the territory of the Slovak Republic. Thus, it considered this period to
be a period insured abroad. It concluded that the subsidiary party
proceeded correctly in setting the level of pension, when it applied
Article 11 of the Agreement and § 31 of the Act on Pension Insurance. It
pointed out that if the Agreement did not exist, the complainant could
not be assigned an early old age pension at all, as he would not have
met the required insured period in the Czech Republic, and Act no.
100/1988 Coll., which is in effect in the Slovak Republic, does not
recognize an early old age pension.
The
complainant appealed against the decision of the Regional Court in
Brno. He referred to the conclusions of the Supreme Court of the CR
reached in proceedings under file no. 30 Cdo 120/98 and stated that if
the Agreement did not exist, the subsidiary party would consider the
Czechoslovak employment period as its own. He pointed to the fact that
the Slovak side can not address the question of whose the “Czechoslovak
period” is, as it does not recognize early old age pensions. He pointed
out that the court did not apply in its decision the principle “not to
damage, by the existence of the Agreement, a citizen who is a permanent
resident of a state, under the legal regulations of which his
entitlement would be more advantageous without the Agreement.”
The
High Court in Olomouc confirmed the contested decision in its verdict
of 21 March 2002, ref. no. 2 Cao 249/2001-27. It stated that the
subsidiary party, in calculating the complainant’s early old age
pension, proceeded in accordance with the Act on Pension Insurance and
the Agreement. It found no defects in its procedure when calculating the
partial early old age pension. In the opinion of the appeals court, the
complainant’s other request can not be granted. The High Court pointed
out that after the division of the CSFR the complainant’s employment
period from 16 October 1962 to 31 July 1995 must be considered a period
of employment abroad, as it was performed in the territory of the Slovak
Republic. The period until 31 December 1992 can not be separated from
this period as a Czechoslovak period, as this is not possible under
either the Act on Pension Insurance or the Agreement. Under the Act on
Pension Insurance it would be possible to include as the complainant’s
insured period for calculating the pension amount only the time from 2
April 1959 to 31 December 1959, from 1 January 1960 to 15 October 1962,
and from 1 August 1995 to 30 June 1999, i.e. a total of 10 years and 214
days. The court concluded that if only domestic regulations are
applied, the complainant would have no entitlement to an early old age
pension, as he would not meet the condition of the necessary insured
period, i.e. a period of at least 25 years. According to the appeals
court, the Supreme Court verdict file no. 30 Cdo 120/98 can not be
applied to this case. The beginning assumption for the procedure
contained in this verdict was the fact that the applicant, unlike the
complainant, met the required insured period in the territory of the
Czech Republic. The High Court reached the final conclusion that the
subsidiary party’s decision denying the complainant’s application for a
change in the amount of the partial early old age pension due to lack of
fulfillment of the conditions of § 56 of the Act on Pension Insurance,
with the application of Art. 11 and 20 of the Agreement, is a “lawful
decision.”
The complainant
contested the decision of the High Court in Olomouc in the adjudicated
constitutional complaint. In it he points to the advantages and
disadvantages of the criterion set in the Agreement for determining
which of the states parties will bear the expenses for pensions during
the period of the joint state, as being the location where the employer
had its registered address as of the day the federation was divided. He
understands the fact that his entitlement was evaluated under Slovak
regulations. However, he does not agree that he should bear the negative
consequences, i.e. that after 40 years of work in his own country he
should be left with a pension in the amount of about two thirds of the
pension which his fellow citizens receive for the same period and the
same income. He points out that the citizens of both republics were
assured that dividing the federation would not affect their
entitlements. After 1993 the Ministry of Labor and Social Affairs also
passed a measure to even out the pension level to the level of pensions
given under Czech regulations. However, since mid-1998 it has been
gradually ceasing to implement it. The complainant points to other
social international agreements which respect the fundamental principle
of not damaging the citizen through such an agreement. However, in his
opinion, the providers of pension insurance here ignore this principle.
He believes that the creators of the Agreement also did not intend to
not resolve the negative situation of many retirees on the Czech side,
although on the other hand they did not expect the possibility that the
economic situation in the two newly-created countries would not develop
the same way. He states that if the Agreement had not been concluded, he
would be entitled to an early old age pension under Czech regulations,
for 37 years worked in Czechoslovakia, and for 3 years of insurance in
the Czech Republic after 1992. Only the period of insurance in the
Slovak Republic after 1992 would not be included in calculating the
amount of the pension. The reality is such that after 40 years of
employment in his own country he received a pension of CZK 514. Thus,
the existence of the Agreement became for the complainant, who always
had permanent residence in the territory of the Czech Republic, a
disaster which, he claims, is unparalleled in the practice of
international agreements in the area of social security. He points to
the extraordinary measures of the Ministry of Labor and Social Affairs
on removing harshness and to a number of examples from actual practice
where, especially in recent years, the decision making of the allocation
commission, which evaluates individual applications for balancing
contributions as a way of removing harshness, is discriminatory. The
government ombudsman also pointed this out in his summary report on his
activities in 2001. However, the complainant is not entitled to a
balancing contribution. He also is not entitled to an early old age
pension from the Slovak side, as such a pension does not exist in
Slovakia. He was given only a partial pension. According to the
complainant, this situation could be corrected by allocating him a
“temporary early pension” until the time when he becomes entitled to an
old age pension under Slovak regulations.
The
complainant points to the contested decision of the High Court in
Olomouc, under which the complainant is not entitled to an early pension
either under the Agreement or under domestic regulations. He believes
that this conclusion is inconsistent with not only the purpose of
concluding bilateral social agreements (to not deprive a citizen of an
entitlement only because he worked in the other contracting state), but
also the citizen’s right to rely on future security in old age, if for a
number of years he met the conditions required by his own state.
According to the complainant, the High Court also did not respect the
principle of the Agreement concerning division of expenses and related
to the time of the joint state. It handled the complainant’s objection,
pointing to the legal opinion of the Supreme Court stated in decision
file no. 30 Cdo 120/98, by retroactively dividing employment until 1992
into periods in the territories of the Czech Republic and of the Slovak
Republic which, however, the Supreme Court did not do in the cited
verdict. Without any support whatsoever, the court evaluated the
complainant’s case using a different criterion than is contained in the
Agreement itself. The complainant is convinced that the practice which
the High Court in Olomouc confirmed in the contested verdict also
violates the principles of the multilateral ILO convention no. 102
concerning Minimum Standards of Social Security (published under no.
461/1991 Coll.) and the European Social Security Code. He believes that
payment of the full Czech early old age pension until such time as he
becomes entitled to a “normal” Slovak old age pension would not be
inconsistent with the aim of Article 20 of the Agreement. He points to a
number of examples in practice and states that an international social
agreement can not annul or amend the laws of a state party. The
incorrect interpretation applied by the High Court would mean that a
state party ceases to fulfill its obligations vis-à-vis its citizens,
arising from its own laws, or permits some of its citizens to receive
worse security than others. In contrast, the previous practice respected
the legal opinion of the Supreme Court of the CSR, stated in decision
file no. Cpj 232/73, under which the fact that the Czechoslovak state
concluded an agreement on social insurance with another state may not,
under any circumstances, be to the detriment of a Czechoslovak citizen’s
pension entitlements. Such an agreement can bring benefits for the
citizen, but may not reduce his lawful entitlements under Czechoslovak
regulations. This principle is also used in the case law of the
Constitutional Court, which stated, in judgment file no. Pl. ÚS 31/94,
that “ratification of international agreements does not affect the more
advantageous rights, protection and conditions provided and guaranteed
by domestic legislation.” The complainant points to differing judicial
practice in addressing these issues, where some courts respect the
abovementioned legal opinion of the Supreme Court (e.g. decisions by the
High Court in Prague, file no. 12 Cao 12/96, the Regional Court in
Ostrava, file no. 21 Ca 280/99, the Regional Court in Brno, file no. 22
Ca 68/99, 22 Ca 69/99, and the Supreme Court in Brno, file no. 30 Cdo
120/98), but other courts do not. The contested verdict of the High
Court in Olomouc can be included in the second category. Yet, with
regard to the gravity of this issue, in view of the legal certainty of
citizens, court decisions should be foreseeable and practices should be
uniform.
The complainant
further points to Act no. 100/1932 Coll., on the domestic applicability
of international agreements on social insurance. He states that the
Agreement and domestic law apply side by side. However, in his opinion
the rule on priority application of the Agreement does not mean that it
has higher legal force, but indicates the order of application.
Thus,
the complainant is convinced that he should be allocated an “interim”
old age pension under Act no. 155/1995 Coll., on Pension Insurance, for
the period from 1 July 1999 to 2 April 2001, i.e. for the entire time of
employment in the joint state and the period of insurance obtained in
the Czech Republic after 1992, until such time as he becomes entitled to
an old age pension under Slovak regulations. The decision of the High
Court in Olomouc did not respect the fundamental principles of a state
governed by the rule of law and denied the complainant his right to
material security in old age in an amount corresponding to the length of
the insured period, the level of income, and the taxes and insurance
premiums deducted from it. It thereby violated Article 1 of the Charter
on the equal rights of citizens.
The
Constitutional Court, under § 32 of the Act on the Constitutional
Court, called on the party to the proceedings, the High Court in
Olomouc, and the subsidiary party to the proceedings, the Czech Social
Security Administration in Prague, to submit statements on the
adjudicated constitutional complaint.
The constitutional complaint is justified.
The
Constitutional Court has emphasized many times in the past that it is
fundamentally not authorized to intervene in the decision making
activity of the general courts, as it is not the top of that system (cf.
Art. 81, Art. 90 of the Constitution). If the courts proceed in
accordance with Chapter Five of the Charter, it cannot assume the right
of review over their activity (Art. 83 of the Constitution). On the
other hand, however, it is authorized to evaluate whether proceedings as
a whole were fair and whether they violated the complainant’s
fundamental rights or freedoms guaranteed by the Charter or the
Constitution. In the past the Constitutional Court has repeatedly
acknowledged that the interpretation and application of legal
regulations by the general courts can be, in some cases, so extreme,
that they diverge from the bounds of Chapter Five of the Charter and
thus interfere with a constitutionally guaranteed right. In that case it
is within the powers of the Constitutional Court to annul the contested
decision (cf., e.g., II. ÚS 433/98, or II. ÚS 474/2000).
The
Charter states in Art. 30 para. 1 that “Citizens have the right to
adequate material security in old age and during periods of work
incapacity, as well as in the case of the loss of their provider. The
subject of this right is a “citizen,“ although previously valid laws
used this concept to mean “resident with permanent residence in the
territory of the CR.” The adequacy of pension security payments means
commensurateness to the earnings of a given “citizen” before the
entitlement to a pension arose. The complainant is a citizen of the CR,
has permanent residence in the territory of the CR, and was given a
partial early old age pension in the amount specified above, which, in
his opinion, is much less than he should be entitled to as an ordinary
Czech citizen in the pension insurance system (see p. 18 of the
constitutional complaint). The Czech Social Security Administration and
the general courts calculated the amount of the pension taking into
account the wording of the agreement between the CR and the SR on social
security of 29 October 1992, which gives as a criterion for calculation
of the amount of pension the location of the employer’s registered
address. In view of the fact that the complainant was employed by an
employer with its registered address in Myjava, SR, the agreement refers
to Slovak law. Slovak law, of course, does not recognize the
institution of an early old age pension. The High Court, as the appeals
court, confirmed the procedure and the decision of the Czech Social
Security Administration and the court of the first level, and described
them as “lawful.”
The
provision of § 61 of Act no. 155/1995 Coll., on Pension Insurance, which
was applied in this matter, really does require, in the matter of
setting the base amounts and percent amounts of a partial pension,
applying the international agreement first, so the procedure of the
Czech Social Security Administration and the general courts was prima
facie lawful.
The
Constitutional Court does not agree with the manner in which the High
Court understood the concept of lawfulness in its decision. The
Constitution of the CR, in Art. 1 para. 1 (before the “Euro-amendment”
of Art. 1), at the beginning of the fundamental provisions, states that,
“The Czech Republic is a sovereign, unitary, and democratic state
governed by the rule of law, founded on respect for the rights and
freedoms of man and of citizens.” Thus, it is evident that the framers
of the Constitution did not connect the constitutional existence of the
Czech state with a mere formal postulate of a “state governed by the
rule of law,” but with a state governed by the rule of law whose real
effect is respect for the rights and freedoms of man and of citizens.
In
this case the law (by referring to an international agreement) imposes a
different manner of calculating the amount of an early pension,
depending on the criterion of the location of a citizen’s employer’s
registered address. Art. 1 of the Charter provides that people are free,
have equal dignity, and enjoy equality of rights. Art. 3 para. 1 of the
Charter declares that everyone is guaranteed the enjoyment of her
fundamental rights and basic freedoms without regard to differences
based on factors cited in the paragraph, or on “other status.” Thus,
this provision of the Charter provides a ban on discrimination in the
enjoyment of any of the rights guaranteed by the Charter. The
Constitutional Court thus had to answer the question whether the
interpretation and application of the relevant statutory provisions by
the Czech Social Security Administration and the general courts,
relating to the complainant’s exercise of his right to “adequate
material security in old age” (Art. 30 para. 1) is a discrimination
which is forbidden by Art. 3 para. 1 of the Charter.
Not
every differentiation between citizens is of a discriminatory nature.
Different treatment of citizens is constitutionally acceptable if it is
based on “objective” and “reasonable” grounds. In this case the
differentiation is based on whether a citizen of the CR was, during the
existence of the Czechoslovak state, employed by an employer with its
registered address in the Czech Republic or in the Slovak Republic. If a
Czech citizen (with permanent residence in the CR) was employed in the
Slovak Republic at that time, in terms of pension insurance this is
considered “employment abroad,” which has negative consequences for his
pension entitlements in the Czech pension insurance system.
The
Czech Republic and the Slovak Republic were created as of 1 January
1993 by the division of the joint Czechoslovak state. This joint state
was characterized by a uniform pension insurance system, and so, in
terms of the law at the time, it was legally irrelevant, which part of
the Czechoslovak state a citizen was employed in, or where his employer
had its registered address. Czech National Council constitutional Act
no. 4/1993 Coll., on Measures Connected with the Dissolution of the
Czech and Slovak Federal Republic (Art. 1), implements reception of the
CSFR legal order in Czech law, such that constitutional acts, statutes,
and other legal regulations of the CSFR which were valid in the
territory of the CR on the day the CSFR ceased to exist remain valid.
Thus, the Czech Republic accepted the principle of continuity of the
legal order at the constitutional level. The cited constitutional Act of
the Czech National Council is part of the constitutional order of the
CR under Art. 112 para. 1 of the Constitution. Therefore, a period of
employment with an employer whose registered address was in the Slovak
part of the Czechoslovak state can not be seen as “employment abroad.”
In view of the foregoing, the Constitutional Court considers such
differentiation between citizens of the Czech Republic, which is based
on a fiction that employment (or the registered address of the employer)
in the Slovak Republic of the then joint Czechoslovak state is
“employment abroad,” to be discriminatory, as it is not supported by
“objective” and “reasonable” grounds.
The
CR concluded the abovementioned agreement on social security with the
SR as a newly-created entity under international law. It used the
opportunity to exercise its sovereignty by regulating its relationships
with the SR. The regulation of these relationships in the future does
not create any specific problem of an international law or
constitutional law nature. However, much more complicated from that
point of view is the circumstance that the bilateral agreement on social
security with the SR interferes with legal relationships which arose
and continued to exist during the former joint state and during the time
when Czechoslovak law, which was subsequently received into Czech law,
was valid. The CR’s international obligations vis-à-vis the SR, whose
effects are also aimed into the past an into the legal situations of
their citizens, which were created and developed inside Czechoslovakia
and the Czechoslovak legal order, must respect certain constitutional
bounds.
The Constitutional
Court of the CSFR declared, in its judgment no. 15 of 10 December 1992
(Pl. ÚS 78/92), that “the principles of a state governed by the rule of
law, legal certainties which can be derived from the requirement of
democratic organization of the state, require that every
constitutionally possible case of retroactivity be established expressis
verbis in the Constitution, or in a statute, and that cases connected
to it be resolved so that the acquired rights are duly protected.” The
Constitutional Court of the CR also accepts this principle. The
complainant met the condition of a minimum number of years of insurance
required by § 31 para. 1 of Act no. 155/1995 Coll. in the time when the
joint Czechoslovak state existed. The Constitutional Court believes that
application of an international agreement on the basis of § 61 of that
Act can not lead to retroactively denying him fulfillment of that
condition. This is inconsistent with the principle of legal certainty
and the foreseeability of law, which form the very basis of the concept
of a state governed by the rule of law.
As
the Constitutional Court already emphasized above, the concept of a
state governed by the rule of law must be understood not in isolation,
but in connection to the constitutional requirement of respect for the
rights and freedoms of the human being and the citizen, as is stated in
Art. 1 para. 1 of the Constitution. This constitutional requirement of
respect for rights and freedoms must also be preserved when applying an
international agreement, all the more so because international law
itself honors the principle that “ratification of international
agreements does not affect more advantageous rights, protection and
conditions provided and guaranteed by domestic legislation” (see
Constitutional Court judgment of 24 May 1995, published under no.
164/1995 Coll.).
The
Constitutional Court is not authorized to evaluate the constitutionality
of an already ratified international agreement. On the other hand it is
required to be guided by Article 88 para. 2 of the Constitution, under
which the judges of the Constitutional Court are bound in their decision
making only by the constitutional order and the statute under par 1.
The Agreement between the CR and the SR on social security is not an
agreement which could be considered a component of the constitutional
order (see Constitutional Court judgment of 25 June 2002, published
under no. 403/2002 Coll.). It is also not an agreement under Art. 10 of
the Charter, in the version before the “Euro-amendment.” As its preamble
clearly indicates, its purpose was not to secure the fundamental rights
and freedoms of citizens. The parties were guided by “the desire to
regulate their relationships in the area of social security.” Therefore,
the Constitutional Court can not accept as constitutional an
application of one of its provisions which would result in a situation
which is not in accordance with the Charter or the Constitution as parts
of the constitutional order.
Because
the contested decision of the High Court in Olomouc applied the
relevant statutory provisions without the requisite regard for the
requirements imposed by the constitutional order, it interfered with the
complainant’s right to judicial protection guaranteed by Art. 36 para. 1
of the Charter. It also violated Art. 3 para. 1 of the Charter, a ban
of discrimination, in connection with Art. 30 para. 1 of the Charter.
With regard to the foregoing, the Constitutional Court granted the constitutional complaint and annulled the contested decision of the High Court in Olomouc of 21 March 2002, ref. no. 2 Cao 249/2001-27, under § 82 para. 3 let. a) of the Act on the Constitutional Court.
Notice: Decisions of the Constitutional Court can not be appealed.
Brno, 3 June 2003
With regard to the foregoing, the Constitutional Court granted the constitutional complaint and annulled the contested decision of the High Court in Olomouc of 21 March 2002, ref. no. 2 Cao 249/2001-27, under § 82 para. 3 let. a) of the Act on the Constitutional Court.
Notice: Decisions of the Constitutional Court can not be appealed.
Brno, 3 June 2003