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Case No. 29/98-16/99-3/2000
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
RULING
On the compliance of the Republic of Lithuania’s Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, Paragraph 3 of Article 5 of the
Republic of Lithuania’s Law on Tax Administration with the Constitution of the Republic of
Lithuania and on the compliance of the Resolution of the Seimas of the Republic of Lithuania “On
the Recognition of a Strategic Investor” with the Constitution of the Republic of Lithuania and the
Republic of Lithuania’s Law on the Basics of National Security
Vilnius, 18 October 2000
The Constitutional Court of the Republic of Lithuania, composed of the Justices of the
Constitutional Court: Egidijus Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas Normantas,
Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, and Teodora Staugaitienė
The court reporter—Daiva Pitrėnaitė
Seimas member Vytenis Povilas Andriukaitis and the advocate Gediminas Bulotas, acting as
the representatives of the petitioners—groups of members of the Seimas of the Republic of
Lithuania
Darius Karvelis, a consultant to the Law Department of the Office of the Seimas, acting as
the representative of the Seimas of the Republic of Lithuania, the party concerned
The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article
102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, on 19 September 2000, in its public hearing,
considered case No. 29/98-16/99-3/2000 subsequent to the petitions submitted to the Constitutional
Court by the petitioners—groups of members of the Seimas of the Republic of Lithuania—
requesting an investigation into whether the norms of the Republic of Lithuania’s Law on the
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Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”,
the Republic of Lithuania’s Law “On Supplementing and Amending Article 5 of the Law on Tax
Administration” and the Republic of Lithuania’s Law “On Supplementing Article 12 of the Law on
Foreign Capital Investment in the Republic of Lithuania” were in conformity with the Constitution
of the Republic of Lithuania and, whether the norms of the Resolution of the Seimas of the
Republic of Lithuania “On the Recognition of a Strategic Investor” was in compliance with the
Constitution of the Republic of Lithuania and the Republic of Lithuania’s Law on the Basics of
National Security.
The Constitutional Court
has established:
I
1. On 29 September 1998, the Seimas of the Republic of Lithuania adopted the Republic of
Lithuania’s Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” (Official Gazette Valstybės žinios, 1998, No. 90-2482), the Republic of
Lithuania’s Law “On Supplementing and Amending Article 5 of the Law on Tax Administration”
(Official Gazette Valstybės žinios, 1998, No. 90-2483), the Republic of Lithuania’s Law “On
Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic of Lithuania”
(Official Gazette Valstybės žinios, 1998, No. 90-2484) and the Resolution “On the Recognition of a
Strategic Investor” (Official Gazette Valstybės žinios, 1998, No. 90-2485).
In its petition of 9 November 1998, a group of Seimas members requests an investigation
into whether:
1) Articles 2, 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, Paragraph 1 of Article 1 of the Law “On
Supplementing and Amending Article 5 of the Law on Tax Administration” and Article 1 of the
Law “On Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic of
Lithuania” as to the content of the norms established therein are in compliance with the norms
pertaining to a democratic state and the separation of powers as established in Article 1 and
Paragraph 1 of Article 5 of the Constitution and the principle of a state under the rule of law
entrenched in the Constitution;
2) in the light of the procedure of their adoption, the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, the Law “On
Supplementing and Amending Article 5 of the Law on Tax Administration” and the Law “On
Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic of Lithuania”
are in compliance with the procedure established in Paragraph 1 of Article 69 of the Constitution;
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3) Paragraph 1 of Article 1 of the Law “On Supplementing and Amending Article 5 of the
Law on Tax Administration” and Article 1 of the Law on Foreign Capital Investment in the
Republic of Lithuania are in compliance with Item 15 of Article 67 and Paragraph 1 of Article 128
of the Constitution;
4) Paragraphs 1 and 7 of Article 2 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” according to the content of the
norms established therein are in compliance with Paragraph 1 of Article 23, Paragraphs 1 and 4 of
Article 46 of the Constitution and whether Article 4 of the said law according to the content of the
norms established therein is in compliance with Paragraph 1 of Article 23, Paragraph 1 of Article 29
and Paragraphs 1 and 4 of Article 46 of the Constitution;
5) Paragraph 1 of Article 1 of the Seimas Resolution “On the Recognition of a Strategic
Investor” of 29 September 1998, according to the content of the norms established therein is in
compliance with Paragraph 4 of Article 46 of the Constitution and the norms established in
Paragraph 2 of Chapter 4 entitled “Economic Policy” of the annex to the Law on the Basics of
National Security.
The petition is grounded on the following reasoning.
Traditionally, the object of the exclusive competence of the Parliament is to approve taxes
and basic financial liabilities of the state. Delegation of this competence to the Government or any
other state institution is not provided for in the Constitution. Paragraph 1 of Article 1 of the Law
“On Supplementing and Amending Article 5 of the Law on Tax Administration” and Article 1 of
the Law “On Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic
of Lithuania” provide for the right of the Government to arbitrarily exempt certain entities of
economy from payment of new or changed taxes for the term of not three but ten years. By means
of these legal provisions, the opportunity is created to adopt a basic financial liability of the state
not by means of an act of the Seimas but that of the Government. The said laws violate the powers
of the Seimas. Therefore, the impugned legal norms conflict with Item 15 of Article 67, Paragraph 1
of Article 128 of the Constitution and the principle of the separation of the branches of state power.
In the opinion of the petitioner, Paragraph 1 of Article 69 of the Constitution sets the
requirements for the procedure of adoption of laws. The petitioner maintains that the said laws were
adopted under procedure of urgency. The Constitution stipulates that procedure of urgency must be
regulated by law. This procedure is defined in the Statute of the Seimas of the Republic of Lithuania
only, which, under a formal meaning, is not a law. The Seimas had no right to deliberate upon these
laws conforming to procedure of urgency, therefore, it violated Paragraph 1 of Article 69 of the
Constitution.
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The petitioner notes that the Seimas, by regulating the activities of an individual economic
entity by Article 2 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis”, assumed a basic competence of the executive and thus
overstepped its constitutional powers and violated the principle of the separation of powers
established in the norms of Article 1 and Paragraph 1 of Article 5 of the Constitution.
According to the petitioner, the requirements set down in Paragraphs 1 and 7 of Article 2 of
the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta”
and “Naftotiekis” regarding reorganisation of independent economic entities infringe the rights of
the said entities to inviolability of property, therefore, the impugned norms of this law conflict with
Paragraph 1 of Article 23 of the Constitution. They also infringe the rights of enterprises and their
shareholders and hinder fair competition, therefore, they are in conflict with the norms of
Paragraphs 1 and 4 of Article 46 of the Constitution.
In the opinion of the petitioner, the norm of Paragraph 1 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
providing that a certain portion of shares of the enterprise may not belong to its shareholders, while
the right is granted to the state and the strategic investor to disregard this limitation, violates the
principle of the equality of all persons before the law and freedom of fair competition, therefore,
this norm of the law conflicts with Paragraph 1 of Article 29 and Paragraphs 1 and 4 of Article 46
of the Constitution.
The petitioner points out that the norm of Paragraph 2 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
restricts the right of some shareholders to dispose of their property freely as the state and the
strategic investor enjoy priority in acquisition of the shares sold by the shareholders. Thus, the
impugned norm violates the principle of inviolability of property and conflicts with Article 23 of
the Constitution.
The petitioner maintains that, by means of the norm of Paragraph 1 of Article 1 of the
impugned Seimas resolution, the inequality of economic entities before the law is established and
advantages in economic competition for certain entities are created. The petitioner is of the opinion
that freedom of fair competition and the prohibition on monopolising the production are thus
violated, therefore, Paragraph 1 of Article 1 of the impugned Seimas resolution is in conflict with
Paragraph 4 of Article 46 of the Constitution.
The petitioner points out that the provision of Paragraph 2 of Article 1 of the impugned
Seimas resolution by which an opportunity to the strategic investor is granted to acquire a certain
portion of shares of the reorganised enterprise denies the possibility for the state to retain a deciding
vote, therefore, the norms of the impugned Seimas resolution conflict with the norm set down in the
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Law on the Basics of National Security that in enterprises of strategic importance for national
security the controlling decision power must be retained by the state.
2. On 3 June 1999, the Seimas adopted the Law “On Amending and Supplementing Article
3 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’
and ‘Naftotiekis’” (Official Gazette Valstybės žinios, 1999, No. 50-1606).
On 22 June 1999, a group of Seimas members applied to the Constitutional Court with the
petition requesting an investigation into whether:
1) the Law “On Amending and Supplementing Article 3 of the Law on the Reorganisation
of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” passed on 3 June
1999 by the Seimas, regarding the procedure of its adoption, was in compliance with the procedure
established in Article 69 of the Constitution;
2) Article 1 of the Law “On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
was in compliance with the principles of a just society and state under the rule of law established in
the Preamble to the Constitution, as well as Articles 1, 67 and Paragraph 3 of Article 69 of the
Constitution;
3) Article 1 of the Law “On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
was in compliance with Paragraphs 3, 4 and 5 of Article 46 of the Constitution.
The request of the petitioner is based on the following arguments.
If the Law on the Basics of National Security is considered a constitutional law, then its
norms may only be changed by three-fifths majority vote of all Seimas members, while the Law
“On Amending and Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” was adopted by simple majority
vote. By this law a new norm is created, permitting the strategic foreign investor to become a
monopoly, as in case the foreign economic entity acquires 66 percent of the shares of the enterprise,
the State of Lithuania will lose a deciding vote. This norm conflicts with the norm of the Law on the
Basics of National Security that in enterprises of strategic importance for national security the
controlling decision power must be retained by the state. Thus, the procedure of the adoption of the
law conflicts with Article 69 of the Constitution.
In the opinion of the petitioner, by means of Article 1 of the Law “On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės
nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” new norms are created, therefore, in case the Law on the
Basics of National Security is a constitutional law, the principle of coordination of legal acts is
violated. The fact whether a law is a constitutional law, in the case that there is not any list of
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constitutional laws, ought to be decided according to the importance of the law and the context of
its adoption. Thus, Article 1 of the Law “On Amending and Supplementing Article 3 of the Law on
the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” conflicts with the principles of a just society and state under the rule of law
established in the Preamble to the Constitution, as well as Articles 1 and 67 of the Constitution.
The petitioner believes that after Article 1 of the Law “On Amending and Supplementing
Article 3 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’,
‘Mažeikių nafta’ and ‘Naftotiekis’” has granted exceptional rights to the strategic investor, the latter
gets an opportunity to control a monopoly, therefore, this norm conflicts with the norm of
Paragraph 3 of Article 46 of the Constitution stipulating that the state shall regulate economic
activity so that it serves the general welfare of the nation, the norm of Paragraph 4 of the same
article stipulating that monopolisation of production and the market shall be prohibited and the
norm of Paragraph 5 of the same article providing that the state shall defend the interests of the
consumers.
3. On 5 October 1999, the Seimas passed the Law “On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’,
‘Mažeikių nafta’ and ‘Naftotiekis’” (Official Gazette Valstybės žinios, 1999, No. 86-2564).
On 20 December 1999, a group of Seimas members applied to the Constitutional Court with
the petition requesting an investigation into whether:
1) the Law “On Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
passed on 5 October 1999 by the Seimas, regarding the procedure of its adoption, was in
compliance with the procedure established in Article 69 of the Constitution;
2) Articles 1 and 2 of the Law “On Amending and Supplementing Articles 3 and 4 of the
Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” were in compliance with the principles of a just society and state under the rule of
law established in the Preamble to the Constitution, as well as Articles 1, 67, Paragraph 3 of Article
69 and Paragraph 1 of Article 135 of the Constitution;
3) Articles 1 and 2 of the Law “On Amending and Supplementing Articles 3 and 4 of the
Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” were in compliance with Paragraphs 3, 4 and 5 of Article 46 of the Constitution;
4) Article 2 of the Law “On Amending and Supplementing Articles 3 and 4 of the Law on
the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” was in compliance with the principle of a state under the rule of law established in
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the Preamble to the Constitution as well as Article 23 and Paragraphs 1 and 4 of Article 23 of the
Constitution.
The request of the petitioner is based on the following arguments.
It is directly recognised in the Law “On Amending and Supplementing Articles 3 and 4 of
the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” that the joint-stock company “Mažeikių nafta” is an object of essential importance for
national security of Lithuania. The basics of national security are established by the Law on the
Basics of National Security which, as to its essence, must be held a constitutional law. As a new
norm is created by the Law “On Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”,
conflicting with that established in the Law on the Basics of National Security, the procedure of its
adoption is not in line with the requirements for adoption of constitutional laws set down in Article
69 of the Constitution.
Paragraph 1 of Article 2 of the Law “On Amending and Supplementing Articles 3 and 4 of
the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” grants priority to the state in acquiring the shares of this enterprise sold or transferred
in any other way by the shareholders. By establishing the right of priority for certain entities to
acquire shares transferred by the owners the subjective rights of ownership of these owners are
infringed. The principles of ownership and free economic activity of individuals will also be
violated. Thus, the impugned legal norm is in conflict with Article 23 and Paragraph 1 of Article 46
of the Constitution.
Articles 1 and 2 of the Law “On Amending and Supplementing Articles 3 and 4 of the Law
on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” conflict with Paragraphs 3, 4 and 5 of Article 46 of the Constitution. The norms of
these articles grant exceptional rights to the strategic investor, therefore, they conflict with
Paragraph 3 of Article 46 of the Constitution wherein a norm is established that the state shall
regulate economic activity so that it serves the general welfare of the nation. By means of the
impugned law the state refuses to have a decisive vote in the company “Mažeikių nafta” and loses a
significant portion of its profit. Therefore, the norms of Articles 1 and 2 of the Law “On Amending
and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies
‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” conflict with Paragraph 4 of Article 46 of the
Constitution under which monopolisation of production and the market shall be prohibited.
Paragraph 5 of Article 46 of the Constitution provides that the state shall defend the interests of the
consumers. After a decisive vote has been granted to the strategic investor, possibilities are created
to violate the interests of the consumers. The state, by refusing a decisive vote in the company
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“Mažeikių nafta”, violates Paragraph 5 of Article 46 of the Constitution as it will not be able to
defend the interests of the consumers.
By its decision of 28 August 2000, the Constitutional Court joined the petitions of the
petitioners into one case.
II
In the course of the preparation of the case for the judicial consideration, the explanation of
14 December 1999 by D. Karvelis, a consultant to the Law Department of the Office of the Seimas,
was received. It is maintained therein that, while assessing the compliance of Article 1 of the Law
“On Amending and Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” with the norms of the Constitution,
one has to take account of the factual circumstances of adoption of this law. Its norms created the
legal pre-conditions for avoiding significant economic losses and created the conditions for
privatising the oil sector. They regulate special legal relations arising in the course of the
reorganisation of the joint-stock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”.
According to the object of regulation, the impugned law should be considered a special normative
legal act. Adopting this law, the Seimas did not violate the provision of Paragraph 3 of Article 46 of
the Constitution that “the State shall regulate economic activity so that it serves the general welfare
of the Nation”: it implemented the constitutional provision that “the State shall defend the interests
of the consumers”.
D. Karvelis noted that under the Statute of the Seimas, the laws pointed out in Article 150 of
the Constitution, as well as amendments to the Constitution, other laws particularising the
constitutional norms, which are indicated in the law on the list of constitutional laws, shall be
considered constitutional laws. The Law “On Amending and Supplementing Article 3 of the Law
on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” does not belong to such constitutional laws. There are no grounds to consider the
Law on the Basics of National Security a constitutional law having the primacy over the impugned
law.
In the opinion of D. Karvelis, it is necessary to take account of the fact that in the valid laws
the notion “natural monopolies” is not employed. European Union law does not prohibit the
dominance of economic entities in the market. The prohibition against dominance would mean a
certain limitation on the competition, and, thus, the interests of the consumers might suffer. The
European Union Agreement prohibits the abuse of dominance that means the establishment of
unfair prices of sale and purchase, limitation on production, the market or of technological
development or their control to the disadvantage of the consumers, as well as the discrimination of
entities on the basis of nationality.
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III
In the course of the preparation of the case for the judicial consideration, the explanation of
29 March 1999 by V. Pakalniškis, who was then the Minister of Justice of the Republic of
Lithuania, was received. It is maintained therein that the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is a special law regulating
the process of reorganisation of these enterprises, the investments and requirements to the owners of
blocks of shares. The essence of the principle of the legal doctrine lex specialis derogat legi
generali is that in case there is rivalry between a common and a special norm, the special norm
should be applied. The aforesaid law itself defined the legal relation between it and the common
laws (the Company Law, the Law on the Privatisation of State-owned and Municipal Property) by
establishing that the procedure of reorganisation of the aforementioned companies is regulated by
the Company Law, while their privatisation—by the Law on the Privatisation of State-owned and
Municipal Property in case the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” does not provide otherwise. Special norms might be
established by the Seimas only, but not by the Government. Thus, the principle of the separation of
powers was not violated. V. Pakalniškis is of the opinion that the Law on the Reorganisation of the
Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September 1998,
the Law “On Supplementing and Amending Article 5 of the Law on Tax Administration”, the Law
“On Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic of
Lithuania” and the Seimas Resolution “On the Recognition of a Strategic Investor” are in
compliance with the Constitution.
In the course of the preparation of the case for the judicial consideration, the explanation of
26 March 1999 by V. Babilius, who was then the Minister of Economy of the Republic of
Lithuania, was received. It is maintained therein that the Company Law provides for the possibility
of reorganisation of joint-stock companies by way of merger, i.e. certain companies are joined to a
company which continues its activities. The shareholders may adopt a decision to reorganise the
company by not less than a two-thirds majority vote. Before the reorganisation the Government
held the controlling block of shares of the aforementioned enterprises and adopted a decision, by
legally sufficient majority vote, to reorganise the said enterprises. The special law on reorganisation
of the said enterprises, if compared with the valid Company Law, does not provide for additional
restriction or limitation on the exercise of ownership and non-ownership rights of the shareholders.
The norm of Paragraph 2 of Article 4 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, providing for priority of the state
in acquisition of the shares of the company “Mažeikių nafta” sold or otherwise transferred by the
shareholders, does not infringe the right to inviolability of property as it merely establishes a certain
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procedure of disposal of property. In the opinion of V. Babilius, the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September
1998 is in compliance with the Constitution.
In the course of the preparation of the case for the judicial consideration, the explanation of
21 March 2000 by the member of the Seimas S. Malkevičius was received. It is maintained therein
that in the context of the case at issue the constitutional provision “property shall be inviolable”
means that the norms of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” empower the state, which is the holder of the controlling
block of shares, to exercise its rights of property possession, transfer, sale, granting etc. The norms
of the said law are in line with system of the free market as every buyer has the right and an
opportunity to choose a supplier. In the opinion of the member of the Seimas S. Malkevičius, the
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” of 29 September 1998 is in compliance with the Constitution.
In the course of the preparation of the case for the judicial consideration, the explanation of
15 March 2000 by V. Milaknis, Minister of the Economy of the Republic of Lithuania, was
received. It is maintained therein that the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is in compliance with Article 69 of the
Constitution, according to the procedure of its adoption. The strategic interests and security of the
state are secured by special laws irrespective of the form of ownership of economic entities. V.
Milaknis is of the opinion that the norms of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is in compliance with the
Preamble to the Constitution and Articles 1 and 67 of the Constitution. The statement of the
petitioners that the strategic investor has been given a decisive vote is untrue as the state still holds
59.3 percent of shares. The norm of Paragraph 1 of Article 2 of the impugned law does not infringe
the right of the shareholders of the reorganised enterprise to dispose of their shares. In case the
Government refuses to acquire the shares sold, the shareholders may sell them to a person they
choose for the price announced earlier. According to V. Milaknis, the impugned law is in
compliance with Paragraph 1 of Article 46 of the Constitution.
In the course of the preparation of the case for the judicial consideration, the explanation of
16 March 2000 by G. Balčiūnas, Minister of Justice of the Republic of Lithuania, was received. It is
maintained therein that the petitioner groundlessly considers the Law on the Basics of National
Security a constitutional law. It is only the Seimas that decides matters of coordination of laws. The
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” was adopted lawfully as the common constitutional rules of adoption of laws were
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being followed. Thus, the procedure of the adoption of the said law and its Articles 1 and 2 are in
compliance with the Constitution.
In the course of the preparation of the case for the judicial consideration, the explanation of
15 March 2000 by V. Vadapalas, Director General of the Department of European Law under the
Government of the Republic of Lithuania, was received. It is maintained therein that it is provided
in Paragraph 6 of Article 1 of the Law “On Amending and Supplementing Articles 3 and 4 of the
Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and
‘Naftotiekis’” that upon acquisition of shares by the strategic investor, and upon conclusion of
agreements by the joint-stock company “Mažeikių nafta” on the acquisition of the right of control in
the joint-stock company “Klaipėdos nafta”, the provisions of Chapter 3 of the Republic of
Lithuania’s Law on Competition shall not be applied. In itself, the dominance of an economic entity
in the market does not mean abuse. The European Court of Justice has noted that the fact that an
enterprise holds a dominant position does not mean a violation but it only means that regardless of
the reasons of dominance a respective enterprise must abstain from conduct which might distort
competition in the overall market. In another case the said court noted that actions undermining the
competitive structure of the market may be held abuse stemming from the dominant position in the
market and, therefore, had to be prohibited.
IV
At the Constitutional Court hearing the representatives of the petitioners the member of the
Seimas V. P. Andriukaitis and the advocate G. Bulotas presented additional arguments
substantiating the requests of the petitioners.
At the Constitutional Court hearing the representative of the party concerned virtually
reiterated the arguments set forth in his written explanation.
A specialist, Dr. J. Kugelevičius, an expert of the Institute of Lithuanian Energetics, spoke at
the Constitutional Court hearing.
The Constitutional Court
holds that:
I
1. On 29 September 1998, the Seimas adopted the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, the Law “On
Supplementing and Amending Article 5 of the Law on Tax Administration”, the Law “On
Supplementing Article 12 of the Law on Foreign Capital Investment in the Republic of Lithuania”
and the Resolution “On the Recognition of a Strategic Investor”.
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The Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” provides for the procedure of reorganisation of the joint-stock companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, the conditions and procedure of investments
into the company continuing its activities after the reorganisation and it sets requirements for the
owners of blocks of shares. The other aforesaid laws and the Seimas resolution are linked with the
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis”.
On 9 November 1998, a group of Seimas members applied to the Constitutional Court with
the petition requesting an investigation into whether the norms of the aforementioned legal acts
were in compliance with the Constitution as to their content, whether the said laws were in
conformity with the Constitution as to the procedure of their adoption, as well as whether the
Seimas resolution was in compliance with the Constitution and the Law on the Basics of National
Security.
2. By means of the Law “On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
passed on 3 June 1999, Article 3 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” was amended.
On 22 June 1999, a group of Seimas members applied to the Constitutional Court with the
petition requesting an investigation into whether the said law as to its content and procedure of
adoption was in compliance with the Constitution.
3. Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” were amended by the Law “On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies
‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999.
On 20 December 1999, a group of Seimas members applied to the Constitutional Court with
the petition requesting an investigation into whether the said law as to its content and procedure of
adoption was in compliance with the Constitution.
4. Article 3 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” was amended by the Law “On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės
nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 3 June 1999, while Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
were amended by the Law “On Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
of 5 October 1999. The petitioners request the Constitutional Court to investigate the compliance of
13
the norms of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” in its initial wording and in its subsequent wordings with the
Constitution.
The Constitutional Court will investigate the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” in its wording of 5 October 1999
while taking account of the same law in its previous wordings.
5. Article 5 of the Law on Tax Administration was amended and supplemented by means of
the Law “On Supplementing and Amending Article 5 of the Law on Tax Administration” of 29
September 1998. Taking account of the arguments presented by the petitioner, the Constitutional
Court will investigate whether the provision of Paragraph 3 of Article 5 of the Law on Tax
Administration, which is impugned by the petitioners, providing that the Government is entitled to
prolong the term of not increase of taxes to the strategic investor for up to 10 years, is in compliance
with the Constitution.
6. By Article 16 of the Republic of Lithuania’s Law on Investment passed on 7 July 1999
the Law on Foreign Capital Investment in the Republic of Lithuania was recognised as null and
void. The petitioners applied to the Constitutional Court concerning the compliance of the
provisions of Paragraph 4 of Article 12 of the latter law. Under Paragraph 4 of Article 69 of the
Law on the Constitutional Court, the annulment of an impugned legal act shall be grounds to adopt
a decision to dismiss the initiated legal proceedings. Concerning this part of the case, the initiated
legal proceedings should be dismissed.
Alongside, the Constitutional Court notes that as for the challenged provision of Paragraph 4
of Article 12 of the Law on Foreign Capital Investment in the Republic of Lithuania providing that
the Government is entitled to prolong the term of not increase of taxes to the strategic investor for
up to 10 years, an analogous provision has been set forth in Paragraph 3 of Article 5 of the Law on
Tax Administration. The Constitutional Court will investigate the compliance of this norm with the
Constitution in the present case.
7. Under the Constitution, the Constitutional Court shall decide whether laws (parts thereof)
of the Republic of Lithuania as well as resolutions (parts thereof) of the Seimas are in conformity
with the Constitution and the laws.
The Constitutional Court is not empowered to investigate and shall not investigate in this
case any agreements or transactions signed by the Government with the strategic investor, which
are linked with the impugned laws and the impugned Seimas resolution, nor shall it consider their
preparation and conclusion nor their implementation.
8. In the requests of the petitioners doubts are raised whether the said laws are in conformity
with the Constitution as regards the procedure of their adoption and their content.
14
First of all, the Constitutional Court will investigate whether the laws pointed out by the
petitioners are in compliance with Article 69 of the Constitution which establishes the procedure of
adoption of laws, including constitutional laws.
II
On the compliance of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September 1998, the Law “On
Amending and Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 3 June 1999, the Law “On
Amending and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the Jointstock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999 and
the Law “On Supplementing and Amending Article 5 of the Law on Tax Administration” of
29 September 1998 with Article 69 of the Constitution.
1. In the opinion of the petitioners, the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” and the Law “On Supplementing
and Amending Article 5 of the Law on Tax Administration”, both of which were passed on 29
September 1998, according to the procedure of their adoption conflict with the requirements set in
Paragraph 1 of Article 69 of the Constitution as they were deliberated under the procedure of
urgency provided for in the Statute of the Seimas but not in the law.
Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September 1998 were amended and supplemented
by the Law “On Amending and Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 3 June 1999 and the
Law “On Amending and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999 the
norms whereof, according to the petitioners, establish a different regulation than is provided for in
the Law on the Basics of National Security, which should be considered a constitutional law. As the
norms of a constitutional law may be amended only by at least a three-fifths majority vote of all the
Seimas members, while the aforesaid laws were adopted by simple majority vote, the petitioner
doubts whether the procedure of adoption of the said laws is in conformity with the requirements set
in Article 69 of the Constitution.
2. Article 69 of the Constitution provides:
“Laws shall be enacted in the Seimas in accordance with the procedure established by law.
Laws shall be deemed adopted if the majority of the Seimas members participating in the
sitting vote in favour thereof.
15
Constitutional laws of the Republic of Lithuania shall be deemed adopted if more than half
of all the members of the Seimas vote in the affirmative. Constitutional laws shall be amended by at
least a three-fifths majority vote of all the Seimas members. The Seimas shall establish a list of
constitutional laws by three-fifths majority vote of the Seimas members.
Provisions of the laws of the Republic of Lithuania may also be adopted by referendum.”
The fundamental rules of legislation are set in this article of the Constitution. Deciding
whether in the course of the adoption of the impugned laws there were violations of the
Constitution, one should take into consideration the fact that under Article 76 of the Constitution,
the structure and procedure of activities of the Seimas shall be determined by the Statute of the
Seimas which shall have the power of law. The determination of the procedure of activities of the
Seimas includes the regulation of the procedure of legislation. Part V of the Statute of the Seimas
entitled “Legislative Procedure” provides for registration of draft laws and other draft acts of the
Seimas, their presentation at Seimas sittings, their deliberation in the main committee and at Seimas
sittings, consideration of a draft law under procedure of urgency and that of special urgency,
adoption of the law at Seimas sittings etc. Thus, without violating the Constitution, the Seimas is
entitled to establish a corresponding legislative procedure as well as consideration of draft laws
under procedure of urgency by the Statute of the Seimas which has the power of law. In its ruling of
8 November 1993, the Constitutional Court held: “The duty of the Seimas to act in accordance with
the procedure of law enactment established by the Statute of the Seimas not only may be but, in
fact, must be interpreted as a constitutional duty because it is conditioned by the provision
established in Paragraph 1 of Article 69 of the Constitution.”
Taking account of the reasoning set forth, it should be concluded that the Seimas, while
adopting laws, may consider them under procedure of urgency provided in the Statute of the
Seimas. Therefore, there are not any legal grounds to assert that the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September
1998, the Law “On Amending and Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 3 June 1999, the
Law “On Amending and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999, and
the Law “On Supplementing and Amending Article 5 of the Law on Tax Administration” of 29
September 1998, as regards the procedure of their adoption, conflict with Paragraph 1 of Article 69
of the Constitution.
3. The petitioners substantiate their statement by the fact that the laws by which Articles 3
and 4 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” were amended and supplemented conflict with Article 69 of the
16
Constitution as regards the procedure of their adoption, on the fact that the regulation established in
the norms of the said laws is different from that established in the Law on the Basics of National
Security, which is considered a constitutional law by the petitioners.
The procedure of adoption of constitutional laws is set in Paragraph 3 of Article 69 of the
Constitution. As mentioned before, these laws are deemed adopted if more than half of all the
members of the Seimas vote in the affirmative, while they are amended by at least a three-fifths
majority vote of all the Seimas members. The Seimas shall establish a list of constitutional laws by
three-fifths majority vote of the Seimas members.
In its ruling of 8 November 1993, the Constitutional Court held that only after approval of a
list of constitutional laws under this procedure the laws entered on the said list shall be
constitutional laws and the rule of their adoption and amendment by qualified majority vote as
established in the Constitution may be applied to these laws only. Thus, in case a law is not entered
on the list of constitutional laws, the procedure of adoption of constitutional laws defined in
Paragraph 3 of Article 69 of the Constitution may not be applicable to the adoption of such a law.
The Law on the Basics of National Security has not been included into the list of
constitutional laws, thus, it is not a constitutional law. Alongside, it needs to be noted that this law
does not regulate relations pertaining to legislature either, therefore, it does not condition
peculiarities of adoption of the impugned laws.
Taking account of the reasoning set forth, it should be concluded that the Law “On
Amending and Supplementing Article 3 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 3 June 1999 and the Law “On
Amending and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999, as to the
procedure of their adoption, are in compliance with Paragraph 3 of Article 69 of the Constitution.
III
On the compliance of Article 2 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” with the principle of a state
under the rule of law established in the Preamble to the Constitution, Article 1 and Paragraph
1 of Article 5 of the Constitution, and on the compliance of Paragraphs 1 and 7 of Article 2 of
the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” with Paragraph 1 of Article 23 and Paragraphs 1 and 4 of Article 46
of the Constitution.
1. Article 2 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” provides:
17
“1. The joint-stock companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’ shall be
reorganised by way of merger, i.e. by joining the joint-stock companies ‘Būtingės nafta’ and
‘Naftotiekis’ to the joint-stock company ‘Mažeikių nafta’, the former two ceasing their activities as
legal persons.
2. The governing board of every reorganised company shall draw up an extensive evaluation
of the plan of reorganisation and shall present it to the general meeting of the shareholders. After
the Government has approved the reorganisation plan, the general meetings of the shareholders of
the joint-stock companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’ may, by at least a
two-thirds majority vote, adopt a decision to reorganise the company and approve this plan and the
prepared Articles of Association of the company which will be operating after the reorganisation.
3. The approved reorganisation plan and the minutes of the general meeting of the
shareholders must be handed over to the supervisor of the register of enterprises within 5 working
days from the day of the meeting which has approved the reorganisation plan.
4. The reorganisation of the joint-stock companies shall be announced publicly twice with
an interval of not less than 14 days between the announcements.
5. The liabilities of the reorganised joint-stock companies ‘Būtingės nafta’ and ‘Naftotiekis’
shall be transferred to the joint-stock company ‘Mažeikių nafta’ which will continue its activities.
Every reorganised company must provide additional guarantees as regards fulfilment of their
liabilities to every creditor who requests so. In cases when the reorganised companies lack
sufficient financial and material resources to provide the additional guarantees, the Government
must provide the creditors with the State guarantees under procedure provided by law.
6. The requirements of Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the Company Law
shall not be applicable to the reorganisation of the joint-stock companies ‘Būtingės nafta’,
‘Mažeikių nafta’ and ‘Naftotiekis’.
7. In the reorganisation plan of the joint-stock companies ‘Būtingės nafta’, ‘Mažeikių nafta’
and ‘Naftotiekis’ it shall be provided that the shares of the oil products sales network (petrol
stations) as well as those of the companies established on the basis of Plinkškiai hotel-recreational
centre belonging to the joint-stock company ‘Mažeikių nafta’, as well as those of the company
established on the basis of the shop making wooden articles, belonging to the joint-stock company
‘Naftotiekis’, shall be transferred respectively to the shareholders of the joint-stock companies
‘Mažeikių nafta’ and ‘Naftotiekis’ in proportion to the number of shares belonging to them, by
respectively reducing the authorised capitals of the joint-stock companies ‘Mažeikių nafta’ and
‘Naftotiekis’. In the course of the reorganisation, mistakes that were made in the formation
(concerning the use of State budget appropriations for construction of dwelling-houses in the
Vsevolozhsk district of the Leningrad region of the Russian Federation for settling the families
18
moving from Mažeikiai) and increase (transfer of the reservoirs of fuel stocks of the State to the
joint-stock company ‘Mažeikių nafta’) of the authorised capital of the joint-stock company
‘Mažeikių nafta’ must be rectified. Decisions concerning reduction of the authorised capital shall be
adopted by the general meetings of the shareholders of the joint-stock companies ‘Mažeikių nafta’
and ‘Naftotiekis’ where the issue regarding the reorganisation of the said enterprises will be
decided. The reduction of the authorised capital of the joint-stock companies “Mažeikių nafta” and
“Naftotiekis” shall be announced publicly twice with an interval of not less than 14 days between
the announcements. Due to the reduction of the authorised capital of the joint-stock companies
“Mažeikių nafta” and “Naftotiekis”, the amendments to the Articles of Association of the said
companies shall not be specially recorded in the register of enterprises.
8. The guarantees of the State for the banks as regards the credits given to the joint-stock
companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’ are also valid for the liabilities taken
by the joint-stock company ‘Mažeikių nafta’ which will continue its activities after the
reorganisation.”
2. The petitioners maintain that the norms of Article 2 of the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” violate the
principle of a state under the rule of law established in the Preamble to the Constitution, the
provision of Article 1 of the Constitution stipulating that Lithuania shall be a democratic state, as
well as the principle of the separation of powers entrenched in Paragraph 1 of Article 5 of the
Constitution, and that Paragraphs 1 and 7 of Article 2 of the said law violate Paragraph 1 of Article
23 and Paragraphs 1 and 4 of Article 46 of the Constitution.
3. In the Preamble to the Constitution the striving for an open, just, and harmonious civil
society and state under the rule of law is entrenched.
In its ruling of 23 February 2000, the Constitutional Court held: “<…> the constitutional
principle of a state under the rule of law is a universal one upon which the whole Lithuanian legal
system as well as the Constitution of the Republic of Lithuania itself are based and <…> the content
of the principle of a state under the rule of law can be detected in various provisions of the
Constitution and should be construed inseparably from the striving for an open, just, and
harmonious civil society and state under the rule of law declared in the Preamble of the
Constitution. Along with the other requirements, the principle of a state under the rule of law
consolidated in the Constitution also pre-supposes the fact that human rights and freedoms must be
ensured, that all state institutions exercising state authority, as well as other state institutions, must
act on the grounds of law and in compliance with law, that the Constitution has the supreme
juridical power and that the laws, government resolutions and other legal acts must be in conformity
with the Constitution.”
19
The Seimas, as well as the other participants of legislation must coordinate all drafted and
adopted legal acts with the Constitution. This is one of the most important means of securing the
constitutional order and one of the fundamental requirements for a state under the rule of law.
4. Article 1 of the Constitution provides: “The State of Lithuania shall be an independent
and democratic republic.”
The Constitutional Court in the said ruling of 23 February 2000 noted that “in this article of
the Constitution the fundamental principles of the Lithuanian State are established: the Lithuanian
State is free and independent; the republic is the form of governance of the Lithuanian State; the
state authority must be organised in a democratic way, and there must be a democratic political
regime in this country”.
The provisions of Article 1 of the Constitution, as well as the principle of a state under the
rule of law established in the Preamble to the Constitution, determines the main principles of the
organisation and activities of the state authority of the State of Lithuania.
5. Paragraph 1 of Article 5 of the Constitution provides that in Lithuania, the powers of the
State shall be exercised by the Seimas, the President of the Republic and the Government, and the
Judiciary.
By this norm, a more detailed content of which is revealed in the other articles of the
Constitution, the principle of the separation of powers has been established. This is a fundamental
principle of the organisation and activities of a democratic and law-governed state. In its rulings, the
Constitutional Court has noted many a time that this principle means that the legislative, executive
and judicial powers must be separated, sufficiently independent, and that there must be a balance
between them. Every power is exercised through its institutions which are granted the competence
corresponding to their purpose.
6. In the opinion of the petitioners, the provision of Paragraph 6 of Article 2 of the Law on
the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” that certain requirements of Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the
Company Law shall not be applicable to the reorganisation of the joint-stock companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” violates the principle of a state under the rule of law
entrenched in the Preamble to the Constitution, which requires that legal acts be coordinated.
According to the petitioners, a special law must extend and construe the norms of a common law
but it may never provide for a different regulation.
7. In Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the Company Law pointed out by the
petitioner the relations of reorganisation of a joint-stock company (i.e. transformation of the
company as a legal person without the liquidation procedure) are regulated, as, for example, as to
how and when the reorganisation of the company is announced and informed about, the manner of
20
adoption of the decision to reorganise the company and approve the plan of its reorganisation and
its Articles of Association, the manner of reorganisation of the company against which bankruptcy
proceedings have been instituted or with respect to which extrajudicial bankruptcy procedure is
applied, the manner of registration of the Articles of Association of the companies which continue
their activities after the reorganisation etc.
In the norms of Article 10 of the Company Law relations of reorganisation of joint-stock
companies and close corporations are regulated, while the procedure of reorganisation of the jointstock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is provided in impugned
Article 2 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis”. It is pointed out in Paragraph 6 of Article 2 of this law that the
requirements set in Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the Company Law shall not be
applicable to the reorganisation of the joint-stock companies “Būtingės nafta”, “Mažeikių nafta”
and “Naftotiekis”.
It needs to be noted that the state, while taking account of the content of the economic
activity, as well as its peculiarities, may regulate social relations in this area in a differentiated
manner, or establish certain conditions for a certain type of activity. It is important that by means of
such regulation the principles and norms of the Constitution be not violated. Therefore, the singling
out of respective economic entities and peculiarities of regulation of their activities in themselves do
not violate the principle of a state under the rule of law. The circumstance that the norms of the Law
on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” contain a provision by which the norms the Company Law are not be applicable to the
reorganisation of the said companies in itself does not mean that thereby coordination of the system
of legal acts and the principle of a state under the rule of law entrenched in the Constitution are
denied.
8. In the opinion of the petitioners, the Seimas, after it had regulated the activity of one
economic entity in Article 2 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, exercised competence characteristic of the
executive, therefore, by means of such regulation, the principle of the separation of powers
established in Paragraph 1 of Article 5 of the Constitution as well as the provision of Article 1 of
the Constitution that the State of Lithuania shall be an independent and democratic republic are
violated, because the separation of powers is characteristic of a democratic state.
Under Item 2 of Article 67 of the Constitution, the Seimas shall enact laws. By means of the
impugned norms of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” a group of relations is regulated, which is linked with the
reorganisation of the joint-stock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
21
and the activities of the company that will operate after the reorganisation. The legislature may,
without violating the competence of the other state institutions, which is established in the
Constitution, regulate relations of varied nature by law. The relations regulated by the impugned
article of the law are not classed as the exclusive competence of the Government by the
Constitution, therefore, there are no legal grounds to assert that the legislature, while adopting the
impugned article of the law, interfered with the competence of the Government established in the
Constitution and violated the constitutional principle of the separation of powers and the provision
of Article 1 of the Constitution that the State of Lithuania shall be an independent and democratic
republic.
9. Taking account of the aforementioned arguments, it should be concluded that Article 2 of
the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta”
and “Naftotiekis” is in compliance with Article 1 and Paragraph 1 of Article 5 of the Constitution,
as well as the principle of a state under the rule of law established in the Preamble to the
Constitution.
10. Paragraph 1 of Article 2 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides that the joint-stock companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” shall be reorganised by way of merger, i.e. by
joining the other said joint-stock companies to the joint-stock company “Mažeikių nafta”.
Paragraph 7 of Article 2 of this law points out that in the reorganisation plan of the said joint-stock
companies it shall be provided that the shares of the oil products sales network (petrol stations) as
well as those of the companies established on the basis of Plinkškiai hotel-recreational centre
belonging to the joint-stock company “Mažeikių nafta”, as well as those of the company established
on the basis of the shop making wooden articles, belonging to the joint-stock company
“Naftotiekis”, shall be transferred respectively to the shareholders of the joint-stock companies
“Mažeikių nafta” and “Naftotiekis” in proportion to the number of shares belonging to them, by
respectively reducing the authorised capitals of the joint-stock companies “Mažeikių nafta” and
“Naftotiekis”. The impugned Paragraph 7 of Article 2 also provides that in the course of the
reorganisation mistakes that were made in the formation of the authorised capital of the joint-stock
company “Mažeikių nafta” must be rectified. Decisions concerning reduction of the authorised
capital shall be adopted by the general meetings of the shareholders of the joint-stock companies
“Mažeikių nafta” and “Naftotiekis” where the issue regarding the reorganisation of the said
enterprises will be decided.
In the opinion of the petitioners, after it had been indicated by law as to how the joint-stock
companies had to be reorganised, the rights of the said companies as economic entities as well as
those of their shareholders were infringed. By means of such regulation, the inviolability of
22
property guaranteed in Paragraph 1 of Article 23 of the Constitution is denied, freedom of economic
activity and the initiative secured by Paragraph 1 of Article 46 of the Constitution as well as
freedom of fair competition entrenched in Paragraph 4 of Article 46 of the Constitution are limited.
11. Paragraph 1 of Article 23 of the Constitution provides that property shall be inviolable.
Paragraph 1 of Article 46 of the Constitution provides that Lithuania’s economy shall be based on
the right to private ownership, freedom of individual economic activity, and initiative. Paragraph 4
of Article 46 of the Constitution prescribes: “The law shall prohibit monopolisation of production
and the market, and shall protect freedom of fair competition.”
While assessing the compliance of Paragraphs 1 and 7 of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
with Paragraph 1 of Article 23 of the Constitution, it should be noted that it is provided in
Paragraph 2 of Article 2 of the said law that, after the Government has approved the reorganisation
plan, the general meetings of the shareholders of the joint-stock companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” may, by at least a two-thirds majority vote, adopt a decision to
reorganise the company and approve this plan and the prepared Articles of Association of the
company which will be operating after the reorganisation. The impugned Paragraph 7 of Article 2
of the law points out that decisions concerning reduction of the authorised capital are adopted by the
general meetings of the shareholders. Thus, under the law, the final decision on the reorganisation
of the joint-stock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is adopted by the
shareholders. By the established legal regulation the ownership rights of the shareholders are not
infringed. While taking account of this, it should be concluded that the impugned norms of
Paragraphs 1 and 7 of Article 2 of the said law are in compliance with Paragraph 1 of Article 23 of
the Constitution.
The purpose of the impugned norms of Paragraphs 1 and 7 of Article 2 of the said law is
only regulation of questions linked with the reorganisation of the aforementioned companies.
Paragraph 1 of Article 2 of the said law provides for a manner of the reorganisation of respective
companies, while Paragraph 7 of the same article stipulates that in the reorganisation plan of these
companies reduction of the authorised capital must be provided. In both cases decisions are adopted
by the general meetings of the shareholders. The provision of Paragraph 1 of Article 46 of the
Constitution that Lithuania’s economy shall be based on the right to private ownership, freedom of
individual economic activity, and initiative is not denied by means of such legal regulation. The
relations regulated in Paragraphs 1 and 7 of Article 2 of the Law are not directly linked with
competition relations, therefore, the provisions of Paragraph 4 of Article 46 of the Constitution are
not violated.
23
Taking account of the above arguments, the conclusion should be drawn that Paragraphs 1
and 7 of Article 2 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” are in compliance with Paragraph 1 of Article 23 and
Paragraphs 1 and 4 of Article 46 of the Constitution.
IV
On the compliance of Article 3 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” with the principle of a state
under the rule of law established in the Constitution, Article 1, Article 4, Paragraph 1 of
Article 5, Paragraphs 3, 4 and 5 of Article 46, Article 67, Paragraph 1 of Article 128 and
Paragraph 1 of Article 135 of the Constitution.
1. Article 3 entitled “Procedure and Ways of the Investment” of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
adopted on 29 September 1998 consisted of two paragraphs. It was provided in Paragraph 1 of this
article that the strategic investor, recognised as such upon the recommendation of the Government
and by means of a decision of the Seimas, shall be granted the right to acquire shares of the new
issue of the joint-stock company “Mažeikių nafta” which continues its activities after the
reorganisation, the total nominal value whereof does not exceed 33 percent of the authorised capital
of this company. In such a case the authorised capital of the joint-stock company “Mažeikių nafta”
is increased without application of the provisions of Paragraph 4 of Article 43 of the Company Law
and Article 18 of the Law on the Privatisation of State-owned and Municipal Property. It was
provided in Paragraph 2 of the said article that after the strategic investor has acquired the new issue
of shares of the joint-stock company “Mažeikių nafta”, the state-owned shares of the joint-stock
company “Mažeikių nafta” shall be privatised only under the procedure established in the Law on
the Privatisation of State-owned and Municipal Property. After the privatisation the state must, by
right of ownership, have in possession a block of shares of the joint-stock company “Mažeikių
nafta” granting more than 25 percent of votes in the general meeting of the shareholders.
The wording of Article 3 amended by the Law “On Amending and Supplementing Article 3
of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’
and ‘Naftotiekis’” of 3 June 1999 was set forth as follows:
“1. The strategic investor, recognised as such upon the recommendation of the Government
and by means of a decision of the Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock company ‘Mažeikių nafta’ which
continues its activity after the reorganisation upon the increase of the authorised capital of this
company; the general nominal value of these shares must not exceed 33 percent of the authorised
capital of the said company;
24
2) within a 5-year period at any time from the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article by the strategic investor, to acquire newly issued shares of the jointstock company ‘Mažeikių nafta’ upon the increase of the authorised capital of this company, the
nominal value of which together with those pointed out in Item 1 of Paragraph 1 of this Article does
not exceed 49.5 percent of the authorised capital of the joint-stock company ‘Mažeikių nafta’;
3) to purchase from the State, after the strategic investor has acquired the shares pointed out
in Item 2 of this Article, the shares belonging to the State by right of ownership the nominal value
of which does not exceed 16.5 percent of the authorised capital of the joint-stock company
‘Mažeikių nafta’ which is registered at that time, and it shall be established that the strategic
investor may purchase these shares in portions under the procedure established by the Government
of the Republic of Lithuania. The strategic investor shall be entitled to make use of this right for 7
years from the moment of the acquisition of the shares pointed out in Item 1 of Paragraph 1 of this
Article.
2. In the course of the acquisition of the shares by the strategic investor under Items 1 and 2
of Paragraph 1 of this Article, the authorised capital of the joint-stock company ‘Mažeikių nafta’
shall be increased without application of the provisions of Paragraph 4 of Article 43 of the
Company Law and Article 18 of the Law on the Privatisation of State-owned and Municipal
Property. In the course of the sale of the shares, belonging to the State by right of ownership, of the
joint stock-company ‘Mažeikių nafta’ which are pointed out in Item 3 of Paragraph 1 of this Article
to the strategic investor, the provisions of the Law on the Privatisation of State-owned and
Municipal Property and those of Paragraph 2 of Article 8 and Article 10 of the Law on Public
Trading in Securities shall not be applied. The rest of the shares of the joint-stock company
‘Mažeikių nafta’ which belong to the State by right of ownership shall be privatised only under the
procedure established by the Law on the Privatisation of State-owned and Municipal Property. After
the privatisation, the State must retain in its ownership a block of shares of the joint-stock company
‘Mažeikių nafta’ granting more than 25 percent of votes in the general meeting of the shareholders.
If the Seimas adopts a decision to privatise still a greater portion of the shares of the joint-stock
company ‘Mažeikių nafta’, the strategic interests of the state will be secured by law.
3. After the strategic investor has acquired the shares under Item 1 of Paragraph 1 of this
Article, state institutions will not be permitted to present additional requirements, as regards the
period prior to the acquisition of the shares by the strategic investor, to the joint-stock company
‘Mažeikių nafta’ concerning the activities or failure of the joint-stock company ‘Mažeikių nafta’
continuing its activities after the reorganisation. The Government of the Republic of Lithuania, in
the agreement with the strategic investor, has the right to assume liabilities in the name of the State
to recover the losses to the strategic investor, which may be incurred within 1 year from the
25
acquisition of the shares pointed out in Item 1 of Paragraph 1 of this Article due to demands of
other persons for the joint-stock company ‘Mažeikių nafta’ continuing its activities after the
reorganisation concerning its activities or failure in the period prior to the acquisition of the shares
by the strategic investor.
4. The notice about the first meeting of shareholders of the joint-stock company ‘Mažeikių
nafta’, which will take place after the strategic investor has acquired the shares pointed out in Item 1
of Paragraph 1 of this Article, shall be publicly announced no later than 10 days prior to the day of
the meeting, while the announced draft agenda of the meeting shall not be further specified. In this
case the provisions of Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22 of the
Company Law shall not be applicable.”
By means of Article 1 of the 5 October 1999 Law “On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’,
‘Mažeikių nafta’ and ‘Naftotiekis’”, Article 3 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” was amended and supplemented
once again. Items 2 and 3 of Paragraph 1 of the said article were set forth as follows:
“2) after he has requested so, within a 5-year period at any time from his acquisition of the
shares pointed out in Item 1 of Paragraph 1 of this Article, to acquire newly issued shares of the
joint-stock company ‘Mažeikių nafta’ upon the increase of the authorised capital of this company,
the nominal value of which together with those pointed out in Item 1 of Paragraph 1 of this Article
does not exceed 49.5 percent of the authorised capital of the joint-stock company ‘Mažeikių nafta’;
3) to purchase from the State, after the strategic investor has acquired the shares pointed out
in Item 2 of this Article, the shares belonging to the State by right of ownership the nominal value
of which does not exceed 16.5 percent of the authorised capital of the joint-stock company
‘Mažeikių nafta’ which is registered at that time. The strategic investor may purchase these shares
in portions under the procedure established by the Government of the Republic of Lithuania. The
strategic investor shall be entitled to make use of this right on request at any time within 7 years
from the moment of the acquisition of the shares pointed out in Item 1 of Paragraph 1 of this
Article. The Government of the Republic of Lithuania in its agreements with the strategic investor
may stipulate that part of the shares pointed out in this Item may be transferred to the crude oil
suppliers of the joint-stock company ‘Mažeikių nafta’ and/or financial institutions.”
In addition, the impugned Article 3 of the law was supplemented with new Paragraph 2,
wherein it was established:
“2. In the case that at any time until the acquisition of the shares by the strategic investor
under Item 2 of Paragraph 1 of this Article the authorised capital of the joint-stock company is
increased by means of additional contributions of other persons but not the strategic investor and in
26
case the strategic investor requests so, the Government of the Republic of Lithuania will transfer
him gratis a corresponding portion of shares of the joint-stock company ‘Mažeikių nafta’, which
belong to the State by right of ownership, so that the nominal value of the shares of the joint-stock
company ‘Mažeikių nafta’, which belong to the said company by right of ownership, would
correspond to the same portion in terms of percentage of the authorised capital of this company
which was possessed by the strategic investor prior to the increase of the authorised capital by
means of the additional contributions. In the course of the transfer of shares of the joint-stock
company ‘Mažeikių nafta’ in pursuance of the requirements of this Paragraph, the provisions of the
Law on the Privatisation of State-owned and Municipal Property shall not be applicable. In the
course of the acquisition of shares of the joint-stock company ‘Mažeikių nafta’ by the financial
institutions pointed out in the concluded agreement between the Government of the Republic of
Lithuania and the strategic investor, the authorised capital of the said company shall be increased
without application of the norms of Paragraph 4 of Article 43 of the Company Law and those of the
Law on the Privatisation of State-owned and Municipal Property.”
It was decided to consider former Paragraphs 2, 3 and 4 of Article 3 respectively Paragraphs
3, 4 and 5. Paragraphs 3 and 4 of Article 3 of the impugned law were also amended and set forth as
follows:
“3. In the course of the acquisition of the shares by the strategic investor under Items 1 and 2
of Paragraph 1 of this Article, the authorised capital of the joint-stock company ‘Mažeikių nafta’
shall be increased without application of the provisions of Paragraph 4 of Article 43 of the
Company Law and Article 18 of the Law on the Privatisation of State-owned and Municipal
Property. In the course of the sale of the shares, belonging to the State by right of ownership, of the
joint stock-company ‘Mažeikių nafta’ which are pointed out in Item 3 of Paragraph 1 of this Article
to the strategic investor or crude oil suppliers of the joint-stock company ‘Mažeikių nafta’ and/or
financial institutions, the provisions of the Law on the Privatisation of State-owned and Municipal
Property and those of Paragraph 2 of Article 8 and Article 10 of the Law on Public Trading in
Securities shall not be applied. With the exception of the cases provided for in Paragraph 2 of
Article 3 and Paragraph 3 of Article 4 of this Law, the rest of the shares of the joint-stock company
‘Mažeikių nafta’ which belong to the State by right of ownership shall be privatised only under the
procedure established by the Law on the Privatisation of State-owned and Municipal Property.
4. After the strategic investor has acquired the shares under Item 1 of Paragraph 1 of this
Article, state and municipal institutions will not be permitted to present additional requirements, as
regards the period prior to the acquisition of the shares by the strategic investor, either to the jointstock company ‘Mažeikių nafta’ or its subsidiaries concerning the activities or failure of the jointstock company ‘Mažeikių nafta’ or its subsidiaries or other events. The Government of the Republic
27
of Lithuania, in the agreements with the strategic investor and/or the joint-stock company ‘Mažeikių
nafta’, has the right to assume basic property liabilities in the name of the State, including recovery
of losses. Such losses include or may be incurred due to that fact that the Government of the
Republic of Lithuania may not carry out its agreement obligations because of changes in the laws of
the Republic of Lithuania and because of the fact that the information, statements and/or
confirmations pointed out in the agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented information revealing documents of the
joint-stock company ‘Mažeikių nafta’) were false or inexact.”
In addition, the said article was supplemented with new Paragraphs 6 and 7:
“6. In the course of the acquisition of the shares by the strategic investor under the
provisions of this Article, as well as in the course of conclusion of agreements by the joint-stock
company ‘Mažeikių nafta’ on acquisition of the right of control in the joint-stock company
‘Klaipėdos nafta’, the provisions of Chapter 3 of the Law on Competition shall not be applicable.
The provisions of Paragraphs 3 and 4 of Article 30 and Paragraph 6 of Article 45 of the Company
Law shall not be applicable to the joint-stock company ‘Mažeikių nafta’.
7. In the agreements with the strategic investor and the joint-stock company ‘Mažeikių
nafta’, the Government of the Republic of Lithuania shall be granted the right independently to
establish the method and procedure under which the joint-stock company ‘Mažeikių nafta’ would
compensate the strategic investor a possible decrease of value of the said company. The
compensation sum of the joint-stock company ‘Mažeikių nafta’ to the strategic investor may not
exceed US$75 million.”
Thus, by means of the laws of 9 June 1999 and of 5 October 1999, the rights of the strategic
investor were particularised and expanded.
2. Article 3 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis”, after the aforementioned amendments and supplements
have been made, provides:
“1. The strategic investor, recognised as such upon the recommendation of the Government
and by means of a decision of the Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock company ‘Mažeikių nafta’ which
continues its activity after the reorganisation upon the increase of the authorised capital of this
company; the general nominal value of these shares must not exceed 33 percent of the authorised
capital of the said company;
2) after he has requested so, within a 5-year period at any time from his acquisition of the
shares pointed out in Item 1 of Paragraph 1 of this Article, to acquire newly issued shares of the
joint-stock company ‘Mažeikių nafta’ upon the increase of the authorised capital of this company,
28
the nominal value of which together with those pointed out in Item 1 of Paragraph 1 of this Article
does not exceed 49.5 percent of the authorised capital of the joint-stock company ‘Mažeikių nafta’;
3) to purchase from the State, after the strategic investor has acquired the shares pointed out
in Item 2 of this Article, the shares belonging to the State by right of ownership the nominal value
of which does not exceed 16.5 percent of the authorised capital of the joint-stock company
‘Mažeikių nafta’ which is registered at that time. The strategic investor may purchase these shares
in portions under the procedure established by the Government of the Republic of Lithuania. The
strategic investor shall be entitled to make use of this right on request at any time within 7 years
from the moment of the acquisition of the shares pointed out in Item 1 of Paragraph 1 of this
Article. The Government of the Republic of Lithuania in its agreements with the strategic investor
may stipulate that part of the shares pointed out in this Item may be transferred to the crude oil
suppliers of the joint-stock company ‘Mažeikių nafta’ and/or financial institutions.
2. In case that at any time until the acquisition of the shares by the strategic investor under
Item 2 of Paragraph 1 of this Article the authorised capital of the joint-stock company is increased
by means of additional contributions of other persons but not the strategic investor and in case the
strategic investor requests so, the Government of the Republic of Lithuania will transfer him gratis
a corresponding portion of shares of the joint-stock company ‘Mažeikių nafta’, which belong to the
State by right of ownership, so that the nominal value of the shares of the joint-stock company
‘Mažeikių nafta’, which belong to him by right of ownership, would correspond to the same portion
in terms of percentage of the authorised capital of this company which was possessed by the
strategic investor prior to the increase of the authorised capital by means of the additional
contributions. In the course of the transfer of shares of the joint-stock company ‘Mažeikių nafta’ in
pursuance of the requirements of this Paragraph, the provisions of the Law on the Privatisation of
State-owned and Municipal Property shall not be applicable. In the course of the acquisition of
shares of the joint-stock company ‘Mažeikių nafta’ by the financial institutions pointed out in the
concluded agreement between the Government of the Republic of Lithuania and the strategic
investor, the authorised capital of the said company shall be increased without application of the
norms of Paragraph 4 of Article 43 of the Company Law and those of the Law on the Privatisation
of State-owned and Municipal Property.
3. In the course of the acquisition of the shares by the strategic investor under Items 1 and 2
of Paragraph 1 of this Article, the authorised capital of the joint-stock company ‘Mažeikių nafta’
shall be increased without application of the provisions of Paragraph 4 of Article 43 of the
Company Law and Article 18 of the Law on the Privatisation of State-owned and Municipal
Property. In the course of the sale of the shares, belonging to the State by right of ownership, of the
joint stock-company ‘Mažeikių nafta’ which are pointed out in Item 3 of Paragraph 1 of this Article
29
to the strategic investor or crude oil suppliers of the joint-stock company ‘Mažeikių nafta’ and/or
financial institutions, the provisions of the Law on the Privatisation of State-owned and Municipal
Property and those of Paragraph 2 of Article 8 and Article 10 of the Law on Public Trading in
Securities shall not be applied. With the exception of the cases provided for in Paragraph 2 of
Article 3 and Paragraph 3 of Article 4 of this Law, the rest of the shares of the joint-stock company
‘Mažeikių nafta’ which belong to the State by right of ownership shall be privatised only under the
procedure established by the Law on the Privatisation of State-owned and Municipal Property.
4. After the strategic investor has acquired the shares under Item 1 of Paragraph 1 of this
Article, state and municipal institutions will not be permitted to present additional requirements, as
regards the period prior to the acquisition of the shares by the strategic investor, either to the jointstock company ‘Mažeikių nafta’ or its subsidiaries concerning the activities or failure of the jointstock company ‘Mažeikių nafta’ or its subsidiaries or other events. The Government of the Republic
of Lithuania, in the agreements with the strategic investor and/or the joint-stock company ‘Mažeikių
nafta’, has the right to assume basic property liabilities in the name of the State, including recovery
of losses. Such losses include or may be incurred due to that fact that the Government of the
Republic of Lithuania may not carry out its agreement obligations because of changes in the laws of
the Republic of Lithuania and because of the fact that the information, statements and/or
confirmations pointed out in the agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented information revealing documents of the
joint-stock company ‘Mažeikių nafta’) were false or inexact.
5. The notice about the first meeting of shareholders of the joint-stock company ‘Mažeikių
nafta’, which will take place after the strategic investor has acquired the shares pointed out in Item 1
of Paragraph 1 of this Article, shall be publicly announced no later than 10 days prior to the day of
the meeting, while the announced draft agenda of the meeting shall not be further specified. In this
case the provisions of Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22 of the
Company Law shall not be applicable.
6. In the course of the acquisition of the shares by the strategic investor under the provisions
of this Article, as well as in the course of conclusion of agreements by the joint-stock company
‘Mažeikių nafta’ on acquisition of the right of control in the joint-stock company ‘Klaipėdos nafta’,
the provisions of Chapter 3 of the Law on Competition shall not be applicable. The provisions of
Paragraphs 3 and 4 of Article 30 and Paragraph 6 of Article 45 of the Company Law shall not be
applicable to the joint-stock company ‘Mažeikių nafta’.
7. In the agreements with the strategic investor and the joint-stock company ‘Mažeikių
nafta’, the Government of the Republic of Lithuania shall be granted the right independently to
establish the method and procedure under which the joint-stock company ‘Mažeikių nafta’ would
30
compensate the strategic investor a possible decrease of value of the said company. The
compensation sum of the joint-stock company ‘Mažeikių nafta’ to the strategic investor may not
exceed US$75 million.”
3. The petitioners maintain that the norms of Article 3 of the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” violate the
principle of a just society and state under the rule of law established in the Preamble to the
Constitution, as well as Article 1 of the Constitution, Paragraphs 3, 4 and 5 of Article 46 of the
Constitution, Article 67 and Paragraph 1 of Article 135 of the Constitution.
While assuming that the Law on the Basics of National Security is a constitutional law, the
petitioners doubt whether the norms of Article 3 of the impugned law, establishing a different legal
regulation, if compared with the constitutional law, are in compliance with the principle of a just
society and state under the rule of law established in the Preamble to the Constitution, Article 1 of
the Constitution which prescribes that the State of Lithuania shall be an independent and democratic
republic (since a democratic republic is one under the rule of law), and the final competence of the
Seimas established in Article 67 of the Constitution. The petitioners point out that the Law on the
Basics of National Security particularises and interprets the norms of Chapter III of the
Constitution, especially its Article 135. Therefore, the petitioners doubt whether the impugned legal
norms are in compliance with Paragraph 1 of Article 135 of the Constitution providing that in
conducting foreign policy, the Republic of Lithuania shall pursue the universally recognised
principles and norms of international law, shall strive to safeguard national security and
independence as well as the basic rights, freedoms and welfare of its citizens, and shall take part in
the creation of sound international order based on law and justice.
In addition, the petitioners presume that the Seimas, while regulating activities of individual
economic entities, takes upon itself the competence characteristic of the executive and thus violates
the principle of the separation of powers entrenched in Paragraph 1 of Article 5 of the Constitution,
the provision of Article 1 of the Constitution that Lithuania shall be a democratic state in which the
separation of powers must be secured, and the principle of a state under the rule of law consolidated
in the Preamble to the Constitution.
The petitioners also point out that Article 3 of the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides that the norms of
common laws shall not be applicable to respective relations, and that only the impugned law must
be followed. Therefore, upon establishment of exceptions to common legal regulation, the principle
of a state under the rule of law established in the Preamble to the Constitution and the provision of
Article 1 of the Constitution that Lithuania shall be a democratic republic are violated.
31
4. The request of the petitioners is based on the assumption that the Law on the Basics of the
National Security is a constitutional law. The Constitutional Court has already held in the present
ruling that the Law on the Basics of the National Security is not a constitutional law, therefore, it is
impossible to draw the conclusion that the impugned Article 3 of the law, from the aspect pointed
out by the petitioner, conflicts with the principle of a state under the rule of law established in the
Preamble to the Constitution, Article 1, Article 67 and Paragraph 1 of Article 135 of the
Constitution.
5. In the present ruling, the Constitutional Court, while analysing the compliance of Article
2 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” with the Constitution, has held that the singling out of respective economic
entities and differentiated legal regulation of their reorganisation in themselves do not violate the
principle of a state under the rule of law.
It needs to be noted that the legislature, while regulating the relations of reorganisation of
the joint-stock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, did not interfere
with the powers of the other state institutions established in the Constitution nor did he take over the
competence of the executive, established in the Constitution.
Taking account of the fact that by the impugned legal regulation the competence of the
executive has not been interfered with, one may draw the conclusion that the impugned Article 3 of
the law is in compliance with the principle of a state under the rule of law entrenched in the
Constitution, as well as Article 1 and Paragraph 1 of Article 5 of the Constitution.
6. Paragraph 4 of Article 3 of the law provides that after the strategic investor has acquired
the shares under Item 1 of Paragraph 1 of this Article, state and municipal institutions will not be
permitted to present additional requirements, as regards the period prior to the acquisition of the
shares by the strategic investor, either to the joint-stock company “Mažeikių nafta” or its
subsidiaries concerning the activities or failure of the joint-stock company “Mažeikių nafta” or its
subsidiaries or other events. The Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company “Mažeikių nafta”, has the right to assume
basic property liabilities in the name of the state, including recovery of losses.
7. Paragraph 1 of Article 128 of the Constitution provides that decisions concerning state
loans and other basic property liabilities of the state shall be adopted by the Seimas on the
recommendation of the Government. This means that, under the Constitution, decisions concerning
basic property liabilities may be adopted by the Seimas only, and only when there is a
recommendation of the Government. In its rulings of 3 June 1999 and of 21 December 1999, the
Constitutional Court held: “In cases when the powers of a concrete branch of power are directly
established in the Constitution, then no institution may take over these powers, while an institution
32
whose powers are defined by the Constitution may neither transfer nor waive these powers. Such
powers may neither be changed nor limited by law.”
As mentioned before, it is provided in Paragraph 4 of Article 3 of the impugned law that the
Government, in the agreements with the strategic investor and the joint-stock “Mažeikių nafta”, has
the right to assume basic property liabilities in the name of the state, including recovery of losses.
This means that the Government was transferred the powers regarding adoption of decisions
concerning basic property liabilities of the state by the Seimas, which are established by the
Constitution to the latter.
Thus, in this case the Seimas transferred the powers to the Government, which are
established to the Seimas by the Constitution, and thereby it violated Paragraph 1 of Article 128 of
the Constitution, as well as the principle of the separation of powers entrenched in Paragraph 1 of
Article 5 of the Constitution.
8. As mentioned before, it is provided in Paragraph 4 of Article 3 of the impugned law that
the Government, in the agreements with the strategic investor and/or the joint-stock company
“Mažeikių nafta”, has the right to assume basic property liabilities in the name of the state,
including recovery of losses. Under the said law, such losses include the losses incurred due to that
fact that the Republic of Lithuania may not carry out its agreement obligations because of changes
in the laws of the Republic of Lithuania and because of the fact that the information, statements
and/or confirmations pointed out in the agreements concluded by the Government and annexes
thereto (including the presented information revealing documents of the joint-stock company
“Mažeikių nafta”) were false or inexact.
The aforesaid provisions of the law concerning obligations to cover losses also pre-suppose
the fact that the Government has the right, in the name of the state, to obligate itself to cover losses
to the strategic investor and the joint-stock company “Mažeikių nafta” even in such cases when the
strategic investor and/or the joint-stock company “Mažeikių nafta” are responsible for the losses.
Under the law, these losses must be covered from the state budget. Such legal regulation is not in
line with the provision of Paragraph 3 of Article 46 of the Constitution that the state shall regulate
economic activity so that it serves the general welfare of the nation, as well as with the
constitutional principle of a state under the rule of law.
Taking account of the reasoning set forth, it should be concluded that the provision of
Paragraph 4 of Article 3 of the impugned law that the Government, in the agreements with the
strategic investor and the joint-stock company “Mažeikių nafta”, has the right to assume basic
property liabilities in the name of the state, including recovery of losses, to the extent that that the
right of the Government is established to obligate itself to cover losses to the strategic investor and
the joint-stock company “Mažeikių nafta” even in such cases when the strategic investor and/or the
33
joint-stock company “Mažeikių nafta” are responsible for the losses conflicts with Paragraph 3 of
Article 46 of the Constitution and the principle of a state under the rule of law entrenched in the
Constitution.
9. As mentioned before, Paragraph 4 of Article 3 of the Law on the Reorganisation of the
Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides that the
Government has the right to assume obligations to cover losses to the strategic investor and/or the
joint-stock company “Mažeikių nafta”, which may be incurred due to that fact that the Republic of
Lithuania may not carry out its agreement obligations because of changes in the laws of the
Republic of Lithuania.
It needs to be noted that the provision of the law under which the state will be liable to cover
the losses due to changes of the laws of the Republic of Lithuania also means that even in cases
when norms of the Constitution are attempted to be enforced or values entrenched in the
Constitution to be protected by law, the state would be liable to cover losses to the strategic investor
and/or the joint-stock company “Mažeikių nafta” incurred due to this. Thus, under the impugned
norm of the law the enforcement of the Constitution is impeded. The Constitutional Court notes that
enforcement of the Constitution may not be hindered by any conditions.
Taking account of the reasoning set forth, the conclusion should be drawn that the impugned
provision of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” that the Government, in the agreements with the strategic
investor and/or the joint-stock “Mažeikių nafta”, has the right to assume basic property liabilities in
the name of the state, including recovery of losses, to the extent that the Government has the right to
obligate itself to cover losses even in such cases when such losses are incurred due to adoption of
the laws enforcing norms of the Constitution and/or protecting the values established in the
constitution conflicts with Article 4 of the Constitution and the principle of a state under the rule of
law entrenched in the Constitution.
10. It is provided in Paragraph 2 of Article 3 of the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” that in the course of the
transfer of shares of the joint-stock company “Mažeikių nafta” in pursuance of the requirements of
Paragraph 2 of Article 3 of the said law, the provisions of the Law on the Privatisation of Stateowned and Municipal Property shall not be applicable. In addition, in the course of the acquisition
of shares of the joint-stock company “Mažeikių nafta” by the financial institutions pointed out in
the concluded agreement between the Government and the strategic investor, the authorised capital
of the said company shall be increased without application of the norms of Paragraph 4 of Article
43 of the Company Law and those of the Law on the Privatisation of State-owned and Municipal
Property.
34
It is provided in Paragraph 3 of Article 3 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” that in respective cases in the
course of the acquisition of the shares by the strategic investor, the authorised capital of the jointstock company “Mažeikių nafta” shall be increased without application of the provisions of
Paragraph 4 of Article 43 of the Company Law and Article 18 of the Law on the Privatisation of
State-owned and Municipal Property. In the course of the sale of the shares, belonging to the state
by right of ownership, of the joint stock-company “Mažeikių nafta” which are pointed out in Item 3
of Paragraph 1 of Article 3 of the impugned law to the strategic investor or crude oil suppliers of the
company ‘Mažeikių nafta’ and/or financial institutions, the provisions of the Law on the
Privatisation of State-owned and Municipal Property and those of Paragraph 2 of Article 8 and
Article 10 of the Law on Public Trading in Securities shall not be applied.
It is provided in Paragraph 5 of Article 3 of the impugned law that the notice about the first
meeting of shareholders of the joint-stock company “Mažeikių nafta”, which will take place after
the strategic investor has acquired the shares pointed out in Item 1 of Paragraph 1 of the said article
shall be publicly announced no later than 10 days prior to the day of the meeting, while the
announced draft agenda of the meeting shall not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22 of the Company Law shall not be
applicable. Paragraph 6 of Article 3 of the impugned law provides that in the course of the
acquisition of the shares by the strategic investor under the provisions of the said article, as well as
in the course of conclusion of agreements by the joint-stock company “Mažeikių nafta” on
acquisition of the right of control in the joint-stock company “Klaipėdos nafta”, the provisions of
Chapter 3 of the Law on Competition shall not be applicable. The provisions of Paragraphs 3 and 4
of Article 30 and Paragraph 6 of Article 45 of the Company Law shall not be applicable to the jointstock company “Mažeikių nafta”.
It is evident that, in Paragraphs 2, 3, 5 and 6 of Article 3 of the impugned law, a
differentiated regulation of the legal relations regarding the reorganisation of the economic entities
pointed out in the law and that of the functioning of the company continuing its activities after the
reorganisation is provided for. The Constitutional Court, on the grounds of the reasoning which it
has set forth in this Ruling while analysing Article 2 of the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, draws the conclusion that
the provisions of Paragraphs 2, 3, 5 and 6 of Article 3, which establish differentiated legal
regulation, in themselves do not conflict with the principle of a state under the rule of law
established in the Constitution, as well as Article 1 of the Constitution.
11. In the opinion of the petitioners, after the strategic investor had been granted the
exceptional rights established in Article 3 of the Law on the Reorganisation of the Joint-stock
35
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, which permit the strategic
investor to have a monopoly under its control, the norm of Paragraph 3 of Article 46 of the
Constitution by which the state shall regulate economic activity so that it serves the general welfare
of the nation is violated. After the state has refused the right of a decisive vote, the strategic investor
will have the joint-stock company “Mažeikių nafta” occupying an exceptional place in the oil sector
under its control. The petitioners also maintain that thereby Paragraph 4 of Article 46 of the
Constitution prohibiting monopolisation of production and the market is violated. The state, after it
has refused the right of a decisive vote in the joint-stock company “Mažeikių nafta”, will not be
able to defend the interests of the consumers. By means of such regulation Paragraph 5 of Article 46
of the Constitution is violated.
12. Paragraphs 3, 4 and 5 of Article 46 of the Constitution provide:
“The State shall regulate economic activity so that it serves the general welfare of the
Nation.
The law shall prohibit monopolisation of production and the market, and shall protect
freedom of fair competition.
The State shall defend the interests of the consumers.”
In the course of the construction of the content of Paragraphs 3, 4 and 5 of Article 46 of the
Constitution, the attention should be paid to the fact that Lithuania’s economy is based on the right
to private ownership, freedom of individual economic activity, and initiative. The state supports
economic efforts which are useful to the community. Alongside, it needs to be noted that freedom
of individual economic activity is not absolute. The state regulates economic activity by
coordinating the interests of individuals and society.
The Constitutional Court, while interpreting Paragraph 3 of Article 46 of the Constitution in
its ruling of 6 October 1999, noted that in the constitutional provision “the State shall regulate
economic activity so that it serves the general welfare of the nation” the constitutional principle is
established which sets the guidelines and ways for as well as limits on the regulation of economic
activity. It is possible to judge as regards the general welfare of the nation according to the social
development of the nation and the opportunities of self-expression of individuals. The content of the
notion “general welfare of the nation” should be disclosed in every particular case, while taking
account of economic, social and other important factors.
While construing Paragraph 4 of Article 46 of the Constitution, it should be noted that the
provision “the law shall prohibit monopolisation of production and the market” means that it is not
permitted to introduce a monopoly, i.e., it is not permitted to grant exceptional rights to an
economic entity to operate in a certain sector of economy lest this sector should become
monopolised. The prohibition on monopolising production and the market, however, does not mean
36
that under certain circumstances it is prohibited to state in a law the existence of a monopoly in a
particular sector of economy or to reflect factual monopolistic relations and regulate them in a
respective manner.
Paragraph 5 of Article 46 of the Constitution provides for a duty of the state to protect
interests of the consumers. This constitutional provision pre-supposes the fact that various measures
of protection of consumers’ interests must be established by legal norms, as well as that state
institutions must supervise how economic entities conform to the established requirements etc.
13. While assessing the norms of Article 3 of the Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” which establish the rights of
the strategic investor, the Constitutional Court notes that the norms of Article 46 of the Constitution
are interrelated and supplementing each other. Not a single right consolidated in this article of the
Constitution is an absolute one. The right of the state to regulate economic activity established in
Paragraph 3 of Article 46 of the Constitution creates the constitutional preconditions for passing
laws that react to a certain situation of the national economy as well as the diversity and changes of
economic and social life.
The impugned norms of Article 3 of the law regulate relations linked with reorganisation of
one sector of the national economy in the course of which privatisation of items of economy
becomes of great importance. The objective of the legal regulation is to create the conditions for
rearranging the sector of economy by privatising its items, attracting investments, etc.
The peculiarities of the development of this country, the conditions of state-owned
enterprises, the situation in the national economy and other factors exert influence on the choice of
methods of privatisation. Implementing the economic reform, the state may establish differentiated
legal regulation by not violating constitutional principles and requirements of constitutional norms.
Therefore, it is impossible to hold that the norms of the law which establish differentiated legal
situation of certain entities in themselves violate Paragraph 3 of Article 46 of the Constitution. After
these circumstances have been taken into consideration, there exist no grounds to recognise the
impugned Article 3 of the law from the aspect pointed out by the petitioners as one violating
Paragraph 3 of Article 46 of the Constitution.
14. Under Article 3 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”, the strategic investor, recognised as such
upon the recommendation of the Government and by means of a decision of the Seimas, shall be
granted the right to acquire newly issued shares of the joint-stock company “Mažeikių nafta” which
continues its activity after the reorganisation upon the increase of the authorised capital of this
company provided the general nominal value of these shares does not exceed 33 percent of the
authorised capital of the said company. After the strategic investor has requested so, within a 5-year
37
period at any time from his acquisition of the shares pointed out in Item 1 of Paragraph 1 of this
article, he has the right to acquire newly issued shares of the joint-stock company “Mažeikių nafta”
upon the increase of the authorised capital of this company the nominal value of which together
with those pointed out in Item 1 of Paragraph 1 of this article does not exceed 49.5 percent of the
authorised capital of the joint-stock company “Mažeikių nafta”. Besides, it is provided in the
impugned article of this law that, after the strategic investor has acquired the shares pointed out in
Item 2 of this article, he has the right to purchase from the state the shares belonging to the state by
right of ownership the nominal value of which does not exceed 16.5 percent of the authorised
capital of the joint-stock company “Mažeikių nafta” which is registered at that time. The strategic
investor may purchase these shares in portions under the procedure established by the Government
of the Republic of Lithuania. In the said article of the law other relations of acquisition of the shares
are also regulated.
In the course of the investigation into whether by the said legal regulation a monopoly is
created it should be noted that, until the reorganisation, in all the three joint-stock companies
subject to reorganisation the greater portion of the shares belonged to the state. In addition, it had
the right of a decisive vote in these enterprises. Therefore, in this case the legal regulation
concerning the transfer of shares to other entities should not be regarded as one creating a
monopoly. Thus, there are not any legal grounds to regard the impugned norms set down in Article
3 of the law as creating a monopoly in a certain sector of economy.
15. Under Paragraph 5 of Article 46 of the Constitution, the state shall defend the interests
of the consumers. Assessing the compliance of the impugned norms of Article 3 of the law with
Paragraph 5 of Article 46 of the Constitution, it needs to be noted that that virtually by the
established legal regulation the norms of the laws or other legal acts of the Republic of Lithuania
wherein the common guarantees of the protection of the consumers’ rights are consolidated are
neither abolished nor amended.
The duty of the state to defend the interests of the consumers arises out of Paragraph 5 of
Article 46 of the Constitution. Taking account of the fact that in the area of economic relations
regulated by the impugned law that the production and the market are virtually concentrated, as well
as the fact that certain exceptions regarding application of the Law on Competition are provided for
in Paragraph 6 of Article 3 of this law, institutions of state authority have a duty to establish an
additional legal regulation which would secure the protection of the interests of the consumers. It
needs to be noted that the institutions of state authority have not carried out this duty neither prior to
the reorganisation of respective companies nor after the adoption of the impugned law. Such a
situation should be deemed a gap of the legal regulation. State institutions must eliminate this gap.
Thus, the legal regulation consolidated in the impugned law in respect of the consumers is
38
inconsistent and incomplete, however, in this case there are not any sufficient legal grounds to
regard this as violation of Paragraph 5 of Article 46 of the Constitution.
V
On the compliance of Article 4 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” with the principle of a state
under the rule of law entrenched in the Constitution, Article 1, Article 23, Paragraph 1 of
Article 29, Paragraphs 1, 3, 4 and 5 of Article 46, Articles 67 and 135 of the Constitution.
1. It was established in Article 4, entitled “Requirements for the Holders of Blocks of
Shares”, of the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” passed on 29 September 1998:
“1. No shareholder of the joint-stock company “Mažeikių nafta”, save the State and the
strategic investor together with the entities under the control of the strategic investor, the notion
whereof is defined in the Law on Public Trading in Securities, has the right to hold in possession a
block of shares granting more than 24 percent of votes.
2. The State shall have the priority in acquisition of the shares sold or transferred otherwise
belonging to the other shareholders holding not less than one percent of shares of the joint-stock
company ‘Mažeikių nafta’ which continues its activities after the reorganisation. The Government
shall have the right to establish the same right of priority to the strategic investor as well.”
2. The Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”,
“Mažeikių nafta” and “Naftotiekis” in its initial wording was amended by Article 2 of the Law “On
Amending and Supplementing Articles 3 and 4 of the Law on the Reorganisation of the Joint-stock
Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’” of 5 October 1999. By means of
the said article, Paragraph 2 of Article 4 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” was supplemented and set down
as follows:
“2. The State shall have priority in acquisition of the shares sold or transferred otherwise
belonging to the other shareholders holding not less than one percent of shares of the joint-stock
company ‘Mažeikių nafta’ which continues its activities after the reorganisation. The Government
shall have the right to establish the same right of priority to the strategic investor as well. The
period during which the State has the right of priority to acquire shares of the joint-stock company
‘Mažeikių nafta’ from the strategic investor and the procedure of implementation of this right shall
be established in the agreement between the Government of the strategic investor. Under the
procedure set down in the agreement with the Government, the strategic investor shall have the
right to transfer the shares of the joint-stock company ‘Mažeikių nafta’ which belong to the
39
strategic investor by right of ownership to the enterprises all the shares and/or capital whereof,
either directly or indirectly, belong to the strategic investor.”
In addition, Article 4 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” was supplemented with Paragraph 3 wherein
it was established:
“3. In the case that the strategic investor has not sold or transferred otherwise the shares of
the joint-stock company ‘Mažeikių nafta’ acquired under Item 1 of Paragraph 1 of Article 3 of this
Law (save transfer of the shares to the enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor) and a decision has been adopted to privatise,
sell or transfer otherwise a certain portion of state-owned shares so that after such privatisation, sale
or transfer the nominal value of the shares belonging to the State by right of ownership of the jointstock company ‘Mažeikių nafta’ would comprise less than 18 percent of the authorised capital of
this company, while the strategic investor shall have the right of priority to acquire all or part of the
state-owned shares privatised or otherwise transferred without application of the Law on the
Privatisation of State-owned and Municipal Property. This provision of priority shall also be
applicable in cases when the total value of the state-owned shares of the joint-stock company
‘Mažeikių nafta’ further decreases due to subsequent transfers of the state-owned shares.”
3. After the supplements, Article 4 of the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides:
“1. No shareholder of the joint-stock company “Mažeikių nafta”, save the State and the
strategic investor together with the entities under its control the notion whereof is defined in the
Law on Public Trading in Securities, has the right to hold in possession a block of shares granting
more than 24 percent of votes.
2. The State shall have priority in acquisition of the shares sold or transferred otherwise
belonging to the other shareholders holding not less than one percent of shares of the joint-stock
company ‘Mažeikių nafta’ which continues its activities after the reorganisation. The Government
shall have the right to establish the same right of priority to the strategic investor as well. The
period during which the State has the right of priority to acquire shares of the joint-stock company
‘Mažeikių nafta’ from the strategic investor and the procedure of implementation of this right shall
be established in the agreement between the Government of the strategic investor. Under the
procedure set down in the agreement with the Government, the strategic investor shall have the
right to transfer the shares of the joint-stock company ‘Mažeikių nafta’ which belong to the
strategic investor by right of ownership to the enterprises all the shares and/or capital whereof,
either directly or indirectly, belong to the strategic investor.
40
3. In the case that the strategic investor has not sold or transferred otherwise the shares of
the joint-stock company ‘Mažeikių nafta’ acquired under Item 1 of Paragraph 1 of Article 3 of this
Law (save transfer of the shares to the enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor) and a decision has been adopted to privatise,
sell or transfer otherwise a certain portion of state-owned shares so that after such privatisation, sale
or transfer the nominal value of the shares belonging to the State by right of ownership of the jointstock company ‘Mažeikių nafta’ would comprise less than 18 percent of the authorised capital of
this company, while the strategic investor shall have the right of priority to acquire all or part of the
state-owned shares privatised or transferred otherwise without application of the Law on the
Privatisation of State-owned and Municipal Property. This provision of priority shall also be
applicable in cases when the total value of the state-owned shares of the joint-stock company
‘Mažeikių nafta’ further decreases due to subsequent transfers of the state-owned shares.”
4. The petitioners maintain that the norms of Article 4 of the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” violate the
principle of a just society and state under the rule of law entrenched in the Preamble to the
Constitution, Articles 1 and 23, Paragraph 1 of Article 29, Paragraphs 1, 3, 4 and 5 of Article 46,
Article 67 and Paragraph 1 of Article 135 of the Constitution.
5. The petitioners, assuming that the Law on the Basics of National Security is a
constitutional law, have doubts concerning the compliance of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
with the principle of a just society and state under the rule of law entrenched in the Preamble to the
Constitution, as well as Articles 1, 67 and Paragraph 1 of Article 135 of the Constitution.
The Constitutional Court has already held in this Ruling that the Law on the Basics of
National Security is not a constitutional law, therefore, there are not any legal grounds to assert that
the impugned norms of Article 4 of the law violate the principle of a state under the rule of law
entrenched in the Preamble to the Constitution, Articles 1 and 67 as well as Paragraph 1 of Article
135 of the Constitution.
6. The petitioners maintain that the norms of Paragraph 1 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
limit the right of the shareholders of the joint-stock company “Mažeikių nafta”, with the exception
of the state and the strategic investor, to hold a block of shares of this company granting more than
24 percent of votes. By means of such regulation the principle of the equality of all persons before
the law, established in Paragraph 1 of Article 29 of the Constitution, as well as freedom of fair
competition entrenched in Paragraph 4 of Article 46 of the Constitution, is violated.
41
According to the petitioners, by the norms of Paragraph 2 of Article 4 of the law the rights
of the shareholders who hold by right of ownership more than 1 percent of shares of the joint-stock
company “Mažeikių nafta” continuing its activities after the reorganisation to freely dispose of their
property, i.e. shares, are infringed, as it is established that either the state or the strategic investor
has the right of priority in acquisition of these shares. Such legal regulation violates the principle of
inviolability of property established in Article 23 of the Constitution and the provision of Paragraph
1 of Article 46 of the Constitution providing that Lithuania’s economy shall be based on the right to
private ownership, freedom of individual economic activity, and initiative. According to the
petitioners, Paragraph 3 of Article 4 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides, in case there are certain conditions,
for the right of priority of the strategic investor to acquire the shares sold or transferred otherwise
by the state and the possibility of not following the requirements established in the other laws. Such
legal regulation violates freedom of fair competition entrenched in Paragraph 4 of Article 46 of the
Constitution and the principle of a state under the rule of law, declared in the Preamble to the
Constitution.
7. The Constitution is an integral legal act the principles and norms whereof constitute a
harmonious system. Therefore, while assessing whether the impugned norms of the law are in
conformity with the provisions of Articles 29 and 23 of the Constitution, one has to take into
consideration the fact that in this case these constitutional provisions are linked with the right of the
state to regulate economic activity so that it would serve the general welfare of the nation. The
legislature, while taking account of the importance and character of the regulated economic
relations, may regulate this activity in a differentiated manner or establish certain conditions for it.
Such conditions may be set for the reorganisation of enterprises operating in a specific sector of
economy, terms and procedure of investments into such enterprises, and requirements for the
holders of blocks of shares.
8. Paragraph 1 of Article 4 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides that no shareholder of the joint-stock
company “Mažeikių nafta”, save the state and the strategic investor together with the entities under
the control of the strategic investor the notion whereof is defined in the Law on Public Trading in
Securities, has the right to hold in possession a block of the shares granting more than 24 percent of
votes.
While assessing whether the impugned norms are in conformity with Articles 23 and 29 and
Paragraphs 1 and 4 of Article 46 of the Constitution, one has to take account of the purpose of the
law, the character of the regulated relations and the aspiration of the state to respectively regulate
the economy of this country. As mentioned in this Ruling, the singling out of individual economic
42
entities and differentiated regulation of their situation should be linked with the aims raised by the
state in the sphere of economy.
The impugned norms of Paragraph 1 of Article 4 set requirements for the holders of blocks
of shares of the stock-joint company “Mažeikių nafta” which continues its activities after the
reorganisation, i.e., requirements as to the size of a block of shares that they may hold. Therefore,
there are not any legal grounds to assert that legal regulation violates the guarantees established in
Article 23 of the Constitution, the equality of persons before the law established in Article 29 of the
Constitution and freedom of fair competition consolidated in Paragraph 4 of Article 46 of the
Constitution.
9. Paragraph 2 of Article 4 of the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provides that the state shall have priority in
acquisition of the shares sold or transferred otherwise belonging to the other shareholders holding
not less than one percent of shares of the joint-stock company “Mažeikių nafta” which continues its
activities after the reorganisation. The Government shall have the right to establish the same right of
priority to the strategic investor as well. Paragraph 3 of the same article provides that in the case
that “the strategic investor has not sold or transferred otherwise the shares of the joint-stock
company ‘Mažeikių nafta’ acquired under Item 1 of Paragraph 1 of Article 3 of this Law (save
transfer of the shares to the enterprises all the shares and/or capital whereof, either directly or
indirectly, belong to the strategic investor) and a decision has been adopted to privatise, sell or
transfer otherwise a certain portion of state-owned shares so that after such privatisation, sale or
transfer the nominal value of the shares belonging to the State by right of ownership of the jointstock company ‘Mažeikių nafta’ would comprise less than 18 percent of the authorised capital of
this company, while the strategic investor shall have the right of priority to acquire all or part of the
state-owned shares privatised or otherwise transferred without application of the Law on the
Privatisation of State-owned and Municipal Property”.
The establishment of the right of priority under certain conditions for respective entities in
itself does not deny the principles of the right of ownership established in Article 23 of the
Constitution, nor those of the equality of all persons before the law, the court and other state
institutions, nor the requirements of Paragraphs 1 and 4 of Article 46 of the Constitution. The
circumstance that the norms of Paragraphs 2 and 3 of Article 4 of the Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” provide for a
different legal regulation from that provided in other laws may not serve as the grounds for drawing
the conclusion that the principle of a state under the rule of law established in the Constitution is
violated.
43
Paragraph 2 of Article 4 of the law provides for the right of priority of the state as well as
that, on a decision of the Government, of the strategic investor to acquire the shares sold or
transferred otherwise. When one considers sale of shares, the legislature, while taking account of
the purposes of the legal regulation as well as other circumstances, may establish entities which
have the right of priority to acquire the shares sold. In this case, the right of ownership established
in Article 23 of the Constitution is not violated as the shareholder who sells the shares is paid the
market price. However, shares may be transferred not only by means of sale but other ways as well,
e.g., by giving them as a present. It needs to be noted that neither the Constitution nor universally
recognised international legal norms deny the opportunity to set certain limits on the exercise of the
rights of ownership, however, by means of such limitations the essence of the right of ownership
may not be denied. Meanwhile, under the impugned norm of the law the right of a person to give
his shares as a present or transfer them otherwise is groundlessly restricted.
Taking account of the reasoning set forth, it should be concluded that the provision of
Paragraph 2 of Article 4 of the Law on the Reorganisation of the Joint-stock Companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis” that the state, and, by the decision of the Government,
the strategic investor shall have priority in acquisition of the shares sold or transferred otherwise
belonging to the other shareholders holding not less than one percent of shares of the joint-stock
company “Mažeikių nafta” which continues its activities after the reorganisation to the extent that
the right of the shareholders to transfer their shares otherwise is limited conflicts with Article 23 of
the Constitution.
VI
On the compliance of Paragraph 3 of Article 5 of the Law on Tax Administration with
the principle of a state under the rule of law entrenched in the Constitution, Article 1,
Paragraph 1 of Article 5, Item 15 of Article 67, Paragraph 3 of Article 127 and Paragraph 1 of
Article 128 of the Constitution.
1. Paragraph 3 of Article 5 of the Law on Tax Administration provides: “In cases when
under the procedure established by the Republic of Lithuania’s Law on Investment in an investment
agreement of the Government of the Republic of Lithuania concluded with a respective strategic
investor the said strategic investor obligates himself to invest, in the course of 3 years (36 calendar
months) from the day of the conclusion of the agreement, not less than 200 million litas into an
economic entity registered in the Republic of Lithuania register of enterprises, at the request of the
strategic investor in the investment agreement it may be established that in respect with the said
economic entity the rates of direct taxes (taxes listed in Paragraph 1 of this Article except valueadded and excise taxes) established on that day in valid tax laws shall not be increased from the day
after the investment provided for in the investment agreement has reached 200 million litas. The
44
Government of the Republic of Lithuania shall have the right to prolong the term of not increase of
taxes for strategic investors for up to 10 years.”
2. In the opinion of the petitioner, the impugned norm of Paragraph 3 of Article 5 of the Law
on Tax Administration conflicts with the principle of a state under the rule of law entrenched in the
Preamble to the Constitution, Article 1, Paragraph 1 of Article 5, Item 15 of Article 67 and
Paragraph 1 of Article 128 of the Constitution.
The petitioner bases his allegation that the impugned norm of Paragraph 3 of Article 5 of the
Law on Tax Administration conflicts with the aforesaid articles of the Constitution on the fact that
that by this norm the Government has been delegated the competence of the Seimas to approve
taxes and assume basic property liabilities. It is from this aspect that the Constitutional Court will
consider the impugned norms of Article 5 of the Law on Tax Administration.
3. Under Item 15 of Article 67 of the Constitution, the Seimas shall establish state taxes and
other obligatory payments. Paragraph 3 of Article 127 of the Constitution provides that taxes, other
budgetary payments, and dues shall be established by means of laws of the Republic of Lithuania.
The Government of the Republic of Lithuania shall implement laws and resolutions of the Seimas
concerning the implementation of laws, as well as the decrees of the President of the Republic (Item
2 of Article 94 of the Constitution) and discharge other duties prescribed to the Government by the
Constitution and other laws (Item 7 of Article 94 of the Constitution).
Tax relations are liability legal relations between the state and the taxpayer. Taxes are
established by law. It is only in the norms of legal acts of such type that the object of a tax, entities
of tax relations, their rights and duties, sizes of taxes, term of payment, exceptions and deductions
may be established. By substatutory acts the procedure of enforcement of such laws may be
regulated and particular norms of tax laws may be implemented.
4. As mentioned before, it is provided in Paragraph 3 of Article 5 of the Law on Tax
Administration that the Government shall have the right to prolong the term of not increase of taxes
to a strategic investor for up to 10 years.
Under Paragraph 3 of Article 127 of the Constitution, taxes, other budgetary payments, and
dues shall be established by means of laws of the Republic of Lithuania. Item 15 of Article 67 of the
Constitution provides that the Seimas shall establish state taxes and other obligatory payments.
Thus, only a law may provide for the term of payment, exceptions and deductions. As mentioned in
this Ruling, the Constitutional Court has noted that in cases when concrete powers are established
for one or another state institution, then this institution may not transfer these powers to another
institution, while the other state institution may not take over these powers. Under Paragraph 3 of
Article 5 of the impugned Law on Tax Administration, the Government has been granted the right
to prolong the term of not increase of taxes for a strategic investor for up to 10 years, i.e. the Seimas
45
transferred the powers to the Government which are directly established for the Seimas in the
Constitution.
It is provided for in Paragraph 1 of Article 128 of the Constitution that decisions concerning
State loans and other basic property liabilities of the state shall be adopted by the Seimas on the
recommendation of the Government. Taking account of the fact that the said article of the
Constitution does not regulate tax relations, it should be concluded that the impugned provision of
Paragraph 3 of Article 5 of the Law on Tax Administration is in compliance with Paragraph 1 of
Article 128 of the Constitution.
Taking account of the reasoning set forth, it should be concluded that the provision of
Paragraph 3 of Article 5 of the Law on Tax Administration by which the right is granted to the
Government to prolong the term of not increase of taxes for a strategic investor for up to 10 years
conflicts with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution, as well as
Paragraph 1 of Article 5 of the Constitution and the principle of a state under the rule of law
entrenched in the Constitution.
VII
On the compliance of Paragraph 1 of Article 1 of the Seimas Resolution “On the
Recognition of a Strategic Investor” of 29 September 1998 with Paragraph 4 of Article 46 of
the Constitution, as well as on the compliance of Item 1 of Paragraph 2 of Article 1 of the said
resolution with the Law on the Basics of National Security.
1. In the opinion of the petitioners, the compliance of Paragraph 1 of Article 1 of the Seimas
Resolution “On the Recognition of a Strategic Investor” of 29 September 1998 with the
Constitution should be assessed in connection with the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”. By granting the status of a
strategic investor to a concrete entity, one establishes advantages in the competition of economic
activity, while an actual opportunity for a strategic investor to monopolise production is created.
Thus, Paragraph 1 of Article 1 of the impugned law violates the freedom of fair competition and the
prohibition on monopolising production as established in Paragraph 4 of Article 46 of the
Constitution.
In addition, according to the petitioners, the provision of Item 1 of Paragraph 2 of the
impugned Seimas resolution, by which the agreement between the Government and the strategic
investor is approved so that the strategic investor might acquire 33 percent of shares of the
authorised capital of the company, as in such a case the state will lose a decisive vote in adopting
positive decisions, violates the provision of the section entitled “Economic Policy” of Chapter 4 of
the Law on the Basics of National Security stipulating that in enterprises of strategic importance for
national security the controlling decision power must be retained by the state.
46
2. Paragraph 1 of Article 1 of the Seimas resolution recognises the United States of America
company “Williams International Company” a strategic investor and grants it the right to acquire a
portion of shares of the joint-stock company “Mažeikių nafta” which continues its activity after the
reorganisation.
The petitioner links the alleged non-compliance of the resolution with the Constitution to the
fact that the Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių
nafta” and “Naftotiekis” allegedly conflicts with Paragraph 4 of Article 46 of the Constitution.
The Constitutional Court has held in this Ruling that the impugned norms of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
are in conformity with Paragraph 4 of Article 46 of the Constitution, therefore, in this case it is
impossible to draw the conclusion that from the aspect pointed out by the petitioner Paragraph 1 of
Article 1 of the Seimas resolution which is being linked with the aforementioned law conflicts with
Paragraph 4 of Article 46 of the Constitution.
3. The section “Economic Policy” of Chapter 4 entitled “Principal Provisions of Lithuania’s
Domestic Policy to Ensure Security” of the annex to the Law on the Basics of National Security
establishes the fundamentals of ensuring security in the economy of this country.
4. The Constitutional Court notes that the Seimas resolution impugned by the petitioner is
directly linked not with the Law on the Basics of National Security but the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”.
The latter law provides for the procedure of reorganisation of the joint-stock companies “Būtingės
nafta”, “Mažeikių nafta” and “Naftotiekis”, the conditions and procedure of investments into the
company which continues its activity after the reorganisation, as well as requirements for the
holders of blocks of shares.
The provisions of the section “Economic Policy” of Chapter 4 of the Law on the Basics of
National Security establish the basics of ensuring security but they do not regulate the
reorganisation of the joint-stock companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”.
The impugned Seimas resolution is designed for the enforcement of the Law on the
Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis”
and is not linked with the Law on the Basics of National Security. Therefore, it should be concluded
that the norms of Item 1 of Paragraph 2 of Article 1 of the impugned Seimas resolution are in
compliance with the Law on the Basics of National Security.
5. The Seimas adopted both the Law on the Reorganisation of the Joint-stock Companies
“Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” and the Resolution “On the Recognition of a
Strategic Investor” on 29 September 1998. The said law went into effect on 14 October 1998. Thus,
the Government had exercised its powers established in this law concerning presentation a proposal
47
to the Seimas as to the recognition of the strategic investor before the said law went into effect. In
this case, the Seimas had adopted the resolution concerning recognition of a particular entity as a
strategic investor before the said law came into force. Thus, the law had been applied before it went
into effect.
The Constitutional Court notes that such practice of adoption of a substatutory act, i.e. a
Seimas resolution, is a vicious one, as the Seimas resolution regarding the application of the law
was adopted regardless of the fact that the law had not gone into effect yet.
Although the impugned Seimas resolution had been adopted before the law came into force,
however, the said resolution went into effect after the Law on the Reorganisation of the Joint-stock
Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September 1998 had come
into force. After these circumstances have been taken account of, there remain no legal grounds to
assert that the impugned Seimas resolution as to the procedure of its adoption conflicts with the
Constitution.
6. A concrete entity is recognised a strategic investor in Paragraph 1 of Article 1 of the
Seimas Resolution “On the Recognition of a Strategic Investor”. It was established in Paragraph 2
of Article 1 of the resolution as to what provisions of the agreement between the Government and
the strategic investor “Williams International Company” are approved by the Seimas. Taking into
consideration this fact, it should be concluded that the Seimas resolution was adopted in order to
carry out the agreement reached in principle.
It needs to be noted that that such practice of legislation when legal norms following which
agreements ought to be concluded are not set but, rather, agreements are reached first, and legal
norms are determined later, reflecting the agreement, is a vicious one as it denies one of the most
important principles of adoption of laws and other legal acts, meaning that legal acts must establish
rules of conduct, which must be followed by entities in the future only. However, the
aforementioned vicious character of the adoption of the impugned Seimas resolution, while one
takes account of the fact that the impugned Seimas resolution went into effect only after the law had
come into force, may not be held sufficient grounds to recognise that this Seimas resolution is in
conflict with the Constitution.
7. Taking account of the reasoning set forth, the conclusion should be drawn that Paragraph
1 of Article 1 of the Seimas Resolution “On the Recognition of a Strategic Investor” of 29
September 1998 is in compliance with Paragraph 4 of Article 46 of the Constitution. Item 1 of
Paragraph 2 of Article 1 of the said resolution is compliance with the Law on the Basics of National
Security.
48
Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53,
54 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional
Court of the Republic of Lithuania gives the following
ruling:
1. To recognise that Article 2 of the Republic of Lithuania’s Law on the Reorganisation of
the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” is in compliance
with the Constitution of the Republic of Lithuania.
2. To recognise that the provision of Paragraph 4 of Article 3 of the Republic of Lithuania’s
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” that the Government of the Republic of Lithuania, in the agreements with the strategic
investor and/or the joint-stock “Mažeikių nafta”, has the right to assume basic property liabilities in
the name of the state for the strategic investor and/or the joint-stock company “Mažeikių nafta”
conflicts with Paragraph 1 of Article 5 and Paragraph 1 of Article 128 of the Constitution of the
Republic of Lithuania.
3. To recognise that the provision of Paragraph 4 of Article 3 of the Republic of Lithuania’s
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” that the Government of the Republic of Lithuania, in the agreements with the strategic
investor and the joint-stock company “Mažeikių nafta”, has the right to assume basic property
liabilities in the name of the state, including recovery of losses, to the extent that that the right of the
Government of the Republic of Lithuania is established to obligate itself to cover losses to the
strategic investor and the joint-stock company “Mažeikių nafta” even in such a case when the
strategic investor and/or the joint-stock company “Mažeikių nafta” are responsible for the losses
conflicts with Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the
principle of a state under the rule of law entrenched in the Constitution of the Republic of Lithuania.
4. To recognise that the provision of Paragraph 4 of Article 3 of the Republic of Lithuania’s
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” that the Government of the Republic of Lithuania, in the agreements with the strategic
investor and/or the joint-stock “Mažeikių nafta”, has the right to assume basic property liabilities in
the name of the state, including recovery of losses, to the extent that the Government of the
Republic of Lithuania has the right to obligate itself to cover losses even in such a case when such
losses are incurred due to adoption of the laws enforcing norms of the Constitution of the Republic
of Lithuania and/or protecting the values established in the Constitution conflicts with Article 4 of
the Constitution of the Republic of Lithuania and the principle of a state under the rule of law
entrenched in the Constitution of the Republic of Lithuania.
49
5. To recognise that the provision of Paragraph 2 of Article 4 of the Republic of Lithuania’s
Law on the Reorganisation of the Joint-stock Companies “Būtingės nafta”, “Mažeikių nafta” and
“Naftotiekis” that the state, and, upon the decision of the Government of the Republic of Lithuania,
the strategic investor shall have priority in acquisition of the shares sold or transferred otherwise
belonging to the other shareholders holding not less than one percent of shares of the joint-stock
company “Mažeikių nafta” which continues its activities after the reorganisation to the extent that
the right of the shareholders to transfer their shares otherwise is limited conflicts with Article 23 of
the Constitution of the Republic of Lithuania.
6. To recognise that the provision “the Government shall have the right to prolong the term
of not increase of taxes for strategic investors for up to 10 years” of Paragraph 3 of Article 5 of the
Republic of Lithuania’s Law on Tax Administration conflicts with Paragraph 1 of Article 5, Item 15
of Article 67, Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania, as well as
the principle of a state under the rule of law entrenched in the Constitution of the Republic of
Lithuania.
7. To recognise that the Republic of Lithuania’s Law on the Reorganisation of the Jointstock Companies “Būtingės nafta”, “Mažeikių nafta” and “Naftotiekis” of 29 September 1998, the
Republic of Lithuania’s Law “On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’ and ‘Naftotiekis’”
of 3 June 1999, the Republic of Lithuania’s Law “On Amending and Supplementing Articles 3 and
4 of the Law on the Reorganisation of the Joint-stock Companies ‘Būtingės nafta’, ‘Mažeikių nafta’
and ‘Naftotiekis’” of 5 October 1999, and the Republic of Lithuania’s Law “On Supplementing and
Amending Article 5 of the Law on Tax Administration” of 29 September 1998 as to the procedure
of their adoption are in compliance with the Constitution of the Republic of Lithuania.
8. To recognise that Paragraph 1 of Article 1 of the Resolution of the Seimas of the Republic
of Lithuania “On the Recognition of a Strategic Investor” of 29 September 1998 is in compliance
with the Constitution of the Republic of Lithuania.
9. To recognise that Item 1 of Paragraph 2 of Article 1 of the Resolution of the Seimas of the
Republic of Lithuania “On the Recognition of a Strategic Investor” of 29 September 1998 is in
compliance with the Law on the Basics of National Security.
10. To dismiss the initiated legal proceedings concerning the compliance of the Republic of
Lithuania’s Law “On Supplementing Article 12 of the Law on Foreign Capital Investment in the
Republic of Lithuania” with the Constitution of the Republic of Lithuania.
This ruling of the Constitutional Court is final and not subject to appeal.
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The ruling is pronounced in the name of the Republic of Lithuania.
Justices of the Constitutional Court:
Egidijus Jarašiūnas
Egidijus Kūris
Zigmas Levickis
Augustinas Normantas
Vladas Pavilonis
Jonas Prapiestis
Vytautas Sinkevičius
Teodora Staugaitienė