Decision

The case relates to Art. 149, para 1, subpara 2 in relation to Art. 150, para 3 of the Constitution.

The proceedings were instituted on 1 December 2006 following a challenge of the Ombudsman of the Republic of Bulgaria of the constitutionality of Art. 154, para 1 of the Energy Act (EA) (promulgated, DV, No 107/2003; amended, DV, No 74/2006).

The Ombudsman claims that the text challenged, which violates citizens' rights, is at variance with Art. 19, para 2 and Art. 56 of the Constitution. In his view the Legislature, in breach of the former Constitution text has failed to provide a nondiscriminatory legal arrangement for the business of the district heating companies, to guarantee a real equality of the parties to the transaction of heat supply and to provide consumers with a possibility to efficiently protect their rights as the burden of proof whenever a company has claims lies with the end user. Second, regarding Art. 56 of the Constitution, the Ombudsman finds that the citizens' right to protection is infringed upon as the equality of the parties to the heat supply contract calls for equal opportunities in the protection of rights and interests in a lawsuit.

The Constitutional Court examined the challenge and judged the views in the challenge and in the stands of the stakeholders.

Art. 154, para 1 of the EA did not obtain the majority vote required for the judgment “anticonstitutional” and the challenge was dismissed. As neither of the two views was supported by a majority vote, the Court could not formulate a commonly agreed stand

I. А. In the view of Justices Vassil Gotsev, Lyudmil Neikov, Vladislav Slavov, Evgeni Tanchev, Plamen Kirov and Krassen Stojchev the text challenged is dissonant with Art. 19, para 2 of the Constitution and the challenge request should be honored on account of:

The provision of Art. 154, para 1 of the EA allows the companies that are listed in Art. 151, para 1 to approach defaulting payers in a process prescribed in Art. 237, littera " k " of the Civil Procedure Code on the basis of an abstract of the heat transmission company's account. In the meaning of the CPC thus quoted text the abstract of an account is a document, which is a proof of executorial power and a writ of execution can be obtained on the basis of this power. The so-called non-judicial execution grounds as the abstract of an unpaid bill grants a privilege to the claimant who is spared the need to be a moving party in an adversary proceeding and is free to proceed with forcible execution without a court procedure against the defaulting payer. No doubt, the non-judicial execution puts the defaulting payers and the claimants in an unequal position. Therefore the law sanction, which determines what arrears are subject to non-judicial execution, while it conforms to the Constitution, should cover executorial powers that derive from written acts that are sufficiently credible and formally indisputable.

The establishment and guarantee of equal legal conditions in the sense of Art. 19, para 2 imply legal equality, not economic equality. In the case in question the challenged legal text creates legal inequality with the privilege it grants to the heat transmission companies to collect their receivables. The claim that this privilege will ensure the stability, reliability and non-interruption of the heat supply process has an economic dimension in addition to management and heat generation aspects; however, this claim cannot be a legal justification for the non-observation, by way of exception, of the Constitution-enshrined principle of the establishment and guarantee of equal legal conditions for economic activities.

When the Civil Procedure Code mentions which acts can have non-judicial execution grounds, the justification for that is the type of arrears, the credibility of the claimant or of the defaulting payer and suchlike. This can be the only excuse for a special rights protection process, which is different from the universal process. Thus for an act to become a non-judicial execution, one has to take into consideration the nature, substance and functions of this act as defined in the existing legislation.

Art. 19, para 2 of the Constitution is explicit: when the law defines the legal conditions for economic activities, it must protect the consumer. Therefore, the lawmaker has to recognize the Constitution-enshrined imperative in the adoption of whatever resolution, which affects consumers. For this reason when a law is to impart non-judicial execution grounds to an act as part of the legal conditions for economic activities, this law has to conform to the postulation of Art. 19, para 2 of the Constitution.

With respect to the cases that are covered by Art. 154, para 1 of the EA, it is beyond doubt that the quick collection of arrears to be used for a public utility was the justification for such a regulation. The economic and social considerations were prevailing and led to the text as it is. This text grants a privilege to the public utilities, the justification being that they need sophisticated organization, efforts, technologies and money. However, the interest of the public utility users is ignored. The fact that the public utility users are consumers has been totally ignored and no consumer protection mechanism that must be there if the Constitution is to be complied with, is in place.

The legal arrangement of Art. 154, para 1 of the EA simply refers to already existing CPC rules whose function is to protect a defaulting payer regardless of the specifics of his legal status. The protection as prescribed by Art. 250 and Art. 254 of the Civil Procedure Code to be triggered in the hypothesis of Art. 154, para 1 of the EA has not been conceived as consumer protection nor has it been designed as such. This protection is entirely in line with the rationale of the protection of rights and is not preoccupied in the least with the legal status of a person in his capacity of a consumer. In general, the protection as defined in Art. 250 and Art. 254 of the CPC is not in tune with Art. 19, para 2 of the Constitution for the idea of consumer protection is not there at all. The specific parameters of the protection that the Constitution extends prove that rather than adequate consumer protection, the burden of proof lies with the customer (Art. 254 of the CPC) and that it is the customer who must present sound written evidence or put up the required collateral (Art. 250 of the CPC). That is to say, the employment of the mechanism in Art. 250 and Art. 254 of the CPC in the hypothesis of Art. 154, para 1 of the EA does not protect the customer for while it grants a privilege that does not fit into the general framework of rights protection to the heat transmission companies, is does not extend adequate protection on consumers as per the prescription of Art. 19, para 2 of the Constitution.

The meaning of Art. 19, para 2 of the Constitution is broader and does not boil down to the prescription to pass a special consumer protection act. Consumer protection is not a matter of one piece of legislation but of a set of rules that cover all possible areas of violations of consumer rights and interests.

The latter demands that a legislative frame should be in place to protect the consumer with definite standards and requirements of the quality and quantity of the goods and services provided and to avert the risk in usage. It was noted that Art. 154, para 1 of the EA violates the Constitution prescription for it grants an unjustified privilege to economic actors, the heat transmission companies which are regional monopolists. Further, it is commonly known that the amount and quality of heat is measured with metering devices whose specifications vary (those that are used to measure the heat supplied to a flat do not have to meet the standards of the commercial heat meters – Art. 140, para 1 of the EA and Art. 48 and Art. 49 of Regulation No 2 of 2004 on heat supply) and apply formulae that the customers find it difficult to understand. Therefore, it cannot be concluded that the abstract of a bill affects executorial powers that derive from written acts that are sufficiently credible and formally indisputable. The customer is not provided with clear and fair figures of the amount and quality of the heat consumed, yet, the law makes it binding on him to bear the burden of proof if he contests the bill that the heat transmission company delivers. The above fact and the privilege granted to the heat transmission companies and the limitations on consumer protection in the general court procedure constitute a violation of rights that the quoted Constitution text upholds.

Thus 154, para 1 of the EA violates Art. 19, para 2 of the Constitution.

B. On the alleged contravention to Art. 56 of the Constitution.

The right to legal defense is a fundamental right of citizens whose rights and legitimate interests must be defended. It is a universal right.

The allegations of the noncompliance of Art. 154, para 1 of the EA with Art. 56 of the Constitution and the accusation that the text in question curtails the citizens' right to contest the claims of the heat transmission companies in a judicial process cannot be shared. In principle, as already said, it will not be a defiance of the Constitution if by way of exception a law curtails certain rights of citizens in order to protect other Constitution-enshrined values or for the sake of priorities or interests of high public importance. Such codified exceptions allow the adoption of texts like Art. 237 of the CPC, which grants a privilege in the collection of arrears.

Then the right to legal defense is a fundamental right of citizens and to prevent curtailment or violation Art. 244, Art. 250 and Art. 254 of the CPC were adopted so as to exercise this right by appeal of the grounds on which a writ of execution is obtained or by objection to the executory proceedings or by adversary proceedings with negative declaratory action. The above explanation allows to conclude that Art. 154, para 1 of the Energy Act does not fall foul of Art. 56 of the Constitution.

C. On the alleged contravention to Art. 35, para 1 of the Constitution:

The concepts that were formulated by the Association of European Integration and Human Rights and discussed in the context of Art. 22, para 1 of the Constitutional Court Act allow the heat transmission company to curtail the freedom of movement of a defaulting payer in execution proceedings. Such action can be taken in the meaning of Art. 76 (3) of the Bulgarian Identity Documents Act (BIDA) and is a possible consequence of the application of Art. 154, para 1 of the Energy Act, however following the obtainment of a writ of execution as per Art. 237 of the CPC, legal defense, if any, as per Art. 244, Art. 250 ff. of the CPC and subsequent executionary proceedings. This sequence of law-established proceedings shows that there exists no direct relation between the curtailment of rights by the BIDA and the alleged contravention of the Energy Act text, which is challenged, to Art. 35, para 1 of the Constitution.

II. In the view of Justices Roumen Yankov, Lazar Grouev, Emilia Droumeva, Dimiter Tokoushev and Blagovest Pounev the Energy Act text, which is challenged is not at variance with the Constitution and the request should be dismissed for the following reasons:

The public discontent and suspicion about overcharged bills of the heat transmission companies make the idea that the challenged Art. 154, para 1 of the EA might be anticonstitutional easily digestible. Such a negative public attitude per se cannot be taken as a legal argument for judgment.

It is not certain that the challenged text creates legal inequality and grants a privilege on the heat transmission companies by the facilitation of the collection of arrears.

While the Constitution reads that the law shall provide and guarantee equal conditions for economic activity it does not mean that the conditions in the different economic sectors and for each economic actor must always be identical. The specifics from sector to sector and from actor to actor presupposes the specific legal arrangement. What is important, as the Constitution provides for, is that the legal framework should not differ under identical conditions of economic activity.

It is the specific and not the general that is particularly manifest in such enterprises. The heat transmission companies in this specific case, and the electricity transmission and gas transmission companies in all other cases are special economic actors and actual monopolists in each region. However, this monopoly cannot а priori be perceived solely as a privilege ( vide infra ).

The requirements for equal legal conditions for business in the sense of Art. 19, para 2 of the Constitution are not directly relatable to consumer rights protection though the efficiency of such protection is determined by the production of goods and services. The principle of equal conditions for economic activity has no bearing on the producer-consumer relations. This principle subsumes the economic actors' market freedom though it helps, with the conditions for competition that it creates, improve the quality of consumption. However, these are the free market's mechanisms of protection which must be differentiated from the legal instruments of consumer protection that include standards of the quality of the goods or services consumed and a legal mechanism to guarantee the protection. The syntactic analysis of Art. 19, para 2 of the Constitution shows that there exists a relation between the principles of equal legal conditions for economic activity and consumer protection. Though these two activities are carried out simultaneously, they are not identical. For this reason the judgment of the constitutionality of Art. 154, para 1 of the EA must focus on consumer protection.

The text challenged in not dissonant with the Constitution as it expresses the lawmaker's unanimous concept of strong legal guarantees for the energy supplier companies' collection of arrears. The faster collection procedure as per Art. 237, littera “k” of the CPC is to be enjoyed by the district heating companies, and also by the electricity distribution companies, the gas supply companies and the other commercial service of general economic utility, the water supply and sewerage companies. These services of general economic utility are treated equally with the provision of equal legal conditions for a profit-making business. The collection of arrears from defaulting payers is facilitated as there is no need to take legal action against them. Therefore the district heating companies' customers are not on a par with customers in other sectors of the economy where such a method of collection of arrears is disallowed.

The facilitated method that the challenged text grants to the district heating companies to deal with defaulting payers is not a discriminating clause in the contract made between the heat supplier and the customer for this is seen as a procedure necessitated by the modus operandi of those companies and the public importance of the utility.

For these companies it is an obligation, and not a privilege, to supply heat to all customers while they have no chance whatsoever to choose customers that they could have done had they been allowed to freely negotiate.

Despite their being commercial companies, it is their obligation and not a privilege to supply heat even when the bills are not paid on time or are not paid at all if the defaulting payers are hospitals, kindergartens, schools, institutional care places, enterprises of vital importance for the national economy with a flow process, condominium-project buildings even when some of the occupants do not pay their heating bills.

These special characteristics call for a quick return on the heating, hence the facilitated way of dealing with defaulting payers. The obtainment of a writ of forcible execution without taking legal action against the defaulting payers is intended to quickly recover the sums needed for the continuation of the heat supply operation which otherwise would have to be disrupted or even discontinued if the company is decapitalized.

In conclusion, the need to have a normally operating energy sector with quality of service for the good payers and quality of life for the public in general has brought to life a facilitated proceeding to protect the heat supplier's interest.

Though the Ombudsman's recognizes that the challenge is not directly relatable to the arguments of the noncompliance of Art. 154, para 1 of the EA with the Constitution, he insists that the text is “dissonant with the EU antitrust legislation”, in particular with Art. 86 of the consolidated text of the Treaty Establishing the European Community.

In this case the Ombudsman selectively refers only to part of the cited Art. 86 as the provision contains an integral continuation which explicitly reads that undertakings entrusted with the operation of services of general economic interest shall be subject to the rules contained in this Treaty, in particular to the rules on competition, “ in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them”. Therefore Art. 86 actually suggests that Art. 154, para 1 of the EA chimes with EU law which allows to deviate from the rules of absolute equality whenever the heat transmission companies are faced with obstructions, in law or in fact, to perform their tasks to the community.

The notion “services of general economic interest” has a definition in European jurisprudence as commercial services of general economic utility, on which the public authorities therefore impose specific public-service obligations. Their providers are assigned special public legal obligations and therefore such services must operate on the basis of principles and conditions, which enable them to fulfil their functions.