Decision No 1 of 31 March 2011 on Constitutional Case no 22/2010
Proceedings have been instituted on the grounds of Article 149(1)(2) of the Constitution.
A group of Members of Parliament (MPs) allege that §83 of the 2011 Bulgarian State Budget Act amending Article 17 of the Film Industry Act (promulgated in the State Gazette (SG) No 105/2003; last amended SG No 99/2010) was enacted in breach of Articles 4(1), 67(2) and 88(1) of the Constitution. According to the petitioners the lawmaker failed to incorporate a provision amending the Film Industry Act in the draft 2011 Bulgarian State Budget Act endorsed at first hearing on 11 November 2010. The amendment was proposed by a group of MPs in the period between the first and second hearings of the draft law and was endorsed in the report drawn up by the Parliamentary Committee responsible for budgetary and financial affairs. To adopt §83 of the 2011 Bulgarian Budget Act at second hearing the Parliament followed a procedure that did not allow MPs to further amend and supplement the Film Industry Act (ZFI). The aggrieved parties allege that the Law amending and supplementing the Film Industry Act was enacted in breach of the procedure laid down in the Constitution. They request that Article 17 of the Film Industry Act as amended by §83 of the 2011 Bulgarian State Budget Act be declared anti-constitutional. Arguments are forth according to which the provision concerned is not a statutory prescription but non-binding in nature and leaves a wide margin of discretion. Hence it undermines the stability, including the financial standing of an institution established by law, and compromises the possibilities available to it to participate in the proceedings of international organisations and funds.
The Constitutional Court, with a view to delivering a judgment in the case and following due deliberation of the arguments set forth in the petition and the written opinions received from the parties, considered the following:
1. Proceedings have been instituted on a petition requesting that §83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act be declared anti-constitutional. The Constitutional Court, which has received petitions requesting it to rule on the anti-constitutionality of provisions laid down in the annually enacted laws on the state budget on several occasions in the past, finds that the laws concerned, without prejudice to their formality, are special statutes by virtue of being enacted by the National Assembly. The body of national law takes into account the specific nature of draft state budget laws and prescribes that they be adopted in accordance with the procedure laid down in the Rules of Procedure of the National Assembly (Article 21 of the State Budget Structure Act) – a provision to be construed in light of the rule postulating the “equal ranking laws”. However, in the case at hand, the petitioners do not contest a provision laid down in the body of the 2011 Bulgarian State Budget Act, which concerns State revenue and expenditure, but a paragraph contained in the transitional and final provisions that effectively amends the Film Industry Act. According to the consistent practice of the National Assembly the transitional and final provisions of the annually enacted laws on the State budget amend or supplement other laws that have a direct bearing on the budget. The Constitution does not set out any prescriptions as to the content of budgetary laws. This means that they may contain provisions on revenue and expenditure and lay down rules governing different matters within the purview of financial law with implications for the budget. As the laws concerned have a limited applicability in time they are integrated into the bulk of fiscal legislation by means of their transitional and final provisions insofar as the former have direct implications for the application of the latter. Furthermore, the transitional and final provisions of a law form a self-contained part of statutes and may, in principle, remain in force for an indefinite period. In other words, through their transitional and final provisions the annually enacted State Budget Acts acquire the inherent features of ordinary statutory acts.
2. The Constitutional Court disagrees with the petitioners in that the amendment of a law must per force be undertaken in the form of an enacted law amending and supplementing a statute. Laws are frequently modified by incorporating amendments in the transitional and final provisions of newly-enacted pieces of legislation. When a new law is enacted in lieu of an existing one, its transitional and final provisions must set out rules governing the revocation and amendment or supplementation of other statutory acts (Article 35(2) of Decree No 883 laying down rules on the implementation of the Statutory Instruments Act). However, when the aim is to amend and supplement an existing statute, which will remain in force without enacting a new law a draft Law amending and supplementing the statute concerned must be submitted to Parliament by MPs or by the Council of Ministers.
This means that the amendment of a statutory act does not always require the enactment of a dedicated law that amends and supplements it. Moreover, the enactment of a new law in lieu of an existing one allows other statutory acts to be amended and supplemented as well. The case concerns the enactment of the 2011 Bulgarian State Budget Act, i.e. a new law. Hence, its transitional and final provisions may include changes to other statutory acts. Furthermore, there is a special link between the annual budgetary law and other pieces of fiscal legislation insofar as the application of the latter depends on the former. This link is the reason why a possibility exists to align the annually enacted budget laws to the bulk of fiscal legislation by means of incorporating special rules in their transitional and final provisions.
Article 17 of the Film Industry Act lays down specific provisions on the expenditure incurred from the annual State budget and applies solely in the context of the budgetary procedure. Being a sectoral law it comes within the purview of budgetary legislation. The application of the articles concerned depends on the enactment of the annual budget act. Hence, within the framework of the debates relating to producing a draft 2011 Bulgarian State Budget Act and its subsequent enactment both the Council of Ministers and MPs may submit proposals for amendments, i.e. propose that certain provisions of other laws concerning the disbursement of budgetary funds be amended by means of altering the transitional and final provisions of the Bulgarian State Budget Act.
3. The petitioners maintain that for the modified version of the draft law to be endorsed at second hearing in Parliament it may not include rules, which were not incorporated in the version endorsed at first hearing because this would constitute a breach of the lawmaking procedure laid down in Article 88 of the Constitution. The Constitutional Court has delivered judgments in cases in which petitioners have requested it to rule on the anti-constitutionality of laws on the grounds of breach of Article 88(1) of the Constitution according to which draft pieces of legislation are to be deliberated and enacted following two distinct hearings by Parliament – a provision that dully applies to the 2011 Bulgarian State Budget Act. The Court finds that no compelling grounds that call for a reversal of prior jurisprudence are present. By virtue of its very nature the rule laid down in Article 88(1) of the Constitution, i.e. the requirement for draft laws to be enacted following deliberations during two distinct hearings by Parliament, means that laws may set out rules, which have been incorporated into the body of the draft law in the period between the first and second hearing and are for this reason endorsed at the second hearing only. The latter would be substantially purposeless had the possibility available to MPs to make proposals in line with the Parliamentary rules and procedure established by law been limited. The opposite would mean a limitation of the powers of an MP to a mere right to vote on draft laws, particularly where they are not amongst the authors of a bill put to the vote, which has not been submitted to Parliament on their initiative. Furthermore, insofar as the draft State Budget Act is submitted to Parliament by the Council of Ministers (Article 88(2) of the Constitution), the only manner in which MPs may be meaningfully involved in the process of its enactment is by making proposals for its amendment.
It is also necessary to note that Article 88(1) of the Constitution definitively outlines the decisive stages in the lawmaking procedure. By expressly stipulating that laws are enacted following deliberations during two distinct hearings, the fundamental law leaves room for modifying or altering, respectively supplementing, individual provisions in the course of the debates at the level of Parliamentary committees in the period between the first and second hearing, which are then put to the vote in plenary session. This means that the amendments to draft laws between the two hearings insofar as they concern individual provisions with special meaning are in line with Article 88(1) of the Constitution and this principle fully applies to the annually enacted laws on the State budget (argument pursuant to Article 21(1) of the State Budget Structure Act).
4. The petitioners further note that the manner in which §83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act was adopted did not allow MPs to make alternative proposals regarding Article 17 of the Film Industry Act. The minutes from the plenary proceedings submitted in evidence, i.e. the records from the deliberations on the 2011 Bulgarian State Budget Act at first and second hearing, along with the report drawn up by the Parliamentary committee responsible for budgetary and financial affairs, show that the proposal concerned was made by four MPs in the period between the two hearings of the draft law. That proposal is set out in the report of the committee along with a positive opinion. However, the records from the committee’s meeting on 25 November 2010 fail to indicate whether any deliberations regarding the proposal took place and what their outcome was. An argument concerning the provision and the manner in which it was endorsed and put to the vote during the second hearing of the draft law ensued. Several MPs proposed that the provision be removed from the body of the law and others that individual words be deleted. Despite this, the provision was enacted as worded by the Parliamentary Committee responsible for budgetary and financial affairs.
The consistent jurisprudence of the Constitutional Court is underlined by the understanding that any breach of the Rules of Procedure of Parliament governing the enactment of laws do not per se render a provision laid down in laws that have come into full force and effect anti-constitutional. It is evident that in the case at hand MPs could have reasonably made proposals concerning §83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act. It has been incontrovertibly established that deliberations in plenary session did take place prior to the enactment of the contested provision. This means that the requirement for debate as a fundamental principle underlying the lawmaking process has not been breached.
5. The petitioners allege that §83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act fails to lay down a binding obligation within the meaning of the law hence jeopardizing its application and that it renders it vulnerable to subjective judgment, which is inadmissible.
According to the enacted provision of the 2011 Bulgarian State Budget Act “where possible” the following funds are to be made available:
1. an annual subsidy for the agency whose amount is calculated on the basis of the average statistical balance sheet figure for the previous year that covers the making of up to 7 feature films; up to 14 documentaries and up to 160 minutes of animated feature films;
2. the membership fees payable to international film industry organisations, funds and programmes of which the Republic of Bulgaria is a member;
3. funds that cover the operational costs of the Agency.
Prior to the amendment the provision concerned stipulated: “Annually the following funds shall be provided from the Bulgarian State budget:
1. an annual subsidy for the agency whose amount is calculated on the basis of the average statistical balance sheet figure for the previous year that covers the making of up to 7 feature films; up to 14 documentaries and up to 160 minutes of animated feature films;
2. the membership fees payable to international film industry organisations, funds and programmes of which the Republic of Bulgaria is a member;
3. funds that cover the overheads to be incurred by the Agency.”
By introducing the wording “where possible” into the cited provision the lawmaker substantially modified the intended meaning by transforming a statutory obligation of the government into a mere “possibility” to be acted upon at its discretion. At first glance, the amendment does not create significant problems. This warrants the conclusion that the alleged arbitrariness and subjectivity in making a decision regarding funding is fully justified. In other words, the lawmaker has indeed failed in its duty to ensure that the Agency is funded as a matter of obligation and not at the discretion of the government. However, the matter to be addressed is whether such logic is justified in the context of the relations concerned.
According to the Constitution the method used to regulate the relations in question is incompatible with the legitimate aim the law purportedly seeks to achieve. This is so because the government has an irrevocable obligation to fund the government bodies it has established. It is therefore unlawful that the government should seek to create grounds, which purportedly exempt it from paying membership fees in international organisations to which it has voluntarily acceded. At the same time the wording of Article 17 of the Film Industry Act contravenes Article 6(5) of the 2011 Bulgarian State Budget Act according to which the Council of Ministers approves the budgets of government bodies within a range that allows them to cover their approved expenses. In connection to this, the Council of Ministers clearly recognises that the funding of government bodies is not a matter of discretion. This is explicitly stipulated in Regulation No 334 of 29 December 2010 on collecting revenue and disbursing the State budget of the Republic of Bulgaria in 2011 (promulgated SG No 2/2011). Hence the subsidy allocated to the National Film Centre Agency covers its membership fees into non-commercial international organisations. Thus the wording “where possible” as relevant to at least two of the hypothesis covered by Article 17 of the Film Industry Act, and insofar as it entails arbitrariness and subjective judgment in lieu of a clear obligation, creates legal uncertainty and indeed compromises the achievement of the legitimate aims the law seeks to achieve. Hence it is inadmissible on the grounds of Article 4(1) of the Constitution.
Besides, the wording “where possible” used in Article 17 of the Film Industry Act is further unacceptable in light of the provision laid down in Article 23 of the Constitution. According to the provision concerned the government creates conditions that are conducive to the free development of arts and supports that development. The provision concerned ensures the continuation of a tradition of long standing, which requires a certain model of conduct to be pursued in the relations between the government and arts institutions, which the new Constitution correctly maintains and promotes. The sole reason why this requirement was included into the Constitution was to impose an obligation on the government to ensure and promote the development of Bulgarian art. Hence it is thoroughly inadmissible that a law, including the annually enacted State Budget Act, should seek to alter the nature of that obligation into a discretionary matter upon which the government may act upon or not depending entirely on its subjective judgment. On the other hand, in light of the Constitution establishing a rule that safeguards public interest, which the cited Article 23 undoubtedly does, the lawmaker is expressly denied the possibility to alter the nature of the obligation concerned by enacting arbitrary provisions. The government does not have the right to renounce its obligations under the Constitution. The stipulations laid down in the Constitution are of a higher legal ranking and therefore may not be revoked by a statutory act of a lower rank.
The obligation stipulated in Article 23 of the Constitution according to which the government creates conditions that are conducive to the free development of art and supports that development requires it to pursue an active line of conduct in this regard. In particular, it creates an obligation for the government to develop certain policies that promote the different branches of art. Such policies should take into account the economic and financial situation in the country but their implementation should not be made conditional on it. This means that the annually enacted law on the State budget developed by the Council of Ministers and adopted by Parliament should firstly aim to ensure compliance with the requirements laid down in the Constitution and not seek to subversively alter the nature of those requirements by making them conditional upon extraneous considerations.
6. A review of the constitutionality of §83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act should also take into account that the dispute also concerns the relationship between the legislative and executive branches of power. Moreover, the matter is explicitly mentioned in two of the opinions received from the Council of Ministers and the Minister of Finance. Both parties maintain that no problems relating to the funding of filmmaking may arise insofar as the matter has been addressed by the executive power, which purportedly intends to continue to do so in the future. It is evident that according to the opinions received compliance with Article 17 must be ensured by the executive power although the enacted amendment creates a strong impression that this is strictly within the remit of competence of the National Assembly, which enacts the annual laws on the State budget. As the subject in the sentence is not clearly designated the party to which the provision in question is addressed remains undecided. Such uncertainty is strongly detrimental inasmuch as it compromises the integrity of the annually enacted law on the State budget as a self-contained piece of legislation and creates an impression that the application of the law depends on the goodwill of the executive power. On the other hand, it should also be noted that Regulation No 334/2010 of the Council of Ministers is a bylaw, i.e. a piece of legislation issued pursuant to and with a view to ensuring the implementation of a statutory act of a higher ranking.
Paragraph 83 of the transitional and final provisions of the 2011 Bulgarian State Budget Act has failed to be aligned to the fundamental principles laid down therein. The lawmaker has used the unamended text of Article 17 of the Film Industry Act but has modified it in a manner that completely alters its intended meaning. This is so because the revoked provision guarantees that a certain minimum subsidy from the State budget will be made available for filmmaking, which should be appropriately sub-divided, whereas the amended and subsequently enacted provision simply imposes an upper limit for funding in addition to a specific formula according to which the subsidy should be disbursed. A strict interpretation of Article 17 of the Film Industry Act also creates an impression that the law introduces a requirement for “earmarking” the subsidy to be made available for filmmaking in advance. On the other hand, the 2011 Bulgarian State Budget Law and relating bylaws set out a different methodology to be applied. In line with the adopted approach, only the total budget of the Ministry of Culture is to be expressly stipulated in the law – an amount, which the Council of Ministers should then allocate to different programmes and strands. This calls for improving the precision of the contested provision with a view to ensuring it does not act as a source of conflict in respect of competence of the different bodies concerned in the future.