DECISION OF THE CONSTITUTIONAL COURT OF THE REPUBLIC OF BELARUS

the 22 of June, 2010 No. D-462/2010

On the conformity of the Law of the Republic of Belarus “On the Support of Small and Medium Enterprise” to the Constitution of the Republic of Belarus

The Constitutional Court of the Republic of Belarus comprising the Presiding Officer – Chairman of the Constitutional Court P.P. Miklashevich, Deputy Chairman A.V. Maryskin, judges T.S. Boiko, T.V. Voronovich, S.Y. Danilyuk, V.P. Isotko, L.G. Kozyreva, V.V. Podgrusha, O.G. Sergeeva, A.G. Tikovenko, S.P. Chigrinov

on the basis of part one of Article 116 of the Constitution of the Republic of Belarus, subpoint 1.1 of point 1 and point 3 of the Decree by the President of the Republic of Belarus of June 26, 2008 No. 14 «On Certain Measures to Improve the Activities of the Constitutional Court of the Republic of Belarus»

in open court session in the exercise of obligatory preliminary review considered the constitutionality of the Law of the Republic of Belarus “On the Support of Small and Medium Enterprise”.

Having heard the reporting judge L.G. Kozyreva, having analysed the provisions of the Constitution of the Republic of Belarus (hereinafter – the Constitution), the Law “On the Support of Small and Medium Enterprise” and other legislative acts of the Republic of Belarus, the Constitutional Court of the Republic of Belarus found the following:

The Law of the Republic of Belarus “On the Support of Small and Medium Enterprise” (hereinafter – the Law) was adopted by the House of Representatives of the National Assembly of the Republic of Belarus on May 26, 2010, approved by the Council of the Republic of the National Assembly of the Republic of Belarus on June 15, 2010, and submitted for signing by the President of the Republic of Belarus.

The Law was adopted due to the need to improve legal and organisational basis aiming to create favourable conditions for the development of small and medium enterprise in the Republic of Belarus.

While reviewing the constitutionality of the Law the Constitutional Court proceeds from the following.

1. According to the Constitution in the Republic of Belarus, the state as social and based on the rule of law guarantees to grant equal rights to all to conduct economic and other activities, except for those prohibited by law (part one of Article 1, part two of Article 13). According to parts four, five of Article 13 the Constitution guarantees equal opportunities for free use of abilities and assets for business and other types of economic activities which are not banned by law; the state shall regulate economic activities in the interests of the individual and society, and shall ensure the direction and coordination of state and private economic activity for social purposes.

Deriving from above constitutional provisions the most favorable conditions for the functioning of economic system in whole should be created in the Republic of Belarus, what implies the need to stimulate entrepreneurship as a basis for the economy. The Law is set up to achieve these goals. It regulates relations that occur when supporting small and medium enterprise, defines the subjects of their supporting infrastructure (hereinafter – the subjects of infrastructure).

Some provisions of the Law provide that individual entrepreneurs, microorganisations, small organisations are the subjects of small enterprise. As to the subjects of medium enterprises they are commercial organisations with an average number between 101 and 250of employees for a calendar year provided that all of them meet the requirements set out in Article 3 of the Law.

According to Article 4 of the Law, among the subjects of infrastructure are enterprise support centers and small enterprise incubators. They were created with a view to render any assistance to the subjects of small and medium enterprise in organising and conducting their business. Among other organisations supporting the subjects of small and (or) medium enterprise are the Belarusian Fund of Financial Enterprise Support, institutions rendering financial assistance to entrepreneurs, the society of mutual crediting of the subjects of small and medium enterprise.

2. The constitutional principles of equal rights provided by the state for all to conduct economic and other activities, guaranteeing equal protection and equal conditions for the development of all forms of ownership, as well as the right of everyone to own property, possess, enjoy and dispose of it either individually or jointly with other persons (Articles 13, 44) have found their development in the examined Law. According to Article 5 of the Law the State guarantees to the subjects of small and medium enterprise, subjects of infrastructure equal rights to conduct business, protection of their rights and legitimate interests as well as creation of favourable conditions for the development of business competition. These rights may be restricted, but the possible restrictions and their nature should be determined on the basis of the Constitution which states that the restriction of personal rights and liberties shall be permitted only in the instances provided by law in the interest of national security, public order, protection of the morals and health of the population as well as rights and liberties of other persons (Article 23 of the Constitution).

However the second part of article 5 of the Law provides that the interference of state authorities and other state organisations in the activities of the subjects of small and medium enterprise and subjects of infrastructure is not permitted except for the cases when it is based on legal rules in the interests of national security, public order, protection of the morals and health of the population, rights and freedoms of other persons.

In this connection the Constitutional Court notes that, according to part one of Article 23 together with articles 13 and 44 of the Constitution, legal regulation of possible restrictions on free entrepreneurship as well as of the rights of possession, enjoyment and disposition of property should appear in acts of legislation, meet the equity requirements, be proportionate to the constitutionally significant purposes and not impede the economic independence and initiative of small and medium enterprise.

This approach to the clarification of the meaning of the Law will facilitate clear understanding and application of the said norm in practice as well as ensure the constitutionally guaranteed rights of the subjects of enterprise. The norms on rights and responsibilities of the individuals and legal persons should be clear, concise and consistent with each other in various normative legal acts. As pointed out by the Constitutional Court in the Message to the President of the Republic of Belarus and Chambers of the National Assembly of the Republic of Belarus «On Constitutional Legality in the Republic of Belarus, 2008», the principle of legal certainty in the law prevents from ambiguous understanding and, therefore, unlawful application of legal norms that imply violation of the rights and legitimate interests.

3. Under the Constitution the State shall guarantee to everyone equal opportunities for free use of abilities and assets for business and other types of economic activities which are not banned by law (part four of Article 13), and the proprietor has the right to own, use and dispose of property either individually or jointly with other persons (part two of Article 44). From the analysis of Article 22 of the Constitution it follows that these rights are guaranteed and exercised on the basis of the principles of equality, inviolability of property and freedom of contract, involving equality, autonomy of will and property independence of participants of civil relations, prohibition of arbitrary interference by anyone in private affairs.

The right of possession, enjoyment and disposal of property and freedom of entrepreneurship and freedom of contract of civil circulation is regulated by law (point 2 of part one of Article 97 of the Constitution).

Article 7 of the Law sets out the particularities of legal regulation of support of small and medium enterprise including special tax treatment, reduced structure of accounting, simplified procedure for the transfer of state-owned real estate which is unused or inefficiently used. Article 12 of the Law provides that the legislation may establish supporting measures in the form of property transfer in the free use of state-owned capital structures (buildings, constructions, etc.), including the right to purchase that property, in the form of reduction factors to the basic rental rates for leases of state-owned capital structures, etc. These particularities of legal regulation put the subjects of small and medium enterprise in a privileged position compared to other participants of civil circulation who want to purchase or rent (lease) such property.

The Constitutional Court considers that the establishment of a special legal regime for the specified by the Law circle of subjects may not be regarded as violating constitutional rights of other subjects of entrepreneurship. Subject to the provisions of Articles 22 and 23 of the Constitution the principle of equality before the law does not preclude reasonable differentiation of legal regulation, aiming to establish legal distinction in the rights of participants of civil circulation, provided that legal means used to achieve this are reasonable and proportionate to protected values and goals.

4. According to Article 34 of the Constitution citizens of the Republic of Belarus are guaranteed the right to receive, store and disseminate complete, accurate and timely information on the activities of state bodies, public associations, on political, economic, cultural and international life, the status of the environment.

Article 13 of the Law is set out for the exercise of the constitutional right to information in the field of entrepreneurial activity. Under this article small and medium enterprises are provided with required information resources in order to obtain economic, legal, industrial, technical and other information necessary for their effective development and sharing.

Providing information to small and medium businesses is one of the directions of state support of entrepreneurship in the Republic of Belarus.

5. The State shall regulate economic activities on behalf of the individual and society (part five of Article 13 of the Constitution). This constitutional principle is being developed in the norms of Chapter 2 of the Law. They define the principles of state policy as regards the support of small and medium entrepreneurship, forms and conditions of the state support inclusive of financial, material, informative ones, as well as the support of foreign economic activity of small and medium entrepreneurship, the assistance of the subjects of small and middle enterprise in training, further training and retraining of the staff; the competence of the republican bodies of state administration, local executive and regulatory bodies, councils on the development of enterprise.

In the Constitutional Court opinion, the state regulation of economy and business activity, which is aiming to create favourable conditions for economic activities of entrepreneurs in the Republic of Belarus and the ensuring of optimum interference of the state in economic relations, is based on constitutional norms and principles providing everyone with equal rights to conduct economic or other activities, other than those prohibited by law, with guarantees of equal opportunities for free use of abilities and assets for business and other types of economic activities which are not banned by law; with possible restrictions of the rights and freedoms imposed only by law in the interests of national security, public order, protection of the morals, health, rights and liberties of others.

The implementation in the Law of the norms and principles of the Constitution concerning the equality of different forms of ownership, equal rights to conduct economic or other activities, other than those prohibited by law; guarantees of equal protection and equal conditions for the development of all forms of ownership, equal opportunities for free use of abilities and assets for business and other types of economic activities which are not banned by law as well as the regulation of economic activities on behalf of the individual and society aim to create conditions and provide mechanisms for the development of constitutional economy in the Republic of Belarus.

The Law has been adopted by the House of Representatives of the National Assembly of the Republic of Belarus within its competence pursuant to point 2 of part one of Article 97 of the Constitution and approved by the Council of the Republic of the National Assembly of the Republic of Belarus under point 1 of part one of Article 98 of the Constitution.

The houses of the National Assembly of the Republic of Belarus have acted within their competence provided by articles 97-100 of the Constitution.

In view of the foregoing the Constitutional Court concludes that as to the content of the norms, form of the act and procedure of its adoption, the Law conforms to the Constitution.

Guided by parts one, seven of Article 116 of the Constitutions of the Republic of Belarus, parts eight, thirteen, fourteen of Article 24 of the Code of the Republic of Belarus on Judicial System and Status of Judges, subpoint 1.1 of point 1 and point 3 of the Decree by the President of the Republic of Belarus of June 26, 2008 No. 14 “On Certain Measures to Improve the Activities of the Constitutional Court of the Republic of Belarus”, the Constitutional Court

RULED:

1. To recognise the Law of the Republic of Belarus “On support of small and medium enterprises” to be conforming to the Constitution of the Republic of Belarus.

2. The present decision shall come into legal force from the date of its adoption.

3. To publish the present decision in accordance with legislation.

Presiding Officer-

Chairman of the Constitutional Court

of the Republic of Belarus

P.P.Miklashevich