The Constitutional Court of the Republic of Belarus comprising the Presiding Officer – Deputy Chairwoman O.G. Sergeeva, judges T.S. Boiko, T.V. Voronovich, S.Y. Danilyuk, L.G. Kozyreva, A.V. Maryskin, V.V. Podgrusha, L.M. Ryabtsev, 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 Investments”.

Having heard the reporting judge T.S. Boiko, having analysed the provisions of the Constitution of the Republic of Belarus (hereinafter – the Constitution), the Law of the Republic of Belarus “On Investments” 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 Investments” (hereinafter – the Law) was adopted by the House of Representatives of the National Assembly of the Republic of Belarus on June 26, 2013, approved by the Council of the Republic of the National Assembly of the Republic of Belarus on June 28, 2013 and submitted for signing by the President of the Republic of Belarus.

The adoption of the Law is determined by the necessity of improvement of investment legislation in accordance with international standards and international practice in this field. The law establishes the legal basis and principles of investment activity on the territory of the Republic of Belarus and aimed at attraction of investments to the economy of the Republic of Belarus, provision of guarantees, rights and legitimate interests of investors and their equal protection.

The Law establishes its basic terms and their definitions, principles and investment activity forms; determines the bodies which are responsible for state investment regulation; provides for the rights and obligations of investors, guarantees the investors’ rights and investment protection.

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

1. According to part two of Article 1 of the Constitution the Republic of Belarus exercises supreme control and absolute authority over its whole territory and implements an independent domestic and foreign policy.

According to Article 13 of the Constitution the State shall grant equal rights to all to conduct economic and other activities, except for those prohibited by law, and guarantee equal protection and equal conditions for development of all forms of ownership (part two), and also equal opportunities for free utilisation of abilities and property for entrepreneurial and other types of economic activities which are not prohibited by law (part four), economic activities in the interests of the individual and society, and shall ensure the direction and co-ordination of state and private economic activity for social purposes (part five).

On the basis of these constitutional provisions the legislator establishes the legal regulation of investment activity on the territory of the Republic of Belarus.

1.1. The Article 5 of the Law stipulates that investment activity is based on such principles as the rule of law, equality of investors, good faith and reasonableness of investments, inadmissibility of arbitrary interference with privacy, guarantee of restoration of violated rights and legitimate interests, guarantee of their judicial defence. The supremacy of the universally acknowledged principles of international law in investment activity is recognised.

The Constitutional Court notices that these principles enshrined in the Law conform with the provisions of the Constitution which stipulate the principle of the rule of law in the Republic of Belarus (part one of Article 7); the Republic of Belarus shall recognise the supremacy of the generally recognised principles of international law and shall ensure the compliance of laws therewith (part one of Article 8); all shall be equal before the law and have the right to equal protection of their rights and legitimate interests without any discrimination (Article 22); everyone shall be guaranteed protection of his rights and freedoms by a competent, independent and impartial court within the time limits specified by law (part one of Article 60); restriction of personal rights and freedoms shall be permitted only in the instances specified by law, in the interests of national security, public order, protection of the morals and health of the population as well as rights and freedoms of other persons (part one of Article 23).

1.2. The Article 4 of the Law determines such investment activity forms on the territory of the Republic of Belarus as creation of a commercial organisation; acquisition, creation, including by means of construction, of immovable property, except cases determined by paragraph 4 of Article 2 of the Law; acquisition of intellectual property objects rights; purchase of shares or shares in the authorised capital, shares in a commercial organisation, including cases of increase of authorised capital of a commercial organisation; on the basis of concession and in other forms, except those prohibited by the legislative acts of the Republic of Belarus.

The Constitutional Court notes that the definition of above mentioned forms of investment activity conforms with the mentioned provisions of Article 13 of the Constitution and with part two of Article 44 of the Constitution which stipulates that a proprietor shall have the right to possess, enjoy and dispose of property either individually or jointly with others.

1.3. Alongside with fixation of the rights of investors, including the right to create a commercial organisation (Article 15), the right to benefits and preferences (Article 16), the right to conclude a contract (contracts) with the Republic of Belarus (Article 17), the right to engage foreign citizens and stateless persons for work activities in the Republic of Belarus (Article 18), the Law provides for their obligations. Thus, the Article 19 of the Law stipulates that investors have the obligation to respect the Constitution and the legislative acts of the Republic of Belarus adopted in accordance with it; not to undertake activities that can be considered as unfair competition as well as actions (or inaction) aimed at prevention, removal or restriction of competition, causing damage to the rights, freedoms and legitimate interests of other persons, to exercise other obligations established by the legislation of the Republic of Belarus.

The Constitutional Court states that fixation of the rights and obligations of investors at the legislative level conforms with part two of Article 2 of the Constitution that stipulates that the State shall assume responsibility before the citizen to create the conditions for free and dignified development of his personality and the citizen shall assume responsibility before the State to discharge unwaveringly the duties imposed upon him by the Constitution. The Constitution prescribes that everyone in the territory of the Republic of Belarus is obliged to observe its Constitution and laws (Article 52); everyone shall respect dignity, rights, freedoms and legitimate interests of others (Article 53); protection of the environment shall be the duty of everyone (Article 55); citizens of the Republic of Belarus shall contribute to funding public expenditure by means of state taxes, duties and other payments (Article 56).

The Constitutional Court states that provisions of the Law on the rights and obligations of investors conform with the provisions of the Constitution.

2. The Law enshrines the provisions guaranteeing the rights of investors and the protection of investments.

2.1. Thus, the Law stipulates that foreign investors are guaranteed the free transfer outside the boundaries of the Republic of Belarus of the compensation provided by parts two and four of Article 12 of the Law; of profit (income) and other legally obtained funds related to investments in the territory of the Republic of Belarus and also payments made for benefit of a foreign investor and related to investments after payment of taxes and fees (duties) and other compulsory payments to the national and local budgets, public non-budgetary funds established by the legislation of the Republic of Belarus (parts one and two of Article 11).

According to the Constitutional Court opinion, the analysis of the provisions of Article 11 of the Law indicates that the legislator has established the legal regulation of these social relations with regard to the provisions of Article 44 of the Constitution, according to which the state guarantees to everyone the right of property; the inviolability of property is protected by the law; property acquired in accordance with the law shall be protected by the state.

2.2. The Law provides for the protection of property against nationalisation and requisition as fundamental guarantees to all investors.

According to Article 12 of the Law the property which is a form of investment or its result may not be nationalised or be brought into requisition without compensation (part one); nationalisation is possible only for the reason of public need and conditioned on timely and full compensation for the value of nationalised property and other damages caused by nationalisation (part two); procedure and conditions of nationalisation, as well as compensation for the value of nationalised property and other damages caused by nationalisation, are determined on the basis of the law on the procedure and conditions of the nationalisation of the property adopted in accordance with the Constitution (part three); requisition is only possible in case of natural disasters, accidents, epidemics, epizootics and in other circumstances of extraordinary nature, for the public interest by decision of state bodies under the conditions and the procedure specified by law with the payment of compensation to the investor for the value of requisitioned property (part four).

While finding the constitutional and legal meaning of Article 12 of the Law the Constitutional Court notes that while establishing the guarantees of the rights of investors the legislator has adequately taken into consideration the norm of part five of Article 44 of the Constitution. This norm stipulates that the compulsory alienation of property shall be permitted only by reason of public need, under the conditions and the procedure specified by law, with timely and full compensation for the value of the alienated property.

2.3. Provisions of the Law which guarantee the right to judicial protection (one of the fundamental human rights enshrined in the Constitution) are aimed at investor’s protection.

Thus, according to part two of Article 13 of the Law disputes between an investor and the Republic of Belarus that are not settled in pre-trial order through negotiations within three months from the date of receipt of the written proposal for their settlement, are to be litigated in accordance with the legislation of the Republic of Belarus. Part six of Article 12 of the Law provides that the amount of compensation provided by parts two and four of the mentioned Article may be appealed at the court by the investor.

Such legal regulation agrees with the provision of part one of Article 60 of the Constitution which stipulates that everyone shall be guaranteed protection of his rights and freedoms by a competent, independent and impartial court within the time limits specified by law.

While considering the provisions of the Law relating to pre-trial settlement of disputes between an investor and the Republic of Belarus (part one of Article 13) the Constitutional Court confirms its legal position expressed on a similar case in the Decision of July 7, 2011 “On the conformity of the Law of the Republic of Belarus “On applications of individuals and legal entities” to the Constitution of the Republic of Belarus”. According to this position each party to a legal relationship in case of violation of its rights, freedoms and legitimate interests may use all legal remedies provided by law, including judicial recourse. The possibility to resort to pre-trial settlement of a dispute in order to protect rights, freedoms and legitimate interests is an additional legal remedy and it can not be considered as limitation of the constitutional right to judicial protection, as well as restriction of court jurisdiction.

2.4. At the same time the Constitutional Court draws attention to part three of Article 13 of the Law. This provision provides for the possibility at investor's option to settle disputes between a foreign investor and the Republic of Belarus that are not under the exclusive jurisdiction of the courts of the Republic of Belarus and not settled in pre-trial procedure within three months from the date of receipt of the written proposal for their settlement in pre-trial procedure: by the court of arbitration which is established for the settlement of each specific dispute according to the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law (UNCITRAL), unless the parties to the dispute accept another order (paragraph two); by the International Centre for Settlement of Investment disputes (ICSID) (hereinafter – the Centre), if this foreign investor is a citizen or a legal person of a member country of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of March 18, 1965 (paragraph three).

The Constitutional Court notes that the provisions of the paragraph three of part three of the mentioned Article of the Law are based on point 1 of Article 25 of the mentioned Convention (the Republic of Belarus is a member of this Convention). According to this provision the jurisdiction of the Centre shall extend to any dispute directly related to investments between a Contracting State (or any department or institution of a Contracting State indicated to the Centre by this State) and an individual or legal entity of another Contracting State in case the Parties have agreed in written form to transfer this dispute to the Centre.

In addition, the provisions of the Law concerning the protection of investors comply with the provisions of international treaties in this field the Republic of Belarus is a party to, in particular, the Convention on the Protection of the Rights of Investors of March 28, 1997, the Agreement on Cooperation in the Field of Investment Activities of December 24, 1993, the Agreement on Encouragement and Mutual Protection of Investments in the States – Members of the Eurasian Economic Community of December 12, 2008.

The Constitutional Court notes that part two of Article 3, part four of Article 13 of the Law establish the priority of international treaties of the Republic of Belarus, which agrees with the provisions of the Vienna Convention on the Law of Treaties of May 23, 1969. Thus, the Article 26 of the mentioned Convention enshrines generally accepted principle of international law pacta sunt servanda which stipulates that each treaty in force is binding upon the parties and must be fulfilled by them in good faith.

Thus, the analysis of the content of the mentioned provisions of the Law indicates that the legislator in regulation of social relations in the field of investment was based on part one of Article 8 of the Constitution which stipulates that the Republic of Belarus shall recognise the supremacy of the generally recognised principles of international law and shall ensure the compliance of laws therewith.

3. The Constitutional Court draws attention to the provisions of the Law, which establish certain restrictions of investment activity. Thus, in accordance with the provisions of Article 6 of the Law it is not allowed to invest in the property of legal entities with dominant position on consumer markets of the Republic of Belarus without the consent of the antimonopoly authority of the Republic of Belarus in cases provided by the antimonopoly legislation of the Republic of Belarus as well as in activities prohibited by the legislative acts of the Republic of Belarus. Restrictions of investment activity can also be established by the legislative acts of the Republic of Belarus in the interests of national security (including protection of environmental, historical and cultural treasures), public order, protection of the morals, health of the population, rights and freedoms of other persons.

Part four of Article 11 of the Law provides that the transfer of funds mentioned in part two of this Article can be limited on the conditions and the procedure specified by the legislative acts of the Republic of Belarus and (or) according to a court ruling adopted in accordance with the legislation of the Republic of Belarus and entered into force.

In finding the constitutional and legal meaning of these provisions of the Law the Constitutional Court proceeds from the above mentioned provisions of parts two and four of Article 13 of the Constitution and of part six of Article 44 of the Constitution which stipulates that the exercise of the right of property shall not be contrary to social benefit and security, or be harmful to the environment or historical and cultural treasures, or infringe upon the rights and legally protected interests of others.

The Constitutional Court emphasises that this legal regulation doesn’t violate the principle of equality of all before the law enshrined in Article 22 of the Constitution because restrictions of investment activity provided in the Law secure a due balance between the interests of individuals, society and the state; they are legally acceptable and socially justified. The Constitutional Court in its decisions, including the Decision of June 29, 2012 “On the conformity of the Law of the Republic of Belarus “On Economic Insolvency (Bankruptcy)” to the Constitution of the Republic of Belarus” has noted that the right to possess, enjoy and dispose property may be restricted by law in compliance with Articles 23 and 44 of the Constitution. This restriction of the property rights and interests ought to satisfy the requirements of justice, to be adequate to constitutional aims of protection of the rights and freedoms of other persons and to be based on law.

The Law is adopted by the House of Representatives of the National Assembly of the Republic of Belarus within competence in accordance with point 2 of part one of Article 97 of the Constitution, approved by the Council of the Republic of the National Assembly of the Republic of Belarus in accordance with point 1 of part one of Article 98 of the Constitution. The Law is adopted by the Houses of the National Assembly of the Republic of Belarus within competence in accordance with Articles 97 – 100 of the Constitution.

In view of the foregoing the Constitutional Court concludes that the Law is in conformity with the Constitution as to the content of its rules, form of the act and procedure of its adoption.

Guided by parts one, seven of Article 116 of the Constitution 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 of the Republic of Belarus

 RULED:

1. To recognise the Law of the Republic of Belarus “On Investments” to be conforming to the Constitution of the Republic of Belarus.

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

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

Presiding Officer – O.G. Sergeeva,

Deputy Chairwoman of the Constitutional Court of the Republic of Belarus