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

on the basis of Article 116.1 of the Constitution of the Republic of Belarus, Article 22.3.2 of the Code of the Republic of Belarus on Judicial System and Status of Judges, Articles 98 and 101.1 of the Law of the Republic of Belarus “On the Constitutional Proceedings”

in the exercise of obligatory preliminary review considered the constitutionality of the Law of the Republic of Belarus “On Making Amendments to the Law of the Republic of Belarus “On Investment” in open court session.

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 Making Amendments to the Law of the Republic of Belarus “On Investment” 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 Making Amendments to the Law of the Republic of Belarus “On Investment” (hereinafter, the Law) was adopted by the House of Representatives of the National Assembly of the Republic of Belarus on 8 December 2021, approved by the Council of the Republic of the National Assembly of the Republic of Belarus on 22 December 2021 and submitted to the President of the Republic of Belarus for signing.

The Law improves the legal regulation of relations in the field of investment in order to create a favourable investment climate in the state, maintain stable conditions for attracting investment to the economy of the Republic of Belarus, ensure guarantees, rights and legitimate interests of investors, as well as their equal protection.

1. When considering the constitutionality of the Law, the Constitutional Court proceeds from the following provisions of the Constitution:

the Republic of Belarus is a unitary, democratic, social state based on the rule of law; the Republic of Belarus exercises supreme control and absolute authority over its whole territory and implements an independent domestic and foreign policy; the Republic of Belarus shall defend its independence and territorial integrity, its constitutional system, and safeguard lawfulness and law and order (Article 1); the Republic of Belarus shall recognise the supremacy of the generally recognised principles of international law and shall ensure the compliance of laws therewith (Article 8.1);

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; the State shall guarantee to all equal opportunities for free utilisation of abilities and property for entrepreneurial and other types of economic activities which are not prohibited by law (Articles 13.2 and 13.4);

the State shall guarantee everyone the right of property and shall contribute to its acquisition; property acquired in accordance with the law shall be protected by the State; 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, and in accordance with a court ruling (Articles 44.1, 44.3 and 44.5).

Guided by Article 54.1 of the Law “On the Constitutional Proceedings” the Constitutional Court considers the constitutionality of the Law and determines whether the contents of its provisions, its form, delineation of competencies between state bodies and the procedure for its adoption are conforming to the Constitution, international legal instruments, ratified by the Republic of Belarus.

2. Article 1.2 of the Law sets out Article 3 of the Law “On Investment” (hereinafter, the Law on Investment) in a new wording, according to which relations in the field of investment shall be regulated by legislation on investment, as well as international treaties of the Republic of Belarus and international legal instruments constituting the law of the Eurasian Economic Union. The legislation on investment is based on the Constitution and consists of the present Law, legislation on concessions, public-private partnership and other legislative acts; if an international treaty of the Republic of Belarus establishes other rules than those stipulated by the present Law, then the rules of the international treaty shall apply.

When considering the constitutionality of the above provisions of the Law, the Constitutional Court takes into account the legal position set out in the decision of 7 May 2018 No. D-1123/2018 stating that, along with acts of domestic legislation – the laws of the Republic of Belarus, edicts and decrees of the President of the Republic of Belarus, subordinated normative legal acts, international treaties of the Republic of Belarus are included in the system of legal regulation in force on the territory of the Republic of Belarus, that is, their rules are an integral part of existing law.

The Constitutional Court considers that such legislative regulation is consistent with the provisions of the Constitution, which establish that the Republic of Belarus shall be bound by the principle of supremacy of law; the State and all the bodies and officials thereof shall operate within the confines of the Constitution and acts of legislation adopted in accordance therewith (Articles 7.1 and 7.2), the Republic of Belarus shall recognise the supremacy of the generally recognised principles of international law and shall ensure the compliance of laws therewith; the Republic of Belarus in conformity with the rules of international law may on a voluntary basis enter interstate formations and withdraw from them (Articles 8.1 and 8.2), and also meets the generally recognised principle of international law “pacta sunt servanda”, enshrined in Article 26 of the Vienna Convention on the Law of Treaties of 23 May 1969 and other international legal instruments.

3. The Law (Article 1.3) supplements the ways of investing established by Article 4 of the Law on Investment by investing on the territory of the Republic of Belarus through public-private partnership.

Article 1.5 of the Law sets out Article 6 of the Law on Investment in a new wording. According to the second part of the new wording of this Article, legislative acts regulating investment through concessions within the framework of a public-private partnership, may establish restrictions on the use of objects of civil rights as investment, with the exception of funds (money), including attracted (loans, credits).

This rule ensures the elimination of possible disagreements with potential investors, since, due to the specifics of concessions and public-private partnerships, certain restrictions are permissible, which may not be consistent with the definition of investment in Article 1.1 of the Law on Investment, taking into account the changes introduced by Article 1.1 of the Law, concerning objects that are investments.

The Constitutional Court notes that by means of the established legal regulation, the legislator implements the principle of legal certainty in order to harmonise the provisions of the Law on Investment with the provisions of the laws of the Republic of Belarus “On Concessions” and “On Public-Private Partnership”, which meets the constitutional principle of the rule of law, enshrined in Article 7.1 of the Constitution.

At the same time, proceeding from Article 23.1 of the Constitution in conjunction with Articles 2.2, 13.5 and 44.6 of the Constitution, the Constitutional Court considers it necessary to draw the attention of the legislator to the fact that when establishing the restrictions provided for by the second part of the new wording of the Article 6 of the Law on Investment (Article 1.5 of the Law), they should be consistent with the principle of proportionality. Such restrictions should be permissible, maintain a proper balance of interests of individuals, society and the state, be necessary and sufficient to protect the constitutionally significant interests of ensuring national security, the rights and freedoms of others, as well as the principle of equality enshrined in Article 22 of the Constitution, not distort the essence of the constitutional provision stipulating that the State shall guarantee to all equal opportunities for free utilisation of abilities and property for entrepreneurial and other types of economic activities which are not prohibited by law (Article 13.4 of the Constitution).

4. The Law on Investment is supplemented by Article 11¹ (Article 1.11 of the Law) stipulating that an investor who has concluded an investment agreement with the Republic of Belarus shall be guaranteed against unfavourable changes in the tax legislation in the manner and under the conditions determined by legislative acts. In this case, for the purposes of the said Article, unfavourable changes in the tax legislation mean the tax rate increase and (or) the introduction of new taxes and fees.

The specified provision of the Law, in the opinion of the Constitutional Court, provides opportunities for economic support to the investor by maintaining the best legal regime for him in the field of taxation, which will increase investment activity and the investor's interest in investing his capital in the state economy.

The Constitutional Court considers that the legal regulation established by the Law provides for the exercise of the right of the legislator, arising from Article 23.2 of the Constitution, to establish advantages and privileges for a certain category of persons.

At the same time, the Constitutional Court notes that the legislator, when determining the procedure and conditions for providing a guarantee against unfavourable changes in the tax legislation, should proceed both from the public interests of the state related to its economic security, and from the private interests of individuals and legal entities in order to maintain proportionality between the requirements of the interests of society and the necessary conditions for protecting the fundamental human rights, as well as to balance the constitutionally protected interests.

5. The Law on Investment is supplemented by Articles 12¹ and 12² (Article 1.13 of the Law).

Article 12¹ of the said Law provides that compensation for the value of nationalised or requisitioned property, which is an investment or arises from investments, shall be timely and full (part one); the said Article establishes the rules under which such compensation is recognised as timely (part two) and sets out conditions under which compensation is recognised as full (part three); the said Article enshrines a provision according to which, in cases of the destruction of requisitioned property due to emergencies, the law may provide for a different procedure and conditions for paying compensation for the value of such property (part four).

The Constitutional Court considers these provisions of the Law on the basis of the constitutional principles and rules, including Article 44.5 of the Constitution, by virtue of which 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.

The Constitutional Court believes that the established legal regulation creates legal mechanisms for ensuring the rights and legitimate interests of investors, protecting the constitutionally guaranteed right to private property in order to create a favourable investment climate in the country that contributes to the sustainable development of the state economy.

The Constitutional Court notes that compensation for the value of nationalised or requisitioned property to the investor is one of the international guarantees of investment activity, enshrined in a number of international legal instruments, including the Charter of Economic Rights and Duties of States, adopted by Resolution 3281 (XXIX) of the UN General Assembly on 12 December 1974 (subparagraph “c” of paragraph 2 of Article 2); CIS Convention on the Protection of the Rights of the Investor of 28 March 1997 (Article 9); Protocol on Trade in Services, Incorporation, Activities and Investments (Annex No. 16 to the Treaty on the Eurasian Economic Union of 29 May 2014) (paragraphs 79–81), etc.

In view of the foregoing, the Constitutional Court considers that the legislative regulation of compensation for the value of nationalised or requisitioned property, which is an investment or arises from investments, is consistent with the principles and rules of the Constitution, as well as the provisions of relevant international legal instruments.

Article 12² of the Law on Investment provides that the requirements of the Republic of Belarus, its administrative-territorial units, state bodies (organisations) and their officials against an investor arising in connection with investment cannot be submitted after three years from the date of occurrence of the circumstance, with which are connected and (or) from which the corresponding requirements follow; such requirements are understood as requirements that arise in connection with the change (cancellation) of previously made decisions, as a result of which damage to the investor's property rights may be caused, including deprivation (termination, restriction) of the investor's property rights, when such requirements are not related to the investor’s illegal actions; this restriction on the submission of requirements against the investor does not apply to requirements arising from tax, customs, labour and related relations, as well as from relations related to bringing persons to criminal and administrative liability.

The Constitutional Court notes that the constitutional principle of supremacy of law, which imposes on the state, all its bodies and officials the duty to operate within the confines of the Constitution and acts of legislation adopted in accordance therewith (Articles 7.1 and 7.2 of the Constitution), provides for the establishment of such a legal order in which state protection of the rights and freedoms of the individual is guaranteed, effective legal mechanisms are created to eliminate any violations, including those committed by state bodies and officials.

In the opinion of the Constitutional Court, the above provisions of Article 12² of the Law on Investment create additional guarantees for ensuring the property rights of investors, protecting their private property and are consistent with the relevant provisions of Articles 7, 13, 21 and 44 of the Constitution.

In summary, the Law improves the legal regulation of relations in the field of investment in the territory of the Republic of Belarus, provides for legal guarantees for the activities of investors, protection of their rights and legitimate interests, ensures the rights of owners of property, which is an investment or arises from investments, ensures further constitutionalisation of economic relations in the field of investment, which is consistent with the provisions of Articles 2, 13.2, 13.4, 13.5, 44.1–44.3 and 44.5 of the Constitution.

The Law was adopted by the House of Representatives of the National Assembly of the Republic of Belarus and approved by the Council of the Republic of the National Assembly of the Republic of Belarus within the powers in accordance with Articles 97.1.2 and 98.1.1 of the Constitution.

In view of the foregoing, the Constitutional Court comes to the conclusion that the Law is in line with the Constitution in terms of the content of the rules, the form of the act and the procedure for its adoption.

Guided by Articles 116.1 and 116.7 of the Constitution of the Republic of Belarus, Article 24.2 of the Code of the Republic of Belarus on Judicial System and Status of Judges, Articles 103–105 of the Law of the Republic of Belarus “On the Constitutional Proceedings” the Constitutional Court of the Republic of Belarus

RULED:

1. To recognise the Law of the Republic of Belarus “On Making Amendments to the Law of the Republic of Belarus “On Investment” to be conforming to the Constitution of the Republic of Belarus.
2. The present Decision shall come into force from the date of adoption.
3. To publish the present Decision in accordance with legislative acts.

Presiding Officer –

Petr Miklashevich,

Chairman

Constitutional Court

Republic of Belarus