Decision No. 5 of 29 September 2015 on Constitutional Case No. 4/2015
A group of MPs challenged the constitutionality of the Ratification Act for the Dealer Agreement and the Agency Agreement between the Republic of Bulgaria in a capacity of an “issuer” and several corporate entities in a capacity of “organizers”, “dealers”, “agents” and “underwriters” under the Global Medium-Term Note (GMTN) Program of the Republic of Bulgaria for bond issues worth 8 billion Euro.
It was claimed that during the voting process for the act challenged the MPs were deprived of the opportunity to propose to introduce changes in the bill that had been approved by the first vote and that what happened was tantamount to violation of the principles of the state committed to the rule of law, political pluralism and the parliamentary form of state government just as it was violation of the Constitution text that reads that the National Assembly shall exercise legislative power. Further it was insisted that the decision to vote twice within a single sitting should be taken by the National Assembly before the first vote. A reason was given to the effect that the ratified international agreement had been concluded in the absence of the National Assembly’s prior consent that the Constitution requires.
The Constitutional Court dismissed the challenge on the basis of the following reasons:
І. Concerning the MPs’ right to propose texts between the first and the second vote of a bill
The lawmaking process is subject to the imperative rule that submitted bills shall be debated and passed by two votes. Usually these [two votes] are defined as “crucial phases” to make a bill an act. On its part the codification of the required second vote presets the conclusion that between the two votes on any bill that has been approved “as a whole and in principle” the Constitution guarantees each and every MP the right to propose amendments and supplements to the bill. The same holds true of the ratification acts as they are legal acts too, though their content is more peculiar. However, the bill for the ratification of an international agreement shall not amend the text of the agreement by the approval of a proposed text on second reading. This rule has justification given the way in which international agreements are concluded and the effect of such agreements. The prohibition extends only over propositions regarding the text of the international agreement and leaves out the ratification bill for the agreement. Moreover, proposed changes may be other than technical. Other amendments and supplements may be proposed likewise. Examples vary. Specifically, whenever the terms and conditions of an international agreement allow for reservations against it the proposed text of the bill may be amended or supplemented. The only thing to remember when amendments or supplements are proposed is that they should not distort the international agreement’s text.
The MP’s right to propose amendments and supplements to a bill between the first and the second vote of a bill is restrained by the very logic of the legislating process. Since each vote as such is a crucial phase in the passage of any bill, a relationship between the votes is therefore formed of a type that precludes the submission and discussion of proposed texts which conflict with the principles and the field of application of the bill that has been approved by the first vote. In other words, the proposed amendments or supplements that an MP may introduce shall conform to the stage of progress of the legislating process, i.e. the stage of the first or of the second vote. In the case under discussion here all the three propositions that were made after the bill’s approval by the first vote concern a problem of principle inasmuch as they are relevant to key parameters and the subject of the ratification bill to be addressed by the first vote. Therefore it is wrong to allege that the Members of Parliament were deprived of the right to propose an amendment or a supplement during the passage of the challenged ratification act. The approval of the ratification bill on first voting “as a whole and in principle” leaves no chance to propose amendments or supplements that may refer to the bill’s underlying elements within the framework of the bill’s second vote procedure.
ІІ. Concerning the timing of the decision to discuss and enact a bill by two votes taken at a single sitting
The Constitution provides for an exception where the National Assembly may resolve that both votes be taken at a single sitting. The National Assembly’s Standing Orders make this option contingent on the provision that it shall only apply if during the deliberations on the bill no amendments or supplements have been proposed. The wording of this Constitution provision invites the conclusion that the National Assembly is authorized to judge whether to decide to take both votes in the same sitting and when to decide so. The kind of bill – for instance a ratification act, the nature of the change – for instance clerical only, the absence of proposed amendments or supplements in the course of the first vote and suchlike do not have the credence of absolute conditions that may predetermine the decision-taking. Yet the Constitution reads that the passage of bills by two votes that are taken at a single sitting shall be by exception only. In other words, the application of Art. 88, para 1, Sentence Two of the Constitution precisely because it should be “by exception” shall be made contingent on a similar decision to the effect that other Constitution-enshrined values, principles and rules shall not be infringed on. To cite an earlier decision of the Constitutional Court: an option as referred to should not restrain the pluralism of opinions in the National Assembly and in particular should not curtail the right of a Member of Parliament to introduce proposed amendments or supplements to a bill under debate. Thus in this context the Constitutional Court is of the opinion that there is no way to fix a definite point in time when a decision of this sort, if taken, would, in principle, guarantee that the decision is compliant with the Constitution. To make the decision-taking contingent on a requirement to take it specially before the first vote of the bill might likewise muzzle the pluralism of opinions in the National Assembly and curtail an MP’s right to propose amendments or supplements to a bill debated. The decision is not just a matter of the National Assembly’s freedom of judgment; in addition the decision is always concrete so as to guarantee the pluralism of opinion.
ІІІ. Concerning the requirement that the National Assembly should give its consent to conclude sovereign loan agreements, that the ratification should correlate with the consent and that the ratification instrument should be checked for compliance with the Constitution
The act that is challenged before the Constitutional Court ratifies two dealer agreements and a deed of covenant. The agreement has the features of a loan by the issue of bonds, known also as a bond issue agreement and as such is subject to Art. 84, item 9 of the Constitution whereby the National Assembly shall grant its consent to the conclusion of government loans agreements and shall grant it in advance. What is special in the case concerned is that the loan is not a one-off loan, that is, the agreement does not involve a onetime operation; as the case stands, a number of agreements are involved where the assets and liabilities will be valid over a period of time of prefixed duration. With such performing agreements the Republic of Bulgaria has already exercised its right to issue bonds worth a sum as negotiated and shall be free, by a prefixed future date, to issue bonds again and again up to the maximum negotiated amount.
Prior consent is a general power with a specific focus that the National Assembly enjoys and therefore does not constitute a requirement for the ratification of international agreements that imply government debt. As elsewhere the Bulgarian Legislature’s consent to conclude a definite agreement is treated as part of the system of ways to make sure the balance struck between the Legislature and the Executive is maintained. Abidance by Art. 84, item 9 of the Constitution is an element of the requirement that external debts that the Republic of Bulgaria incurs should be transparent to the public. For that reason consent granted is not a formality, less so is it a power which must be exercised or else is optional whereon it shall slip out of constitutional control.
Prior consent to be given to conclude a loan agreement is a standalone power of the National Assembly with respect to the right to ratify an international agreement which imposes financial obligations on the State (Art. 85, para 1, item 4 of the Constitution). Apart from the different subject that the two powers have, they have a legal action of their own in the domestic and international law. Therefore it is not appropriate to term the one power general and the other power specific. Moreover, inasmuch as conclusions are drawn about the balance between the consent as per Art. 84, item 9 of the Constitution and the ratification, these cannot be exercised providing they are noncompliant with the existing legal regime. It is expressly required for an international government loan agreement to be approved by the Council of Ministers to attach the National Assembly’s prior consent to enter into the agreement to the report that substantiates the agreement. By doing so and if a ratification follows, it is sure that the consent subject to Art. 84, item 9 of the Constitution will be recognized as given. The consent to conclude deeds of covenant under which the Government promises to make payments on external debt is part of a procedure that closes with the ratification providing ratification is required.
The two powers should not be treated as absolutely unrelated to each other. It is beyond doubt that the National Assembly, being the Legislature, is free to make consent contingent upon the ratification of the agreement concluded. Such a practice invites yet another important conclusion, namely, that there should be no reason to refrain from a debate on consent to be granted to work out an external sovereign debt agreement whenever a ratification act which is seen as unconstitutional is challenged.
In the Constitutional Court’s view any act which is to ratify an international agreement may be checked for compliance with the Constitution since the Constitution reads that the Constitutional Court shall have jurisdiction to pronounce on any petition to establish unconstitutionality of the laws and other acts. It is of no relevance whether the purpose of the ratification is to give the State’s consent to enter into an international agreement or, in the context of Art. 5, para 4 of the Constitution, the ratification has action in its capacity of an instrument to make the international agreement part of the domestic legislation.
Whenever a ratification act is checked for compliance with the Constitution, in particular when the act allows the State to enter into a certain agreement, be it an international agreement in the strict sense of the word or an agreement governed by private law and made with a party that is a foreign person, the check covers, in addition to the formal ratification-related requirements, the specific agreement. Inasmuch as ratification is the acceptance of an agreement to be entered into, the check cannot ignore the text of the agreement. The opposite would imply that ratification per se awards some sort of immunity to a possible check for compliance with the Constitution and the check, in the way it is provided for, has to extend over any piece of legislation whatever. Inconsistence, if any, of an international agreement with the Constitution is not to be tolerated given the fact that the underlying postulation is that the Constitution shall reign supreme. Therefore whenever the Constitutional Court is approached, invoking Art. 149, para 1, item 2 of the Constitution, with a challenge of a legally ratified international agreement it is inappropriate to insist that it is only the question of how the agreement has been adopted is relevant and that the question of what has been agreed on is irrelevant. The argument that the compliance of international agreements with the Constitution can be ensured but prior to their ratification (Art. 149, para 1, item 4 of the Constitution) is weak in default of a text to make such verification binding. Moreover, such control ex-ante is unacceptable especially if it is to be exercised over agreements that are governed by private law. After all, as the Constitution itself allows amending or denouncing ratified international agreements according to the procedure specified in the agreements (Art. 85, para 3 of the Constitution), there should not be any reason against amendments or denouncements that are based on a Constitutional Court decision. The National Assembly will have to approve texts to address the legal implications of a Constitutional Court decision that declares amendments or denouncements unconstitutional just as it will have to enact legislation that is intended to amend or denounce such agreements or, to the extent possible, to adopt appropriate reserves.
As the case stands, the Dealer Agreement, the Agency Agreement and the Deed of Covenant that have been ratified by the act that is challenged with the Constitutional Court were signed on 6 February 2015. As a foregoing move a National Assembly’s decision of 19 November [2014] sanctioned preparations to incur external sovereign debt amounting up to BGN 3,000,000,000 in 2014. Almost in parallel Art. 68 of the 2014 State Budget Act of the Republic of Bulgaria was amended to give the Council of Ministers the legitimate right to incur external sovereign debt to a ceiling of BGN 6,900,000,000 and to take action to prepare for incurring external sovereign debt subject to subsequent ratification in 2015. This course of action was put into the 2015 State Budget Act of the Republic of Bulgaria. Presenting the facts as they are it should be assumed that the National Assembly has given its prior consent [to the Government] to enter into an international sovereign loan agreement. The consent as per Art. 84, item 9 of the Constitution may be worded in the form of a decision, however, drawing on argumentum a fortiori (argument based on stronger reason) it may equally be codified.