ON THE CASE REGARDING "THE CONFORMITY OF ARTICLE 24 OF THE LAW OF THE REPUBLIC OF ARMENIA "ON TELECOMMUNICATION" WITH THE CONSTITUTION OF THE REPUBLIC OF ARMENIA"

Yerevan, January 27, 1999

The Constitutional Court of the Republic of Armenia, chaired by the President of the Constitutional Court G. Harutyunyan, represented by the Deputy President V. Hovhannissyan and the Members of the Constitutional Court A. Gyulumyan, F. Tokhyan, H. Nazaryan, R. Papayan, V. Pogossyan, V. Sahakyan, M. Sevyan,

With the participation of

• the representatives of the appellants - of the 72 deputies of the National Assembly - E. Yegoryan, A. Sadoyan and V. Khachatryan,

• the respondent party- the Minister of Justice D. Harutyunyan, the Minister of Telecommunication A. Vardanyan, authorized as representatives by the National Assembly,

• the representative of the President of the Republic of Armenia- the Minister of the Economical and Structural Reforms V. Avanessyan,

• the involved specialist-holder of the chair of the Institute of the National Economy, Doctor of Economic Sciences, professor U. Suvaryan,

Pursuant to paragraph 1 Article 100, paragraph 2 Article 101 of the Constitution of the Republic of Armenia and to paragraph 1 Article 5, paragraph 2 Article 25 and Article 55 of the Law of the Republic of Armenia ,,On the Constitutional Court,, ,

Considered in a public hearing the case ,,On the conformity of Article 24 of the Law of the Republic of Armenia ,,On Telecommunication,, with the Constitution of the Republic of Armenia,,.

The case was initiated by the appeal of 72 deputies of the National Assembly of the Republic of Armenia filed with the Constitutional Court.

After hearing the report of A. Gyulumyan, Member of the Constitutional Court of the Republic of Armenia and reporter for this case, the explanations of the parties’ representatives, the inference of the specialist, studying and analyzing the Law and other attached documents, evaluating the literal meaning of the Law and the formulated law-enforcement practice, the Constitutional Court of the Republic of Armenia finds that:

1. The Law of the Republic of Armenia ,,On Telecommunication,, was adopted by the National Assembly on February 17, 1998 and was signed, promulgated and entered into force on February 20, 1998.

The Law establishes the legal basis for the realization of activity in the sphere of telecommunication on the whole territory of the Republic of Armenia, the powers and responsibility of its participants as well as the rules of the protection of the rights of the telecommunication service users (Article 1).

2. The appellant party considers that Article 24 of the Law of the Republic of Armenia ,,On Telecommunication,, was not in conformity with the Constitution of the Republic of Armenia, in particular, with the provisions on the state-guaranteed freedom of economic activity and free economic competition registered in Article 8 of the Constitution of the Republic of Armenia.

3. The respondent party considers that the mentioned regulation of the Law does not contradict the Constitution of the Republic of Armenia, since the issue concerns to a natural monopoly, and the restriction of the free economic activity in the sphere of telecommunication is intended to improve the communication situation on the territory of the Republic of Armenia and ensure the technical advancement in this field through foreign investments.

4. Article 24 of the Law of the Republic of Armenia ,,On Telecommunication,, which is entitled as ,,transitional provisions,, establishes: ,,The licence N 60, given before the adoption of this Law by the Ministry of Communication of the Republic of Armenia and affirmed by the Government of the Republic of Armenia through its resolution N 218 of June 25, 1997, which confirms the absolute rights, given to the legal owner of the public combined telecommunication network of the Republic of Armenia - ,,Armenian Telephone Company,, Closed Joint-Stock Company (,,ARMENTEL,,), to perform services of telecommunication and high frequency teletransmission by the network of ,,ARMENTEL,, for 15 years is in force in conformity with the provisions of this Law and the licence. The effect of rights established by the said licence must be ensured by the legislation of the Republic of Armenia (including antitrust legislation).”

Article 17 of the same Law enshrines that absolute rights cannot be provided by a licence except under the case provided by the transitional provisions of the Law.

Moreover, Article 2 of the Law establishes that the relations in the sphere of television and broadcasting are regulated by an individual Law except under the case provided by Article 24 of the Law.

5. The legal analysis of the provision of Article 24 of the Law, which keeps in force the licence N60, given by the Ministry of Communication and affirmed by the resolution of Government, shows that the legislator has established not all-mandatory regulation adjusting the legal relations, but actually, ratifying the licence terms established by the executive authority for a concrete legal entity, lent those regulations the force of Law.

Pursuant to Article 55 of the Law of the Republic of Armenia ,,On the Constitutional Court,, , while determining the conformity of Article 24 of the Law of the Republic of Armenia ,,On Telecommunication,, with the Constitution, the Constitutional Court is obliged to proceed from the following factors:

__ the form of the legal act;

__ the time when the act was adopted, as well as whether it was signed, promulgated and implemented in compliance with established procedures;

__ the contents of the legal act;

__ the necessity of protection and free exercise of human and civil rights and freedoms enshrined in the Constitution, the grounds and frames of their permissible restriction;

__ the principle of separation of powers as enshrined in the Constitution;

__the permissible limits of powers of state bodies and public officials;

__ the necessity of ensuring direct application of the Constitution.

6. By stipulating in Article 24 of the Law of the Republic of Armenia ,,On Telecommunication,, that ,,The effect of rights established by the said licence must be ensured by the legislation of the Republic of Armenia (including the antitrust legislation),, (this type of legislation were totally absent at the moment of adopting this Law), the legislator actually, while lending the norm of the Law features proper to a constitutional norm, had anticipated the concept of laws to be adopted for regulating this sphere.

According to Part 3, Article 62 of the Constitution of the Republic of Armenia, the powers of the legislative body are determined by the Constitution, which has not lent the National Assembly of the Republic of Armenia the competence to adopt laws containing the regulations of the constitutional nature.

Moreover, according to the Part 2, Article 5 of the Constitution of the Republic of Armenia, the state bodies and officials may execute only such acts as authorized by legislation. The National Assembly of the Republic of Armenia has lent the force of Law to a document containing the regulations exceeding the competence of the Government or of the body authorized by the latter.

a) The licence given by the Ministry of Communication contravenes the demands of the resolution N 161 adopted by the Council of Ministers of the Republic of Armenia on March 5, 1991 ,,On regulation of different types of economic activity on the whole territory of the Republic of Armenia,, ,

b) The regulation, enshrined in paragraph 4 of the newly edited licence N 60, according to which ,,the absolute rights given to the licenced by this licence must not be considered as infringement to antitrust or any other laws,, is not the matter of competence both of the Government and the Ministry. It is not also the matter of competence of the legislative body,

c) The executive body is not competent to restrict civil rights and prohibit free economic activity if it is not prescribed by law or proceeds from demands of application of law. Such one-sided responsibilities are pledged by the given licence N 60, paragraph 4, establishing that ,,the Ministry of Communication and bodies authorized by the Government of the Republic of Armenia or according to the procedure prescribed by the legislation of the Republic of Armenia are to apply their state legal power not to allow the performance of any kind of services mentioned in the licence by anyone.

7. According to Part 3, Article 8 of the Constitution of the Republic of Armenia, the state guarantees the free development and equal legal protection to all forms of property, freedom of economic activity, free economic competition.

According to Article 4 of the Constitution, the state ensures the protection of human rights and freedoms on the basis of the Constitution and laws, pursuant to the principles and norms of the International Law.

The freedom of economic activity is not absolute freedom, it can be restricted according to the norms and principles of International Law. The nature of restriction is substantiated by the legislator, with due consideration given to the fact that it is possible only for ensuring the relevant recognition and respect of rights and freedoms of other persons and for satisfying the rightful requirements of morality, public order and common welfare in a democratic society (Part Two, Article 29 of the Universal Declaration of Human Rights, item 3, Article 12 of International Covenant on Civil and Political Rights).

The principle of free economic competition, in turn, proceeds from the principles of economic freedom and equality, and implies the equality of all economic entities of the market economy, insurance by the state of equal conditions and opportunities for them.

Meanwhile, the analysis of the provisions of the Constitution of the Republic of Armenia and of the international principles of constitutionalizm shows that the free economic competition does not exclude the existence of such types of activities, which may be prohibited by the state, be subject to state licencing, as well as be natural or state monopolies or be regulated by exclusive rights in order to protect security and lawful interests of the state and society, public order, health and morality, rights and freedoms of other persons.

However, clarification of these spheres, possible restrictions of the degrees of freedom of economic activities or of free economic competition are regulated by the Constitution and by the laws for implementing the antitrust policies ensuring evenhanded competition as well as the economic and social advancement.

The legislative authority alone is competent to determine the limits and nature of these restrictions as regulations of all-mandatory behavior. And in case when individual legal relations are not yet regulated by Law, the Government can supplement not only as a subject providing the legislative initiative, but also based upon Article 78 of the Constitution, whereby with the propose of legislative support of the Government activity program, the National Assembly can authorize the Government to adopt resolutions that have the effect of law that are in force within the period established by the National Assembly and can't be contradictory to laws.

Based on the outcome of investigation of this case and in accordance with paragraph 1 of Article 100 and parts 1 and 2 of Article 102 of the

Constitution of the Republic of Armenia, and in accordance with paragraph 1 of Article 5 and Articles 67 and 68 of the "Law of the Republic of Armenia on the Constitutional Court," the Constitutional Court of the Republic of Armenia decides:

G. Harutiunian
President of the Constitutional Court