a) Armenia / b) Constitutional Court / c) / d) 25-02-2008 / e) DCC-735 / f) On the conformity with the Constitution of Article 3.2 and 3.2.B of the Law on Bankruptcy / g) to be published in Tegekagir (Official Gazette) / h) .
Keywords of the Systematic Thesaurus:
General Principles - Clarity and precision of legal provisions.
Fundamental Rights - Civil and political rights - Procedural safeguards, rights of the defence and fair trial - Access to courts.
Fundamental Rights - Civil and political rights - Right to property.
Keywords of the alphabetical index:
Debtors must have the opportunity of bringing disputes over debts to court. Courts should only deal with the issue of the discharge of debts that are due and not in dispute, once the issue of disputed debts has been settled. There should be a clearer distinction in legislation between special proceedings of bankruptcy cases and proceedings of substantive disputes.
I. Under Article 3.2 of the Law on Bankruptcy, a debtor may be declared bankrupt on a petition for compulsory bankruptcy if, after thirty days or more, his indisputable debts have exceeded the five-hundred-fold limit of minimum salary prescribed by law. This situation must pertain at the time the decision is made, even though the debtor is not insolvent.
The applicants expressed concerns over the expression "even though the debtor is not insolvent". They suggested that it might result in solvent debtors being adjudicated bankrupt. A dispute had arisen over another norm of the same Law (Article 3.2.B). The point was raised that, due to the lack of clarity, substantive disputes on material debts were being moved to trial in bankruptcy cases.
II. The Constitutional Court took the view that Courts should only deal with the issue of the discharge of debts that are due and not in dispute, once the issue of disputed debts has been settled. Moreover, there should be a clearer distinction in legislation between special proceedings of bankruptcy cases and proceedings of substantive disputes.
The Constitutional Court accordingly declared that the expression "even if the debtor is not insolvent" within Article 3.2 of the Law on Bankruptcy was in breach of Article 31 of the Constitution (right to property) invalid. It pronounced Article 3.2.B to be in accordance with the Constitution.