On 29 May 2018, the General Assembly of the judges from the Commercial Law College of the Supreme Court of Cassation referred to the Constitutional Court with the petition to declare unconstitutional the provision of the Amending Act to the Bank Insolvency Act (BIA, The State Gazette, No 22 of 2018) which envisaged retroactivity of the legal grounds of invalidity of nettings.
With the adoption of § 8 of the Amending Act to the BIA the law-maker made retroactive, as from 20 June 2014, the provisions of Article 59(5),(6) and (7) BIA which set out the grounds for relative invalidity ex lege of nettings carried out by creditors of the relevant bank or the bank itself. In accordance with paragraph 5, any netting will be invalid with respect to the creditors of the insolvent undertaking, except for the part which each of them would get in the distribution of the proceeds from the cashing out of the assets, regardless of the date of the two counter-claims, in any of the following cases: (i) after the initial date of the insolvency or (ii) after the date on which the bank was placed under special supervision under the Credit Institutions Act, including the suspension of any or all debts for a certain period of time provided that this date is earlier that the ! date under item (1). In accordance with Article 59(6) BIA, nettings under paragraph 5 are suspended pending the execution of the final settlement of the distribution of the assets which were cashed out.
The reasons of the petition to declare this retroactivity unconstitutional are that the retroactive effect contravenes the principle of legal certainty, insofar as in the implementation of the amended law the creditors of the bank who claim netting with a netted and redeemed debt are deprived of the opportunity to seek satisfaction due to the expiration of the time limits for claiming debts.
Furthermore, it is pointed out in the reasons that the retroactive revision of an existing provision of substantive law together with the longer time limit for claiming invalidity of nettings, which has been increased from two to five years as from the opening date of the insolvency proceedings represents an infringement of the principle of equal rights of the parties, leading to deterioration of the legal status of one of the parties and, at the same time, procedural benefits for the other party.
Further to the petition, case No 11/2018 has been opened.