Constitutional Court

KO93/21, Applicant, Blerta Deliu Kodra and 12 other deputies of the Assembly of the Republic of Kosovo, Constitutional review of Recommendations No. 08-R-01 of the Assembly of the Republic of Kosovo of 6 May 2021

KO93/21, Judgment, of 28 December 2021, published on 13 January 2022

Keywords: Institutional referral, balancing electricity system, deviation in electricity system, difference in treatment, budget, public interest

In the circumstances of the present case, the Court reviewed the constitutionality of the Recommendations [No. 08-R-01] of 6 May 2021, of the Assembly of the Republic of Kosovo, based on the referral submitted to the Court by thirteen (13) deputies of the Assembly, according to the authorizations established in paragraph 5 of Article 113 [Jurisdiction and Authorized Parties] of the Constitution. In reviewing the constitutionality of the contested Act of the Assembly, the Court unanimously decided that (i) the referral is admissible; (ii) the contested Act of the Assembly of 6 May 2021 is in compliance with paragraphs 1, 5 and 14 of Article 65 [Competencies of the Assembly] of the Constitution of the Republic of Kosovo; (iii) the contested  Act of the Assembly of 6 May 2021, is in compliance with Article 24 [Equality Before the Law] in conjunction with Article 55 [Limitations on Fundamental Rights and Freedoms] of the Constitution of the Republic of Kosovo and Article 1 (General Prohibition of Discrimination) of Protocol no. 12 of the European Convention on Human Rights; (iv) to reject the request for Interim Measure; and (v) to reject the request for a hearing.

• Scope of the Referral

The Court initially clarifies that the subject of the constitutional review in this case, is only the constitutionality of the contested Act of the Assembly of 6 May 2021, through which (i) KOSTT is authorized to cover electricity deviations in four (4) municipalities of the Republic of Kosovo, using revenues from its own budget, funds which will be subsequently compensated  “from dividends or any other possible mechanism”; and (ii) the Government of Kosovo is obliged to ensure, within a period of six (6) months and according to the rules and applicable laws, in cooperation with the responsible parties, the entire process of including in the electricity billing system, the consumers in the four (4) respective municipalities.

The Court, in this context, also notes that the following have not been contested through this referral: (i) laws, decisions and other acts of public authorities, which were issued before the adoption of the contested Act of the Assembly and which constitute the legal basis for the exercise of competencies of the Assembly as well as the legal authorizations of other state authorities in relation to the Public Enterprise KOSTT; nor (ii) the decisions of regular courts, as a result of proceedings conducted based on the lawsuit of the Ombudsperson pertaining to the Decision of the Board of the Energy Regulatory Office of 6 February 2012 and repealed on 13 April 2017, through which, in order to cover the losses/deviations in the energy network in the four (4) respective municipalities, the additional amount of 3.5% was billed to electricity consumers in other municipalities of the Republic of Kosovo.

The Court further clarifies that, based on the documents received from the interested parties, the electricity losses as a result of non-billing/non-payment of electricity for electricity consumers in the four (4) municipalities of the Republic of Kosovo, are recorded “as a deviation of Kosovo from the Continental European system”. After the repeal of the abovementioned decision of ERO and until April 2021, these losses, namely the deviations in the electricity system of the Republic of Kosovo, were covered by the Budget of the Republic of Kosovo. In order to balance the electricity system and cover the relevant deviations for the upcoming period, as provided in the applicable laws of the Republic of Kosovo and especially as a result of the implementation of the Connection Agreement with ENTSO-E, namely the European Network of Transmission System Operators for Electricity, as a body of the Regional Group of Continental Europe, the Public Enterprise KOSTT, requested from the Assembly of Kosovo, namely the Functional Committee on Economy, Industry, Entrepreneurship and Trade, among others, to provide financial support to cover the losses in the four (4) municipalities of the Republic of Kosovo, for the period April – December 2021.

In this regard, the Court, based on documents submitted by KOSTT and ERO, notes that the implementation of the KOSTT Connection Agreement with ENTSO-E began on 14 December 2020. The Connection Agreement with ENTSO-E was preceded by the ratification in the Assembly of the International Agreement between the Republic of Kosovo and the Republic of Albania on 30 March 2017, which enabled the formation of a joint regulatory block, known as the Regulatory Block-AK. The latter and the above-mentioned Agreement with ENTSO-E, enabled the Republic of Kosovo (i) to gain energy independence from the regulatory block Serbia, Montenegro, North Macedonia; (ii) to operate as an independent regulatory zone within the AK-Block, within the synchronous zone of ​the ​Continental Europe; and (iii) to gain recognition on the energy maps of Europe, whereby the sovereignty of the independent regulatory zone in the continental European electricity system is recognized. In return, Kosovo institutions committed, inter alia, (i) to guarantee the balancing of the electricity system within its regulatory zone by addressing, as a consequence, the respective losses/deviations; whereas, in case of breach of the obligations arising from this Agreement, the Republic of Kosovo would face: (i) financial consequences; and (ii) reconsideration of the KOSTT status within ENTSO-E.

Consequently, on 6 May 2021, based on the recommendation of the Assembly Committee on Economy, Industry, Entrepreneurship and Trade, at the request of KOSTT “for securing financial means to cover losses”, the Assembly, beyond the specific reporting requirements for KOSTT, decided to (i) “authorize KOSTT to cover electricity deviations in four municipalities of the country (North Mitrovica, Leposavic, Zubin Potok and Zvecan), according to the solution presented and approved by the functional committee, using the revenues from the own budget, funds which will be compensated by dividends or any other possible mechanism”; and (ii) “oblige the Government of Kosovo, within six (6) months, to ensure the entire process of including in the billing system according to the rules and laws in force, in cooperation with the parties responsible for customer billing in four municipalities of the Republic of Kosovo (North Mitrovica, Leposaviq, Zubin Potok, and Zvecan) with electricity”.

• Allegations of the parties

Thirteen (13) deputies of the Assembly of the Republic of Kosovo have contested the constitutionality of this Act of the Assembly. The Applicants first allege that despite the fact that the contested Act of the Assembly is entitled Recommendations, the latter is a decision of the Assembly with legal consequences and, consequently, must be subject to constitutional control as defined in paragraph 5 of Article 113 of the Constitution. Secondly, the Applicants allege that the contested Act of the Assembly was issued in violation of the Constitution, as a result of both the procedure followed and its substance. Pertaining to the procedure, the Applicants, in essence, allege that the contested Act of the Assembly, is contrary to paragraph 5 of Article 65 of the Constitution, because it was issued without a legal basis, stating, inter alia, that such a decision could have been taken only through the Law on Budget or its amendment/supplementation. Whereas, pertaining to the substance of the contested Act of the Assembly, the Applicants state that the latter is contrary to Articles 3 and 24 of the Constitution in conjunction with Article 14 (Prohibition of Discrimination) of the European Convention on Human Rights and Article 1 (General Prohibition of Discrimination) of Protocol no. 12 to this Convention, because in discrimination of electricity consumers who do not live in the four (4) above-mentioned municipalities, the contested Act of the Assembly has authorized the covering of electricity deviations for electricity consumers living in the four (4) respective municipalities of the Republic of Kosovo. The Applicants, in fact, do not contest the obligation of the Public Enterprise KOSTT to cover electricity deviations in these four (4) municipalities until such time that they are included in the electricity billing system according to applicable laws in the Republic of Kosovo. However, they contest the procedure through which the contested Act was issued, alleging at the same time, that the coverage of these deviations in electricity in the respective municipalities, constitutes discrimination within the meaning of Article 24 of the Constitution in conjunction with the relevant articles of the European Convention on Human Rights.

Comments and responses to the Court were also submitted by (i) the Parliamentary Group of Vetëvendosje Movement; (ii) Ministry of Economy; (iii) ERO; and (iv) KOSTT. Responses to the Court have also been submitted by the relevant Committees of the Assembly, namely the Committee on Legislation; the Functional Committee on Economy; the Committee on Budget, Labor and Transfers, as well as the Committee for Oversight of Public Finances. In essence, the respective comments submitted to the Court, allege that the contested Act of the Assembly (i) is a Recommendation and not a decision of the Assembly, and consequently it cannot be subject to constitutional control and, therefore, the Applicants’ referral must be declared inadmissible for review on merits by the Court; (ii) the contested Act of the Assembly was issued based on paragraph 2 of Article 13 (Corporate governing, competencies, reporting) of Law no. 05/L-085 on Electricity, based on which the Assembly is the sole shareholder of the Public Enterprise KOSTT; (iii) KOSTT obligation to cover electricity deviations in the four (4) municipalities of the Republic of Kosovo is established in Article 16 (Tasks and responsibilities of the Transmission System Operator) of the Law on Electricity and by Article 5 (Compensation for the losses in the North of Kosovo) of the KOSTT License, respectively, [ZRRE/Li_15/17, 13 April 2017], and moreover, in accordance with the obligations undertaken by the ENTSO-E Connection Agreement; and that (iv) the contested Act of the Assembly is in the public interest because it concerns energy sovereignty of Kosovo under the obligations arising from the ENTSO-E Connection Agreement.

• Admissibility of the Referral

In reviewing the constitutionality of the contested Act of the Assembly, the Court initially assessed the Applicants’ allegations and the relevant responses of the interested parties, regarding the nature of the contested Act. The Court, in this regard, found that the contested Act of the Assembly falls within the scope of the “decision of the Assembly” as provided by paragraph 5 of Article 113 of the Constitution and accordingly, the Referral is admissible for review on merits. This, inter alia, and based also on the explanations given in this Judgment, because (i) the relevant decision of the Assembly was adopted by a majority vote of the deputies of the Assembly; and (ii) has legal effects for KOSTT and the Government of the Republic of Kosovo. Moreover, the Court, through its already consolidated case-law, has emphasized that the decision-making of public authorities would remain outside the constitutional control, if the Court was to take into account only the formal designation/terminology assigned to the relevant act by the public authorities.

In reviewing the merits of the case, the Court focused on reviewing the constitutionality of the procedure and the substance of the contested Act of the Assembly, namely whether by issuing this Act, the Assembly (i) acted in (non)compliance with its decision-making competence, defined by the Constitution and the law; and (ii) limited the fundamental rights and freedoms of electricity consumers not living in the four (4) municipalities of the Republic of Kosovo, contrary to the guarantees of Article 24 of the Constitution in conjunction with Article 14 of the European Convention on Human Rights and Article 1 of Protocol no. 12 of this Convention.

• Constitutionality of the proceedings

Pertaining to the constitutionality of the procedure followed, the Court initially elaborated (i) the competencies and responsibilities of the Public Enterprise KOSTT; (ii) the KOSTT obligation to balance the energy system and cover electricity deviations; (iii) the rights and obligations of KOSTT in relation to the Connection Agreement with ENTSO-E; (iv) the constitutional and legal competencies of the Assembly to adopt the Law on Budget and responsibilities related to public finances; and (v) the procedure followed in the Assembly and the relevant competence to issue the contested Act, and the Court, concluded that the procedure followed in issuing the contested Act of the Assembly is in accordance with Article 65 of the Constitution.

In support to this conclusion, the Court noted that (i) based on paragraph 1 of Article 65 of the Constitution, the Assembly adopts laws, resolutions and acts; (ii) based on paragraph 14 of Article 65 of the Constitution, the Assembly decides “in regard to general interest issues as set forth by law”; (iii) in exercising its competencies as defined by law, namely based on paragraph 2 of Article 13 of the Law on Electricity, the Assembly of the Republic of Kosovo, exercises the rights of the KOSTT shareholder; (iv) on the other hand, based on paragraph 1 of Article 13 of the Law on Electricity, KOSTT functions as a Publicly Owned Enterprise in accordance with Law no. 03/L-087 on Publicly Owned Enterprises and relevant legislation in force; (v) based on Article 4 (Organisation; Shares) of the Law No. 03/L-087 on Publicly Owned Enterprises, the latter are organized as joint stock companies under the applicable law on business organizations; and that (vi) based on Article 151 (Procedures for Authorizing Dividends) of the Law No. 06/L-016 on Business Organizations, among others, the decision on the authorization and payment of dividends can be made by the shareholders.

Based on the above, the Court clarified that in issuing the contested Act, the Assembly, among others, has authorized KOSTT to cover electricity deviations in the four (4) municipalities “using revenues from its own budget, funds which will be compensated by dividends or any other possible mechanism” and that it issued this decision (i) exercising its competence as a shareholder of the Public Enterprise KOSTT; and (ii) in the exercise of the shareholder’s competence, made a decision pertaining to the KOSTT dividend; whereas, the exercise of this competence was not related to paragraph 5 of Article 65 of the Constitution pertaining to the budget of the Republic of Kosovo, as also maintained before the Court by the relevant Committees of the Assembly, namely the Committee on Budget, Labor and Transfers and Committee for Oversight of Public Finance; but (ii) the exercise of this competence derives from paragraphs 1 and 14 of Article 65 of the Constitution, based on which the Assembly issues acts pertaining to general interest issues as set forth by law.

• The constitutionality of the substance

Pertaining to the constitutional review of the substance of the contested Act of the Assembly, the Court first elaborated the general principles regarding the guarantees of Article 24 of the Constitution, Article 14 of the European Convention on Human Rights and Article 1 of Protocol no. 12 of this Convention, noting that Article 24 of the Constitution in conjunction with Article 1 of Protocol no. 12 of the European Convention on Human Rights, extends the protection against discrimination also in relation to any right provided by law. The Court then elaborated the general principles based on its case-law and that of the European Court of Human Rights, clarifying that in order to determine whether an act may have resulted in discrimination contrary to the guarantees provided through these Articles, it must first assess whether the respective act has treated differently “persons in analogous or relatively similar situations”, and if this is the case, to assess whether this difference in treatment (a) is prescribed by law; (b) pursues a legitimate aim; and (c) is proportionate, namely, whether there is a relationship of proportionality between the limitation of the right and the purpose to be be achieved.

In the above context, the Court initially found that in the circumstances of the present case, within the meaning of the legal provisions pertaining to electricity consumers in the Republic of Kosovo, the electricity consumers in all municipalities are in “analogous or relatively similar situations”. While, in assessing the difference in treatment, the Court emphasized that as a result of the non-billing/non-payment of electricity by electricity consumers in the four (4) municipalities of the Republic of Kosovo, the electricity consumption in these four (4) municipalities, was recorded as a deviation. For this purpose, KOSTT has requested the allocation of financial means in order to procure electricity to cover deviations in the four (4) municipalities of the Republic of Kosovo. Furthermore, based on the contested Act of the Assembly, it results that as a consequence of the authorization given to KOSTT by the Assembly to cover the deviations due to the non-billing/non-payment of electricity by the consumers of four (4) municipalities of the Republic of Kosovo and until the beginning of the implementation of a electricity billing system that includes the consumers of these four (4) municipalities, the latter enjoy a different treatment from consumers of other municipalities of the Republic of Kosovo. Consequently, the Court found that the contested Act of the Assembly results into a difference in treatment between the consumers living in and those not living in the four (4) municipalities of the Republic of Kosovo.

The Court noted, however, that the difference in treatment between consumers in “analogous or relatively similar situations”, based on the case-law of the European Court of Human Rights, results in discrimination contrary to the guarantees of Article 24 of the Constitution in conjunction with Article 1 of Protocol no. 12 of the European Convention on Human Rights, only if the relevant act of public authority lacks “an objective and reasonable justification”. Therefore, the assessment whether the difference in treatment is (a) prescribed by law; (b) pursues a legitimate aim; and (c) is proportionate, is necessary.

First, the Court found that the difference in the treatment of electricity consumers in the four (4) municipalities of the Republic of Kosovo, is “prescribed by law”. This because (i) based on Article 16 (Tasks and responsibilities of the Transmission System Operator) of the Law on Electricity, KOSTT has the obligation to balance the electricity system in accordance with the transmission network code and market rules; (ii) based on Article 19 (Procurement of Electricity and Capacities from the Transmission System Operator) of the Law on Electricity, among others, KOSTT has the obligation to cover losses in the transmission network through the procurement of electricity; and (iii) based on Article 28 (Responsibilities and Rights of the Distribution System Operation) of the Law on Electricity, among others, KOSTT has the responsibility to provide electricity to cover losses in the distribution network. Whereas, based on Article 10 (Transmission System Operator) of the Law on Electricity, the transmission system operator owns the transmission system and is responsible for the operation of this system in line with the license issued by the regulatory authority. Based on the KOSTT License, namely Article 5 (Compensation for the losses in the North of Kosovo), the possibility of KOSTT to “provide electricity to compensate for losses arising from energy used, but not paid, by consumers in the north part of Kosovo” is expressly provided.

Second, the Court found that the difference in the treatment of electricity consumers in the four (4) municipalities of the Republic of Kosovo, pursues a “legitimate aim”. This is because, the contested Act of the Assembly aims at: (i) ensuring the exercise of sovereignty in the electro-energetic  system with all the rights and obligations as defined by the Connection Agreement with ENTSO-E; (ii) preserving the energy independence of the Republic of Kosovo; (iii) protecting the public interest in guaranteeing the supply of electricity throughout the territory of the Republic of Kosovo; (iv) maintaining and strengthening the status of KOSTT in the respective international mechanism, namely the Connection Agreement with ENTOS-E, which has enabled this enterprise to operate as an Independent Regulatory Zone within the AK-Block with the Republic of Albania, within the synchronous zone of Continental Europe; (v) preventing the financial consequences by ENTSO-E, as a result of non-fulfilment of the commitment for balancing within the energy network system or avoiding the deviations in the energy system by KOSTT; and (vi) maintaining the KOSTT status in this mechanism and its equal member status with all other transmission system operators within the ENTSO-E.

Third, the Court found that the difference in the treatment of electricity consumers in the four (4) municipalities of the Republic of Kosovo, through the contested Act of the Assembly, is “proportionate”, namely the contested Act of the Assembly, reflects a reasonable relationship of proportionality between the measure taken and the respective aim pursued. This is because, the contested Act of the Assembly (i) in its point 4, has authorized the Public Enterprise KOSTT to cover the deviations in electricity in the four (4) municipalities of the Republic of Kosovo; while (ii) in its point 5, has obliged the Government to “within the timeline of six (6) months to ensure the entire system of inclusion in the billing system, based on rules and laws in force, in cooperation with the responsible parties, for billing of the consumers” in the four (4) municipalities of the Republic of Kosovo. Therefore, the Court, emphasized that the contested Act of the Assembly, namely the authorization provided to KOSTT to cover losses in electricity, is of a temporary character and it aims at extending the electricity billing system to the consumers in four (4) municipalities of the Republic of Kosovo.

Consequently, and finally, the Court found that the issuance of the contested Act of the Assembly, has resulted in a difference in treatment of electricity consumers who do not live in the four (4) municipalities of the Republic of Kosovo, nevertheless, this difference in treatment contains an “objective and reasonable justification” and, consequently, does not result into discrimination because (a) it is prescribed by law; (b) has pursued a legitimate aim; and (c) is proportionate, and therefore, was not issued in non-compliance with Articles 24 and 55 of the Constitution in conjunction with Article 1 of Protocol No. 12 to the European Convention on Human Rights.