Verification and Contesting of Creditors' Claims : Constitutional Limits in the Czech Insolvency Code (in Re Bohemia Crystalex)

In what must be one of the most exciting moments in the life of any insolvency code, the Czech Constitutional Court was asked in 2010 to review the constitutionality of the Czech Insolvency Act's rules on verification and contesting of creditors' claims. In its judgment in Re Bohemia Crystalex (Pl. 14/10), the Court found those rules wanting on constitutional grounds and struck one of their cornerstones down with effect of March 2011. As of the same date, an amendment to the Insolvency Act went in force replacing the quashed rule - which used to reserve the right to contest creditors' claims to the administrator and the debtor but denied it to creditors - with a new set of rules granting the right to contest claims to creditors as well. Nevertheless, in adopting the amended rules, the Czech Parliament went to great lengths to make sure that the new rules do not subvert the underlying policies of allocation of control over the insolvency proceedings under the Insolvency Act. Those policies lead the Parliament to remove the creditors' right to contest other creditors' claims in the first place. This episode points to certain fundamental conflicts between the wish to design an insolvency law conducive to creditor control over the insolvency proceedings on the one hand, and the constitutional right to due process, as interpreted by the Czech Constitutional Court in the relevant context on the other hand. That conflict is hardly limited to the national level and the story of this particular constitutional review, as well as its legislative causes and effects, may inform lawmaking and research in other legal systems as well