Regulatory Resolution of the Constitutional Court of the Republic of Kazakhstan dated October 3, 2023 No. 31-NP "On reviewing the notes of Article 214 Illegal Entrepreneurship of the Criminal Code of the Republic of Kazakhstan dated July 3, 2014 for compliance with the Constitution of the Republic of Kazakhstan"

IN THE NAME OF THE REPUBLIC OF KAZAKHSTAN

The Constitutional Court of the Republic of Kazakhstan, composed of Chairman Azimova E.A., judges Eskendirov A.K., Zhakipbaev K.T., Zhatkanbayeva A.E., Kydyrbaeva A.K., Nurmukhanova B.M., Ongarbaev E.A., Podoprigora R.A., Sarsembaev E.J. and Udartseva S.F., with the participation of representatives:

the subject of the appeal is Chernyshev D.Ya. – lawyer Chernov O.V.,  

representatives:

The Prosecutor General's Office of the Republic of Kazakhstan – Advisor to the Prosecutor General Adamova T.B.,

Agency of the Republic of Kazakhstan for Financial Monitoring – Head of the Investigative Department O.S. Tazhmaganbetov.,

Ministry of Justice of the Republic of Kazakhstan – Vice Minister Mukanova A.K.,

Office of the Mazhilis of the Parliament of the Republic of Kazakhstan – Head of the sector of the Department of Legislation Rakisheva A.M.,  

Office of the Senate of the Parliament of the Republic of Kazakhstan – Deputy Head of the Legislation Department N.A. Sartayeva,  

The expert is S.M. Rakhmetov, Doctor of Law, Professor, Chief Researcher at the Institute of Legislation and Legal Information of the Republic of Kazakhstan.,

In an open meeting, I considered the appeal of D.Y. Chernyshev on checking for compliance with paragraph 1 of Article 14 of the Constitution of the Republic of Kazakhstan and article 214 of the Criminal Code of the Republic of Kazakhstan dated July 3, 2014 (hereinafter referred to as the Criminal Code).

Having listened to the speaker, Judge of the Constitutional Court of the Republic of Kazakhstan Ongarbayev E.A. and the participants of the meeting, having studied the materials of the constitutional proceedings, having analyzed the norms of the current law of the Republic of Kazakhstan and certain foreign countries, the Constitutional Court of the Republic of Kazakhstan

 

installed:

 

The Constitutional Court of the Republic of Kazakhstan (hereinafter referred to as the Constitutional Court) has received an appeal to review the notes of Article 214 of the Criminal Code for compliance with the Constitution of the Republic of Kazakhstan (hereinafter referred to as the Constitution).  

By the verdict of the Almalinsky District Court of Almaty dated May 10, 2023, the subject of the appeal was convicted under part one of Article 214 of the Criminal Code and sentenced to a fine.

It follows from the appeal and the submitted materials that the applicant was brought to criminal responsibility for illegal entrepreneurship committed through the exchange of unsecured digital assets (cryptocurrencies), with the extraction of large-scale income.

The subject of the appeal believes that the contested note of Article 214 of the Criminal Code does not comply with paragraph 1 of Article 14 of the Constitution, since it cannot be applied to persons in whose criminal cases there is no damage, and the acts are related to the extraction of large-scale income, which puts them in an unequal position with the perpetrators who caused the damage and voluntarily reimbursed.

When verifying the constitutionality of the norm in question in the Criminal Code, the Constitutional Court proceeds from the following.

One of the fundamental principles of the Republic's activities is economic development for the benefit of the entire people (paragraph 2 of Article 1 of the Basic Law).

Paragraph 2 of article 6 of the Constitution states that property is binding, and its use must simultaneously serve the public good. The subjects and objects of ownership, the scope and limits of the exercise of their rights by the owners, and the guarantees of their protection are determined by law.

Article 14 of the Basic Law establishes the principle of equality of all before the law and the court, which implies the unity of requirements and legal responsibility for all subjects of relevant legal relations.

In accordance with paragraph 4 of article 26 of the Constitution, everyone has the right to freedom of entrepreneurial activity, the free use of their property for any legitimate entrepreneurial activity.  

The grounds and limits of restrictions on the right to freedom of entrepreneurial activity follow from the norm of paragraph 1 of Article 39 of the Constitution, according to which human and civil rights and freedoms may be restricted only by laws and only to the extent necessary to protect the constitutional order, public order, human rights and freedoms, public health and morals..

The Law of the Republic of Kazakhstan dated January 6, 2012 "On National Security of the Republic of Kazakhstan" (hereinafter referred to as the Law) in article 4 establishes economic security as one of the types of national security. It is provided by the State through a system of measures, including those of a criminal-legal nature.  

Ensuring and exercising the right to freedom of entrepreneurial activity is an important and necessary condition for the development of the country's economy. The State, while ensuring this right, must proceed from the national interests defined in article 5 of the Law.

Given the high public danger of certain acts related to harming the economic interests of the State and society, the legislator has defined a chapter in the Criminal Code devoted to criminal offenses in the field of economic activity.

The Constitutional Court, in its regulatory resolution No. 14-NP dated May 18, 2023, noted that when criminalizing certain acts, the legislator primarily proceeds from the degree of their public danger. In addition, the social and economic prerequisites and consequences of the adopted laws aimed at combating crime are taken into account.

The legal analysis of Article 214 of the Criminal Code indicates the presence in its provisions of several alternative criminal offenses related to the conduct of business, banking (banking operations), microfinance or collection activities without registration, as well as without a license required for such activities, or in violation of the legislation of the Republic of Kazakhstan on permits and notifications, as well as the occupation of prohibited types of entrepreneurial activity, if these acts have caused major damage to a citizen, organizations or the state are either associated with the extraction of income on a large scale or the production, storage, transportation or sale of excisable goods on a significant scale.

The specifics of the crimes for which responsibility is provided in article 214 of the Criminal Code are that in this norm, three independent signs are indicated as mandatory signs of the objective side: the consequence in the form of causing major damage to a citizen, organization or state, the extraction of income on a large scale or the production, storage, transportation or sale of excisable goods. in significant amounts. The first sign refers to the criminal consequences, and the second and third signs characterize the scale of the committed socially dangerous act. That is, to determine the composition of this crime in a person's act, it is sufficient to establish one of the listed signs.

Section 5 of the Criminal Code provides for types of exemption from criminal liability that are aimed at implementing certain principles of criminal law. Exemption from criminal liability implies the refusal to apply criminal law measures against a person who has committed a criminal offense.

In some cases, the legislator defines special conditions regarding specific types of criminal offenses in the form of article notes.

In accordance with paragraph 8 of Article 23 of the Law of the Republic of Kazakhstan dated April 6, 2016 "On Legal Acts", the structural element of a normative legal act may be supplemented with a note when the relevant instructions cannot be stated in the text of the normative legal act without prejudice to the meaning of the rule of law.

Article 214 of the Criminal Code contains a note stating that a person who has committed an act provided for in the first part of this article for the first time is exempt from criminal liability in case of voluntary compensation for damage.

The introduction of notes to articles of the Criminal Code is aimed at clarifying certain concepts, establishing the scope and amount of harm, damage, or determining the conditions for exemption from criminal liability in relation to a specific article.

It follows from the content of the note in article 214 of the Criminal Code that it is applied only in cases of causing major damage to a citizen, organization or State for the first time and its voluntary compensation until the moment of sentencing by the court. The note does not cover cases of crimes specified in article 214 of the Criminal Code related to the extraction of large-scale income or the production, storage, transportation or sale of excisable goods on a significant scale, since these acts are recognized by law as socially dangerous and in the absence of any criminal consequences.

The notes, according to which a person is released from criminal liability upon voluntary compensation for the damage caused by him, are available in the articles 219, 221, 222, 233, 236, 241, 244 and 245 of the Special Part of the Criminal Code. The Criminal Law contains a significant number of articles according to which the perpetrators are held accountable in the absence of damage.

The notes of the articles of the Special Part of the Criminal Code apply, as a rule, to persons who have committed a criminal offense for the first time and have fully compensated for the damage caused, who by their actions have contributed to the disclosure and investigation of a criminal offense.

This selective approach of the legislator is related to the implementation of the principle of humanism in relation to the persons mentioned in the note, and is consistent with the country's criminal policy.

In paragraphs 1) and 6) of the first part of Article 53 of the Criminal Code, circumstances mitigating criminal liability and punishment are recognized as the commission of a criminal offense for the first time or a crime of minor or moderate gravity for the first time due to an accidental combination of circumstances; voluntary compensation for property damage caused as a result of a criminal offense, making amends for moral and other harm caused by a criminal offense.

At the same time, the punishment imposed by virtue of the second part of Article 39 of the Criminal Code is applied in order to restore social justice, as well as to correct the convicted person and prevent the commission of new criminal offenses by both convicted persons and others.

In accordance with subparagraph 1) According to paragraph 3 of Article 61 of the Constitution, Parliament has the right to issue laws that regulate the most important public relations, establish fundamental principles and norms concerning the legal personality of individuals and legal entities, civil rights and freedoms, obligations and responsibilities of individuals and legal entities.

The Parliament has the right to establish responsibility and cases of exemption from it based on the public danger of an act, the criminogenic situation in the country, the degree of protection of objects protected by criminal law, the consequences of criminal offenses, as well as the post-criminal behavior of a person.

The Criminal Law establishes that the commission of illegal acts provided for in the first part of Article 214 of the Criminal Code involving the extraction of large-scale income or the production, storage, transportation or sale of excisable goods on a significant scale, even if they are committed for the first time, do not fall under the rules of the notes of this article. This does not contradict the principle of equality of all before the law, since the application of this note does not depend on who committed the criminal offense that caused major damage, the responsibility for which is provided by the said article.

The Constitutional Court, in its normative resolution No. 21-NP dated July 14, 2023, noted that "the equality of all before the law and the court, guaranteed by paragraph 1 of Article 14 of the Constitution, means that the laws adopted cannot establish differences in the rights of persons that have no objective and reasonable justification. Under equal conditions, the subjects of law should be in an equal legal position. A different approach to the issue of the limits of restrictions on human and civil rights and freedoms that does not pursue constitutional and legal goals would contradict article 39 of the Constitution."

The Constitutional Court considers that the principle of equality of all before the law does not mean that all acts provided for in criminal law should entail equal responsibility and other consequences related to the commission of an offense. Obviously, the amount of liability depends on the degree of public danger of each specific offense and other related circumstances specified in the Criminal Code.

The Constitutional Council of the Republic of Kazakhstan, in its regulatory resolution No. 9 dated June 26, 2003, also stated that "the constitutional norm on equality of all before the law and the court, enshrined in paragraph 1 of Article 14 of the Constitution of the Republic of Kazakhstan, is reflected in the provisions of part two of Article 14 of the Criminal Code. It is noted here that persons who have committed crimes are equal before the law, regardless of origin, social, official and property status, gender, race, nationality, language, attitude to religion, beliefs, membership in public associations, place of residence or any other circumstances." Further, the Constitutional Council noted that "equality before the law in determining criminal liability means that the subjects of a crime must bear the same criminal responsibility for the same acts, taking into account both mitigating and aggravating circumstances. The means of ensuring formal equality in criminal law is the corpus delicti, which can be simple, qualified and with mitigating circumstances."

In the course of the constitutional proceedings, shortcomings were identified related to ensuring mutual consistency of measures of responsibility for the acts in question and the construction of norms of laws of various branches.

The disposition of article 214 of the Criminal Code focuses the attention of the legislator on its further legislative improvement. It is unnecessarily cluttered with several alternative acts related to illegal business activities, banking (banking transactions), microfinance and collection activities, which can be differentiated in certain provisions of the Criminal Code. Such a legislative approach creates certain difficulties in law enforcement practice and creates a risk of violation of constitutional human rights.

In addition, the definitions of major damage caused to a citizen, as well as a significant amount during the turnover of excisable goods, are not harmonized among themselves: in the Code of the Republic of Kazakhstan on Administrative Offenses of July 5, 2014 (hereinafter referred to as the Administrative Code) – no more than one thousand monthly calculation indices, and in the Criminal Code – two thousand monthly calculation indices and more (paragraphs 1 and 3 of the notes of Article 153 of the Administrative Code, paragraphs 2) and 38) of Article 3 of the Criminal Code).

In its decision, the Constitutional Court noted that when resolving issues related to the criminalization of illegal behavior, the dispositions of the norms of the criminal law must clearly comply with the requirements of certainty of legal regulations and their consistency in the general system of legal regulation. Any criminal offense and the penalty imposed for it must be provided in such a way that everyone can foresee the criminal consequences of their actions (inaction) (Regulatory Decree No. 14-NP of May 18, 2023).

Based on the above, guided by paragraph 3 of Article 72 and paragraph 3 of Article 74 of the Constitution of the Republic of Kazakhstan, subparagraph 3) paragraph 4 of article 23, articles 55-58, 62, paragraph 3 of article 64 and subparagraph 2) Paragraph 1 of Article 65 of the Constitutional Law of the Republic of Kazakhstan dated November 5, 2022 "On the Constitutional Court of the Republic of Kazakhstan", the Constitutional Court of the Republic of Kazakhstan

Decides:

 

To recognize the note of Article 214 of the Criminal Code of the Republic of Kazakhstan as corresponding to the Constitution of the Republic of Kazakhstan.

To recommend to the Government of the Republic of Kazakhstan to consider amendments and additions to the Criminal Code and other laws of the Republic of Kazakhstan in accordance with the legal positions of the Constitutional Court of the Republic of Kazakhstan contained in this regulatory resolution.

This regulatory resolution comes into force from the date of its adoption, is generally binding throughout the Republic, final and not subject to appeal.

To publish this regulatory resolution in Kazakh and Russian in periodicals that have received the right to officially publish legislative acts, the unified legal information system and on the Internet resource of the Constitutional Court of the Republic of Kazakhstan.

 

The Constitutional Court

 Republic of Kazakhstan                                                        

 

© 2012. RSE na PHB "Institute of Legislation and Legal Information of the Republic of Kazakhstan" of the Ministry of Justice of the Republic of Kazakhstan  

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