The abstract of the judgment (The judgment is available only in Georgian). Abstracts published by the Constitutional Court of Georgia summarise the facts of the case and key legal considerations of the judgment.

Abstract

On 14 December 2018, the Constitutional Court of Georgia rendered a judgement and partially upheld the constitutional complaint (№747) of the LTD “Giganti Security” and LTD “Security Company Tigonis” v. the Parliament of Georgia and the Minister of Internal Affairs of Georgia.

In the constitutional complaint №747, the complainants challenged the constitutionality of the provisions related to the control of private security services. Section 1 of Article 24 of the law of Georgia on Private Security Activities stipulated that the authorized body that could exercise control over security activities was the Legal Entity of Public Law – Security Police Department. Section 2 of the disputed provision mandated controlling body to assess the compliance of the security organization activities with the requirements of the legislation and in case of violations, impose sanctions. Subparagraph “a” of section 2 of Article 2 of the regulations of Legal Entity of Public Law – Security Police Department that is approved by the order №266 of the Minister of Internal Affairs on “the Approval of the Regulations of the Legal Entity of Public Law – Security Police Department” provided for the objectives of Security Police Department and its mandate to undertake security activities for natural and legal persons on the basis of a private contract.

The complainant party argued that the disputed provisions granted the Security Police Department authority to, on the one hand, function as a controlling body of the private security organizations, and on the other hand, undertake security activities itself. According to the complainants, enabling a controlling body to act as an entrepreneur on the same market constituted a gross intervention by the State and rendered the existence of a free and competitive environment impossible. The complainants stated that confidentiality of commercial information is of decisive importance for entrepreneurial entities, and the disputed provisions provided the possibility of conveying such information to a competitor. Thus, the complainant considered disputed provisions unconstitutional with respect to the right of free entrepreneurship and competition guaranteed by Article 30(2) of the Constitution of Georgia.

The respondent party disagreed with the complainant and pointed out that the purpose of the disputed provisions was the regulation of private security activities, which, in turn, aimed at producing accurate records regarding security organizations, preventing the abuse of power and improving professional standards. According to the respondent, the Security Police Department was equipped with appropriate knowledge and skills that would ensure effective implementation of these functions. In addition, in the case of disproportionate sanctions and biased decisions, the entrepreneur had the opportunity to apply to a court and to protect its right.

The Constitutional Court of Georgia indicated that Article 30(2) of the Constitution of Georgia establishes the obligation of the State to set equal and fair market conditions for participant economic agents. State interference in any segment shall not result in the privileged position of a certain economic agent (or a group of agents).

According to the Constitutional Court, private security activities are based on private contracts and the autonomy of the will of the parties. Accordingly, the exercise of these activities in the conditions of free competition is protected by Article 30(2) of the Constitution of Georgia. The Constitutional Court distinguished between, on the one hand, the control functions, and, on the other hand, the availability of the information obtained during these activities. The Constitutional Court indicated that while exercising control functions, there is an increased risk of abuse of power by economic agents due to their profit interests. However, in the present case, legislation regulated the types of offences and sanctions with thorough precision. Accordingly, the discretion in the decision-making sphere of the Security Police Department was limited. In addition, according to the legislation, any sanction which the Security Police Department would impose on economic agents, were subject to appeal and verification, inter alia, in courts, which created an effective mechanism for preventing abuse of power by the Department. Consequently, the Constitutional Court ruled that by exercising control over economic agents by the Security Police Department, the freedom of competition guaranteed by Article 30(2) was not restricted.

The Constitutional Court pointed out that the Security Police Department had access to documents that contained information regarding the service tariffs, contracting parties, protection facilities and the duration of a contract of competing economic agents. The Court found that the Security Police Department could plan its own economic activities and improve its condition on the market with the help of the provided information. Thus, the procedure set forth by the disputed norms granted privileged market conditions to the Security Police Department and restricted the right guaranteed by Article 30 (2) of the Constitution of Georgia.

Regarding the proportionality of the restriction, the Court pointed out that the exercise of control of private security organizations by a state agency that has day-to-day contact with the security activities market and is well-acquainted with its specificities could be the legitimate aim of the regulation. However, the Constitutional Court decided that this restriction is not necessary as there was no evidence that would have convinced the Court in the inability of effective control of security activities by defining a controlling body in a different manner. Thus, the Constitutional Court of Georgia pointed out that the simultaneous exercise of two functions by the Security Police Department is disproportionate and section 1 of Article 24 of the law of Georgia on Private Security Activities and subparagraph “a” of section 2 of Article 2 of the regulations of Legal Entity of Public Law – Security Police Department that is approved by the order №266 of the Minister of Internal Affairs on “the Approval of the Regulations of the Legal Entity of Public Law – Security Police Department” contradicts Article 30(2) of the Constitution of Georgia. According to the decision of the Constitutional Court of Georgia, the invalidation of unconstitutional norms was postponed until 30 June 2019 and the respondent was granted the opportunity to settle the issue in accordance with the constitution.

The Constitutional Court did not find unconstitutional the provisions of section 1 of Article 24 of the law of Georgia on “Private Security Activities”, which stipulated the rights of the controlling body of private security activities. According to the Court, this provision defined the authority of the controlling body to examine the lawfulness of the activities of the economic agents to carry out the defence activities and to impose sanctions. The above-mentioned provision did not require the controlling body to be the Security Police Department. Thus, the Court ruled that the disputed provision in this regard did not restrict entrepreneurial freedom and did not contradict Article 30(2) of the Constitution of Georgia.