Explanatory Note from the President of the Republic

16 December 2022

On 13 December 2022 the Timorese Court of Appeal handed down its decision in the case filed by President Ramos Horta concerning the constitutional validity of the Veterans’ Fund created by the rectifying budget of 2022. The following day the Court handed down a decision relating to a further case filed by the President concerning the allocation in the 2023 General State Budget to the Fund. For all intents and purposes the two cases cover the same issues and the decisions are identical, other than the first decsion is far more extensive in its reasons.

The reasoning of the Court is important and interesting and is further evidence of the growing confidence and acumen of the judges. The President of the Republic welcomes the decision and congratulates the Court on its reasoning and its commitment to the Constitution and the people of Timor-Leste.

The principle of Proportionality

The judges overcome any objection that the budget laws are not capable of being judically reviewed by the Constitutional Court by reference to the doctrine of proportionality and the clear words of the Constitution. The Court traces the history of the concept from Ancient Greece, the writing of Plato and Aristotle up to contemporary jurisprudence and states that:

“Under the terms of Section 1.1 of the Constitution of the Republic, “the Democratic Republic Democratic Republic of Timor-Leste is a democratic State based on the rule of law”.

The principle of proportionality, or the prohibition of excess, is intrinsic to the political-legal concept of the Rule of Law …is intrinsic to the political-legal concept of the rule of law. It is now seen as a “universal principle within the Constitutions of democratic States …

In the first place, it is important to remember that the ‘just is what is proportional, the unjust is what violates proportion’”.

The Court recognises that the principle of proportionality is a “general principle of law, constitutionally enshrined” which requires that the acts of the public authorities and, to some extent, of private entities, must be proven “to be suitable and necessary to attain the legitimate and concrete ends that each of those acts”.  That the Government and the parliament must always demonstrate a propretional or adequate link between the means they use to achieve a particular result. Governemtn and Parliament cannot act without this link. If they do they may find that their decsions are found to be legally or constitutionally invalid.

The principle of proportionality is composed of three sub-principles. First, a legislative or administrative measure used must be suitable or appropriate to achieve the purposes in question. Second, the measure adopted must prove to be the least onerous or restrictive available of all the possible measures available to attain the objective. And third, the balancing or weighing, which requires an analysis of the proportionality between the costs and benefits resulting from the adoption of the measure.

These are important points for Government, public servants and citizens to always keep in mind. The Government, Parliament and public servants cannot act simply willy nilly (airbiru). They must always demonstrate the legitimacy of what they do by reference to the principle of proportionality. Government and Parliament have a large degree of freedom to act, but, the Court’s will intervene when the measure in question is manifestly excessive. The Court will always seek to strike a just  balance and outcome. In the case of the Veterans’ Fund the Court found that the law made by Parliament was manifestly excessive.

Proportionality and the Veterans’ Fund.

In applying the principle of proportionality to the Veterans’ Fund the Court stated that the National Parliament described the operation of the fund and its objective in an “excessively vague and imprecise manner”. Parliament, the Court said, did not provide any justification regarding the concrete problems that veterans face in the areas of social support, education, health, employment, access to credit and income generating activities. Nor did it provide any explanation of how these difficulties could not be resolved in other ways, how existing veterans’ support was insufficient, or what the (possible) future advantages of the Fund might be. Importantly, the Parliament provided no information on what might be the (eventual) benefit, even if indirect, for the rest of the Timorese community. The Court also noted that the vague terms of the law meant that it was possible for any type of program  without any limits or boundaries, “there are no boundaries, limits, assumptions or objectives; everything is very undefined”. Simply the law allocated to the Fund: one billion

billion dollars.

The Court noted that the funding allocation to the that the veterans who represent a maximum of 2% of the population, in relative terms when compared to the 2022 State Budget, corresponds, to:

• almost half of the global revenue ($2,178,942,591) and of the global expenditure
• ($2,178.328.791);
• almost 11 times the consolidated global expenditure of the Special Administrative Region of Oe-Cusse Ambeno ($89,565,344);
• about 19 times the tax revenue from direct taxes ($51,757,975);
• about 14 times of the tax revenue with indirect taxes ($69,801,709);
• around 125 times the Ministry of Justice’s expenditure on “access to justice” ($7,992,325);
• about 23 times the Ministry of Health’s expenditure on “health” ($43,631.607);
• around 30 times the expenditure of the Ministry of Public Works on “roads
• and bridges” ($32,873,534);
• about 61 times the expenditure of the Ministry of Defence on “national defence ($16.296.389);
• about 2,037 times the expenditure of the National Institute of Science and Technology ($490,824);
• about two and a half times the revenue of Social Security ($387,998,000)
• about 13 times the expenditure of the Ministry of Education, Youth and Sport with “education and training” ($75,926,640)
• about four times the expenditure of the central administration for “wages and salaries ($245,437,130).
• about half of our GDP of 2021 (US$1.96 billion), and the per capita income in Timor-Leste for that year was in Timor-Leste was $1,457″.

      The Court concluded that:

“The principle of proportionality tells us that in the legal and constitutional evaluation of a precept we must consider all the interests at stake; that we must consider whether the benefits it seeks to bring are greater than the disadvantages that may result from it.

The National Parliament says that “the creation of the National Liberation Combatants Fund does not attribute by itself any added right to the National Liberation Combatants.

With all due respect, one cannot follow such a statement.

Naturally, the beneficiaries of the creation of the Fund are the National Liberation Combatants.

National Liberation Combatants. If not them, then who? And the creation of the Fund gives rise to the legal expectation that National Liberation Combatants to access, in an advantageous situation, the financing of the support programmes that are aimed at them. And the “legal expectation is already a position of expectation to which the Law confers protection, namely through permissions attributed to the the expectant subject, in order to defend the probability of the fulfilment of his wish (i.e. his right to). And we must also bear in mind that, as the Government states”, in our legal system, National Liberation Combatants already benefit from the Statute of the National Liberation Combatants (Law 3/2006, of April 12), the regime of Pensions of the Soldiers and Martyrs of the National Liberation (Decree-Law 15/2008, June 4). Law 15/2008, of 4th June), of the Single Cash Benefit for Combatants and Families of National Liberation Martyrs (Decree-Law 5/2012, of 15 February) and the Scholarship Allocation Regime for the Children of Combatants and National Liberation Fighters and Martyrs (Decree-Law 8/2009, of 15 January).

The fact is that the National Liberation Combatants Fund does not immediately or gradually replace this set of rights, it is in addition to them. …

Besides this, obviously, the one billion dollars that will be that will be channelled into the Fund will not be used to address the needs of the population in general….

The set of diplomas that confer rights to the National Liberation Combatants, as mentioned above, materializes the deserved recognition of the country its “veterans”, which is due to them, moreover, in obedience to the constitutional command of … article 11, and shows that, in this matter, much has has been done.

In light of all the above, weighing the cost-benefits for theNational Liberation Combatants and for all other East Timorese, with balance rationality and reasonableness, we must conclude that the creation of the National National Liberation Combatants Fund, under the precise terms in which article 4 of Law 6 /2022 of Law 6 /2022 offends the principle of proportionality, inherent in article 1 of the Constitution of the Republic”.

The fair and equal use of natural resources.

Article 139(1) of the Constitution of the Republic provides that “the resources of the soil, of the subsoil, of the territorial waters, of the continental shelf and of the exclusive economic zone, which are vital to the economy, are the property of the State and shall be used in a fair and equitable manner, in accordance with the national interest”.

The Court stated that Article 139 means that the natural resources of the nation belong to all and that it is to all citizens that the profits from them should reach; the benefits arising from them must be shared equitably by all Timorese people. The Parliament, therefore, has the clear purpose and duty to ensure that this common good shall not be be used by some to the detriment of others;. Parliament must always have the the national interest on the horizon, so that the benefits of the nation’s natural resources and the Petroleum Fund are enjoyed directly or indirectly, by all of society.

The Court decided that the Veterans’ Fund was created with capital from the Petroleum Fund, and thus from profits originating, even if indirectly, from the “resources” referred to in Article 139 of the Constitution. For the reasons they set out in their decision the Court decided that the amount $1,000,000,000 did not in any way translate into the “fair and equal” use. It was the Court said an amount of money that was too large for the benefit of so few people. Accordingly they declared that Article 4 of Law 6/2022 was also in violation of Article 139 paragraph 1 of the Constitution of the Republic.

Inclusive Sustainability

The decision of the Court gives further support to the policy of the President outlined in his address to the National Parliament on 15 September 2022. In that address the President laid out his vision of Inclusive Sustainability for the nation:

“The objectives of the State set out in the Constitution include such things as the building of a society based on social justice, establishing the material and spiritual welfare of the citizens, protecting the environment and preserving our natural resources. These objectives include promoting the harmonious and integrated development of the sectors and regions, and importantly, ensuring the fair distribution of the national product.

What we should take from this is that in our Constitutional system inclusion means that there is a Constitutional duty to ensure social justice, the material welfare of the citizens and the fair distribution of the national product. Inclusion means that our natural resources and the product of those resources, such as the Petroleum Fund and our common national wealth, must be Constitutionally distributed fairly and used in a fair and equitable manner.

Inclusive Sustainability means that our economic system, the use of our national product and the use of our natural resources must be done in a manner that is sustainable both now, and in the future, for the generations that come. That does not mean that the Government cannot spend and use, for example the Petroleum Fund, but that it must do so fairly for the benefit of all with the needs of future generations considered alongside the present.

It means we must look beyond our personal and party political interest to ensure the material welfare of all of the citizens of the nation, whilst at the same time protecting our abundant natural resources and our environment.

It gives substance to the overriding and fundamental right to equality before the law in the context of the allocation of the nation’s financial and natural resources and its sustainable economic development, in the fair distribution of the national product and the fair and equitable use of natural resources. It entails the duty and obligation to ensure and safeguard the sustainable development of the economy, the environment, and the nation. It entails the duty and obligation to ensure and safeguard the inclusive and sustainable development of our greatest asset, our people.

From the perspective of my Presidency, I have already begun to outline and advocate for the principle of Inclusive Sustainable Development. Its substance, for example, includes our collective duty as organs of State power and sovereignty to plan and build an inclusive social and economic policy. It includes our collective duty to create employment for all in our own country, to revitalize and build our agricultural sector to ensure food nutrition and security and to build local food production, packaging, distribution systems and networks as basis for local manufacturing industries.

To achieve Inclusive Sustainable Development we must work together …” (END)