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SECOND
SECTION
CASE OF IMMOBILIA BAU KFT. v. HUNGARY
(Application
no. 13647/04)
JUDGMENT
STRASBOURG
9
October 2007
This judgment will
become final in the circumstances set out in Article 44 § 2
of the Convention. It may be subject to editorial revision.
In the case of Immobilia Bau Kft. v. Hungary,
The
European Court of Human Rights (Second Section), sitting as a Chamber
composed of:
Mrs F. Tulkens, President,
Mr A.B.
Baka,
Mr I. Cabral Barreto,
Mr R.
Türmen,
Mr M. Ugrekhelidze,
Mr V.
Zagrebelsky,
Mr D. Popović, judges,
and
Mrs F. Elens-passos, Deputy Section Registrar,
Having
deliberated in private on 18 September 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application
(no. 13647/04) against the
Republic of Hungary lodged with the Court
under Article 34 of the Convention for the Protection
of Human Rights and Fundamental Freedoms (“the Convention”)
by Immobilia Bau Kft. (“the applicant”).
- The
Hungarian Government (“the Government”) were represented
by Mr L. Höltzl, Agent, Ministry of Justice and Law Enforcement.
The applicant was represented by Mr G. Ormay, a lawyer practising in
Miskolc.
- On
30 August 2006 the
Court decided to communicate the complaint concerning the length of
the proceedings to the Government. Applying Article 29 § 3 of
the Convention, it decided to rule on the admissibility and merits of
the application at the same time.
THE FACTS
THE CIRCUMSTANCES OF THE CASE
- The
applicant is a limited liability company with its seat in Miskolc.
- The
facts of the case, as submitted by the parties, may be summarised as
follows.
A. The liquidation proceedings
- On
27 November 1990 the liquidation of the Diósgyőr Machine
Factory Ltd. (“the Factory”) was ordered by the
Borsod-Abaúj-Zemplén County Regional Court. However,
during the liquidation procedure, the Factory remained partly active,
in order to minimise losses.
- Between
April 1991 and January 1994, the predecessor of the applicant was a
supplier of the Factory. As the Factory was unable to pay for the
services already rendered – the outstanding fees amounted to
8,528,183 Hungarian Forints (approximately 32,421 euros) – the
applicant became a creditor in the liquidation proceedings.
- On
31 August 1994 the Factory's liquidator prepared the closing balance
sheet. The liquidator was of the view that the satisfaction of all
the creditors in cash was impossible. Instead of payment in cash, it
therefore offered shares in the Factory, but the applicant declined
the proposal.
- On
21 February 1995 the applicant objected (kifogás) to
the closing balance sheet and insisted on payment in cash.
- On
4 July 1995 the Borsod-Abaúj-Zemplén County Regional
Court accepted the closing balance sheet. On appeal on 29 May 1997,
the Supreme Court, acting as a second-instance court, quashed this
decision due to procedural shortcomings. It found, inter alia,
that the Regional Court had not dealt with the applicant's objection.
The Supreme Court held that the liquidator was under an obligation to
attempt to sell the shares of the Factory first and then satisfy the
creditors from the sums received. The Supreme Court's decision
arrived at the Regional Court on 15 July 1997.
- On
10 December 1997 the Regional Court ordered the liquidator to prepare
a new closing balance sheet.
- On
19 January 1998 the liquidator informed the Regional Court that the
sale of the shares was only possible well below their nominal value.
The liquidator also informed the Regional Court about the ongoing
negotiations with possible investors and requested an extension of
the time-limit for the preparation of the closing balance sheet. The
Regional Court registered the liquidator's request.
- On
17 September 1998 the liquidator announced that its attempt to sell
the shares had been unsuccessful and requested the Regional Court to
accept an amended closing balance sheet.
- On
18 February 2000 the liquidator informed the Regional Court about an
update to the closing balance sheet.
- On
22 January 2001 the applicant initiated negotiations with the
liquidator. At a meeting held on 20 February 2001, the liquidator
acknowledged that it had satisfied some of the creditors more
favourably than the applicant, but had only done so to keep the
Factory at least partly active.
- On
23 January 2001 the applicant lodged a complaint with the Regional
Court about the lack of a final decision in the case.
- On
29 March 2001 the applicant raised an objection before the Regional
Court, asking the court to terminate the liquidation proceedings.
- On
1 July 2004 the Regional Court dismissed the applicant's complaint
without examining its merits.
- Subsequently,
on 2 April 2001 the applicant lodged another complaint with the
Regional Court and requested the appointment of an expert auditor in
order to establish whether the liquidator had breached its duties.
- On
12 October 2004 the Regional Court dismissed the applicant's second
complaint. The applicant appealed. On 15 September 2005 the Debrecen
Court of Appeal upheld the first-instance decision.
- Meanwhile,
on 30 January 2002 the Regional Court ordered the liquidator, under
pain of a fine and deletion from the register of liquidators, to
produce the closing balance sheet within 30 days or inform the court
about any obstacles.
- On
4 March 2002 the liquidator informed the Regional Court that the
liquidation procedure was at an advanced stage, but requested the
court to forbear from demanding the closing balance sheet “because
of difficulties in obtaining, handling and classifying certain
documents”. The liquidator added that the unsuccessful attempt
to reach a settlement with the applicant had also delayed the
proceedings.
- On
8 June 2004 the Regional Court again requested information from the
liquidator about the obstacles to finishing the procedure.
- On
1 July 2004 the liquidator informed the Regional Court that it was
still facing the same difficulties and, therefore, was not able to
produce the closing balance sheet.
- On
4 February 2005 the liquidator prepared an additional closing balance
sheet. The Borsod-Abaúj-Zemplén County Tax Authority
audited that document, which was then lodged with the Regional Court
on 19 October 2006.
- The
liquidation procedure is apparently still pending.
B. Civil proceedings against the liquidator
- On
20 April 2001 the applicant brought an action for compensation
against the liquidator before the Borsod-Abaúj-Zemplén
County Regional Court.
- On
8 May 2001 the Regional Court stayed the proceedings. On appeal, on 6
September 2001 the Supreme Court, acting as a second-instance court,
reversed the first-instance decision and ordered the continuation of
the proceedings.
- In
the resumed proceedings, on 30 October 2001 the Regional Court found
that it had no jurisdiction to deal with the case and transferred it
to the competent Miskolc District Court. The Supreme Court, acting as
a second-instance court, upheld this decision on 19 December 2002.
- On
2 April 2003 the District Court dismissed the applicant's case,
finding that the procedure followed by the liquidator had complied
with the relevant domestic law. Moreover, it pointed out that the
applicant had failed, despite warnings, to request the appointment of
an auditor, whose opinion would have been the only acceptable proof
for the establishment of the defendant's liability.
- On
appeal, on 21 November 2003 the Borsod-Abaúj-Zemplén
County Regional Court upheld the first-instance decision. The
applicant lodged a petition for review with the Supreme Court.
- On
14 July 2004 the Supreme Court dismissed its petition, without an
examination on the merits, as inadmissible, since it was incompatible
ratione materiae with the relevant provisions of the Code of
Civil Procedure.
C. Civil proceedings against the Borsod-Abaúj-Zemplén
County Regional Court
- In
2004 the applicant brought an official liability action against the
Borsod-Abaúj-Zemplén County Regional Court before the
Miskolc District Court.
- As
the District Court had no jurisdiction to hear the case, on 1
September 2004 the Budapest Court of Appeal had appointed the
Szabolcs-Szatmár-Bereg County Regional Court to proceed.
- On
24 January 2005 the County Regional Court dismissed the applicant's
case. It pointed out that the domestic courts dealing with the matter
had kept regular contact with the liquidator and repeatedly ordered
it to produce the closing balance sheet. It also noted that the
relevant domestic law did not contain a specific deadline to finish a
liquidation procedure. The Regional Court acknowledged that there had
been some delays imputable to the courts dealing with the case, but
was of the view that these delays had not caused any damage to the
applicant, given that the possibility of recovering the money owed by
the debtor had in any event been very low.
- On
appeal, on 29 September 2005 the Debrecen Court of Appeal upheld the
first-instance decision.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicant complained that the length of the liquidation proceedings
had been incompatible with the “reasonable time”
requirement, of Article 6 § 1 of the Convention, which reads as
follows:
“In the determination of his civil rights and
obligations ..., everyone is entitled to a ... hearing within a
reasonable time by [a] ... tribunal...”
- The
Government contested that argument.
- The
period to be taken into consideration began in January 1994.
According to the information available in the case file as of the
date of adoption of the present judgment, it has not yet ended. It
has thus already lasted more than thirteen years and eight months for
two court instances.
A. Admissibility
- The
Court notes that this complaint is not manifestly ill-founded within
the meaning of Article 35 § 3 of the Convention. It further
notes that it is not inadmissible on any other grounds. It must
therefore be declared admissible.
B. Merits
- The
Court reiterates that the reasonableness of the length of proceedings
must be assessed in the light of the circumstances of the case and
with reference to the following criteria: the complexity of the case,
the conduct of the applicant and the relevant authorities and what
was at stake for the applicant in the dispute (see, among many other
authorities, Frydlender v. France [GC], no. 30979/96, §
43, ECHR 2000-VII).
- The
Court has frequently found violations of Article 6 § 1 of the
Convention in cases raising issues similar to the one in the present
application (see Frydlender, cited above).
- Having
examined all the material submitted to it, the Court considers that
the Government have not put forward any fact or convincing argument
capable of persuading it to reach a different conclusion in the
present case. Having regard to its case-law on the subject, the Court
finds that the length of the proceedings was excessive and failed to
meet the “reasonable time” requirement.
There
has accordingly been a breach of Article 6 § 1.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1
- The
applicant claimed that the length of the proceedings in question
deprived it of the enjoyment of its property. It relied on Article 1
of Protocol No. 1, which provides as follows:
"Every natural or legal person is entitled to the
peaceful enjoyment of his possessions. No one shall be deprived of
his possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way
impair the right of a State to enforce such laws as it deems
necessary to control the use of property in accordance with the
general interest or to secure the payment of taxes or other
contributions or penalties."
- The
Court notes that this complaint is linked to that under Article 6 § 1
of the Convention which has already been examined above and must
therefore, likewise, be declared admissible. However, having regard
to its finding under Article 6 § 1 (paragraph 43 above), the
Court considers that it is not necessary to examine separately
whether there has also been a violation of Article 1 of Protocol No.
1 (see Zanghì v. Italy, judgment of 19 February 1991,
Series A no. 194-C, p. 47, § 23).
III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
- The
Court observes that the applicant complained under Articles 6 and 13
of the Convention about the outcome and the unfairness of the
proceedings. However, these submissions concerning the pending
liquidation proceedings are premature. In respect of the
proceedings instituted against the liquidator and the County Regional
Court, the Court observes that these complaints are essentially of a
fourth-instance nature: there is no indication in the case file that
the domestic courts lacked impartiality or that the proceedings were
otherwise unfair or arbitrary.
- It
follows that these complaints must be rejected respectively for
non-exhaustion of domestic remedies and as being manifestly
ill-founded, pursuant to Article 35 §§1, 3 and 4 of the
Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article
41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- The
applicant claimed 52,047,033 million Hungarian forints (HUF)
in respect of pecuniary and non-pecuniary damage.
- The
Government contested these claims.
- The
Court does not discern any causal link between the violation found
and the pecuniary damage alleged; it therefore rejects this claim.
However, on an equitable basis, and having regard to the fact that
the proceedings are apparently still pending after more than thirteen
years, it awards the applicant EUR 13,000 for non-pecuniary damages.
B. Costs and expenses
- The
applicant also claimed HUF 15,612,500
for the costs and expenses incurred before the domestic courts and
the Court.
- The
Government did not express an opinion on the matter.
- According
to the Court's case-law, an applicant is entitled to reimbursement of
costs and expenses only in so far as it has been shown that these
have been actually and necessarily incurred and were reasonable as to
quantum. In the present case, regard being had to the information in
its possession and the above criteria, the Court considers it
reasonable to award the global sum of EUR 400 to cover the various
costs.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the complaints concerning the excessive
length of the proceedings and the alleged infringement of property
rights admissible and the remainder of the application inadmissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention;
- Holds that there is no need to examine
separately the complaint under Article 1 of Protocol No. 1 to the
Convention;
- Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, EUR 13,000
(thirteen thousand euros) in respect of non-pecuniary damage and EUR
400 (four hundred euros) in respect of costs and expenses, to be
converted into the national currency of the respondent State at the
rate applicable at the date of settlement, plus any tax that may be
chargeable;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 9 October 2007, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
F. Elens-passos F. Tulkens Deputy Registrar President
