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SECOND
SECTION
CASE OF RÓZSA v. HUNGARY
(Application
no. 30789/05)
JUDGMENT
STRASBOURG
28
April 2009
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 Rózsa v.
Hungary,
The
European Court of Human Rights (Second Section), sitting as a Chamber
composed of:
Françoise
Tulkens,
President,
Ireneu
Cabral Barreto,
Vladimiro
Zagrebelsky,
Danutė
Jočienė,
András
Sajó,
Nona
Tsotsoria,
Işıl
Karakaş,
judges,
and Sally
Dollé, Section
Registrar,
Having
deliberated in private on 7 April 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 30789/05) 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 two Hungarian nationals, Mr Ferenc Rózsa
and Mr István Rózsa (“the applicants”),
on 8 August 2005.
- The
applicants were represented by Mr T. Kelemen, a lawyer practising in
Tata. The Hungarian Government (“the Government”) were
represented by Mr L. Höltzl, Agent, Ministry of Justice and Law
Enforcement.
- The
applicants alleged that the decision of the Court of Appeal and the
Supreme Court to deny them locus standi had infringed their
right of access to court implicitly ensured by Article 6 § 1 of
the Convention.
- On
20 September 2007 the Court decided to give notice of the application
to the Government. Under the provisions of Article 29 § 3 of the
Convention, it decided to examine the merits of the application at
the same time as its admissibility.
- The
applicants and the Government each filed observations on the merits
(Rule 59 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicants were born in 1951 and 1949, respectively, and live in
Budapest.
- The
applicants are respectively 50% and 10% shareholders in D. Ltd.
By decisions of the Budapest Regional Court and the Supreme Court, in
1998 the liquidation of D. Ltd was ordered and M. Ltd. appointed
liquidator.
- In
2001 the applicants brought an official liability action against the
two courts involved, claiming damages for the liquidation, which in
their view had been ordered unlawfully.
- On
6 December 2002 the Pest County Regional Court dismissed the action,
holding that, although the liquidation had indeed been ordered
unlawfully, the two courts' culpability was not so extensive as to
justify the establishment of their tort liability.
- On
appeal, on 11 December 2003 the Budapest Court of Appeal upheld the
first-instance decision but changed its reasoning. It held that the
applicants had no locus standi in the case, since their
company was in liquidation and only the liquidator had the capacity
to conduct legal proceedings in its name.
- The
applicants filed a petition for review with the Supreme Court. They
pleaded that their claim did not concern any loss suffered by the
company itself. Rather, they personally sought compensation for the
loss in value of their own shares which they had suffered on account
of the unlawfully ordered liquidation.
- On
10 February 2005 the Supreme Court dismissed the applicants'
petition, reiterating the position that they had no locus standi
in the case. This decision was served after 11 March 2005.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicants complained under Articles 6 and 13 of the Convention that
the decisions of the Court of Appeal and the Supreme Court denying
them leave to take legal proceedings had amounted to a breach of
their right of access to court.
- The
Court considers that this complaint falls to be examined under
Article 6 § 1 of the Convention, which provides as relevant:
“In the determination of his civil rights and
obligations ... everyone is entitled to a fair ... hearing ... by [a]
... tribunal ...”
A. Admissibility
- The Court notes that the application 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
Government conceded that the ability to take legal proceedings in
order to recover any damage the company itself had sustained lay with
the liquidator only. However, in their view, the applicants' right of
access to court was not impaired: had they considered that they had
suffered damage due to the liquidator's omission to claim
compensation from the courts which had wrongfully ordered the
liquidation, they could have sued the liquidator instead.
- The
applicants maintained that they sought the establishment of tort
liability on the part of the courts which had erroneously ordered the
liquidation of their company, thereby causing their shares to lose
value and reducing their fortune. Such an action could not be
replaced by a claim in damages brought by the liquidator on behalf of
the liquidated company itself. They had at their disposal no legal
means to ensure that the liquidator would indeed institute such
proceedings. Had the liquidator decided not to do so, it would have
created no automatic compensation liability towards the applicants.
In any event, it was absurd to expect the liquidator to sue those
courts for damages from which its own appointment had stemmed.
- The
Court considers firstly that the restriction on the applicants'
ability to take legal proceedings must be considered from the
perspective of the right of access to a court. It reiterates that
Article 6 § 1 secures to everyone the right to have any
claim relating to his or her civil rights and obligations brought
before a court or tribunal. In this way it embodies the “right
to a court”, of which the right of access, that is the right to
institute proceedings before courts in civil matters, constitutes one
aspect (see Golder v. the United Kingdom, 21 February 1975,
Series A no. 18, §§ 35-36). This right extends only to
disputes (“contestation”) over “civil rights
and obligations” which can be said, at least on arguable
grounds, to be recognised under domestic law (see, inter alia,
James and Others v. the United Kingdom, 21 February 1986,
Series A no. 98, § 81; Powell and Rayner v. the United
Kingdom, 21 February 1990, Series A no. 172, § 36).
- The
Court notes that the restriction on the applicants' ability to take
legal proceedings concerned a dispute over damages, that is, an issue
of a pecuniary nature. The civil limb of Article 6 is therefore
applicable.
- Furthermore,
the Court reiterates that the “right to a court” is not
absolute. It is subject to limitations permitted by implication, in
particular where the conditions of admissibility of an appeal are
concerned, since by its very nature it calls for regulation by the
State, which enjoys a certain margin of appreciation in this regard
(see Ashingdane v. the United Kingdom, 28 May 1985, Series A
no. 93, § 57). However, these limitations must not restrict or
reduce a person's access in such a way or to such an extent that the
very essence of the right is impaired. Lastly, such limitations will
not be compatible with Article 6 § 1 if they do not pursue a
legitimate aim or if there is not a reasonable relationship of
proportionality between the means employed and the aim sought to be
achieved (see Levages Prestations Services v. France, 23
October 1996, Reports of Judgments and Decisions 1996-V, §
40; Luordo v. Italy, no. 32190/96, § 85, ECHR
2003 IX).
- The
Court recognises that the purpose of the restriction on the
shareholders' capacity to take legal proceedings when a company is
under liquidation is to assign to the liquidator the role of
representing that company before the courts in respect of its
pecuniary rights, the liquidator being responsible for the
administration of the company's assets. Indeed, it is self-evident
that disputes over such matters may have major repercussions on the
assets and liabilities of the estate of the company in liquidation.
This restriction is therefore intended to protect the rights and
interests of others, namely those of creditors (see Luordo,
cited above, § 86).
- However,
in the present case, the Court observes that the applicants' company
had been liquidated arguably in a wrongful manner and that they
sought damages from the responsible authorities for the loss in the
value of their shares. The Court of Appeal and the Supreme Court held
that only the liquidator could bring such an action on behalf of the
company; the applicants, as mere shareholders, had no right to be
party to such proceedings. The Court notes the Government's assertion
that the applicants could have sued the liquidator if they deemed
that its omission to start such litigation had caused them damage.
However, it is not convinced by this argument, especially in view of
the blanket denial of the applicants' locus standi as the
company's owners. It reiterates that the Convention and its Protocols
must be interpreted as guaranteeing rights which are practical and
effective as opposed to theoretical and illusory. In the Court's
view, it is unreasonable to expect the liquidator – who was
responsible for securing the payment of creditors rather than
protecting the interests of shareholders – to bring an official
liability action in the name of the company against the very courts
which had ordered the liquidation and decided on its own appointment
(see, by analogy, Capital Bank AD v. Bulgaria (dec.), no.
49429/99, 9 September 2004). Moreover, to require the shareholders,
for their part, to claim damages from the liquidator for not doing so
would have proved excessively cumbersome for the applicants and
provided an illusory solution for the protection of their pecuniary
interests.
- The
Court therefore considers that no fair balance was struck between the
general interest in securing the payment of the creditors and the
applicants' personal interests in having access to a court. The
interference with the applicants' right was accordingly
disproportionate to the aim pursued.
- Having
regard to the foregoing, the Court concludes that there has been an
infringement of the right of access to a court as guaranteed by
Article 6 § 1 of the Convention.
II. 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
- In
regard to the loss in the value of their shares, Mr Ferenc Rózsa
claimed 4,993,000 euros (EUR) and Mr István Rózsa EUR
999,000 in respect of pecuniary damage. Moreover, Mr Ferenc Rózsa
claimed EUR 850,000 and Mr István Rózsa EUR
200,000 in respect of non-pecuniary damage.
- The
Government contested these claims.
- The
Court finds no causal link between the violation found and the
pecuniary damage alleged. It therefore rejects these claims. However,
it considers that the applicants must have sustained some
non-pecuniary damage. Ruling on an equitable basis, it awards each of
them EUR 2,000 under that head.
- Moreover,
the Court notes that where an individual, as in the instant case, has
been denied access to a court in a manner irreconcilable with the
Convention requirement of fairness, a reopening or a review of the
case, if requested, represents in principle an appropriate way of
redressing the violation (see, mutatis mutandis, Öcalan
v. Turkey [GC], no. 46221/99, §§ 207-210, ECHR
2005-IV).
B. Costs and expenses
- In
regard to the legal costs and stamp duty incurred in the domestic
proceedings, Mr Ferenc Rózsa claimed altogether EUR
31,754 and Mr István Rózsa EUR 20,208. Of the
first amount, respectively EUR 15,216, EUR 6,538 and EUR 10,000
correspond to the costs incurred before the Regional Court, the Court
of Appeal and the Supreme Court. Of the second amount, respectively
EUR 5,977, EUR 4,231 and EUR 10,000 correspond to the same
jurisdictions. In respect of the costs incurred before the Court, the
applicants submitted their agreement with their lawyer, according to
which his fee was stipulated as 10% of any award made by the Court.
- The
Government contested these claims.
- According
to the Court's case-law, an applicant is entitled to the
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, the Court accepts, in
so far as the claims relate to the domestic proceedings, that the
costs incurred before the Court of Appeal and the Supreme Court –
but not those incurred before the Regional Court which, for its part,
did not deny the applicants' locus standi before it –
were necessary in the attempt to prevent the violation found. It
therefore awards Mr Ferenc Rózsa EUR 16,538 and Mr István
Rózsa EUR 14,231 under this head. As regards the costs
incurred before the Court, given the documents in its possession and
the above criteria, the Court finds it reasonable to award the
applicants, jointly, the sum of EUR 1,000.
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 application admissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention;
- Holds
(a) that
the respondent State is to pay the applicants, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, the following
amounts, to be converted into Hungarian forints at the rate
applicable at the date of settlement:
(i) EUR 2,000 (two thousand euros) to each of the
applicants, plus any tax that may be chargeable, in respect of
non-pecuniary damage,
(ii) EUR 16,538 (sixteen thousand five hundred and
thirty-eight euros) to Mr Ferenc Rózsa, EUR 14,231 (fourteen
thousand two hundred and thirty-one euros) to Mr István Rózsa
and EUR 1,000 (one thousand euros) to them jointly, plus any tax
that may be chargeable to the applicants, in respect of costs and
expenses;
(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 applicants' claim
for just satisfaction.
Done in English, and notified in writing on 28 April 2009, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Sally Dollé Françoise Tulkens
Registrar President
