Slovenské telekomunikácie, s.p. and Herold Tele Media, s.r.o. v Slovakia - 47097/99 [2010] ECHR 1617 (28 September 2010)

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Application no. 47097/99
by Slovenské telekomunikácie, š.p.
and Herold Tele Media, s.r.o.
against Slovakia

The European Court of Human Rights (Fourth Section), sitting on 28 September 2010 as a Chamber composed of:

Nicolas Bratza, President,
Lech Garlicki,
Ljiljana Mijović,
David Thór Björgvinsson,
Ján Šikuta,
Päivi Hirvelä,
Mihai Poalelungi, judges,
and Lawrence Early, Section Registrar,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

1. Slovenské telekomunikácie, š.p., was a State-owned company at the material time. The application was lodged on its behalf by Mr F. Eke who the council of creditors had appointed as director of the company in the context of the settlement proceedings initiated under the relevant provisions of the 1991 Bankruptcy Act (for further details concerning the company's status and the relevant proceedings see below). For practical purpose the Court will refer to it as “the first applicant” without prejudging Mr Eke's standing to act on that company's behalf which was contested at domestic level and which is the subject-matter of the present application. The second applicant, Herold Tele Media, s.r.o., is a private limited company with its registered office in Bratislava. The application was lodged on its behalf by Mr I. Matušík.

2. The Government of the Slovak Republic (“the Government”) were initially represented by Mr P. Kresák, their Agent, who was succeeded by Mrs A. Poláčková and then by Mrs M. Pirošíková in the exercise of that function.

3. The facts of the case, as submitted by the parties, may be summarised as follows.

5. According to the register of companies available on the Internet, Mr P.V. had been the company's director between 9 June 1995 and 26 February 1998. He had been the company's managing director from 27 February 1998 to 2 February 1999. Mr F.D. had been the deputy managing director between 27 February 1998 and 2 February 1999.

6. A different section of the register of companies concerning Slovenské telekomunikácie, š.p. was entitled “Further legal issues”. It comprised an entry covering the period from 28 January 1997 to 31 March 1999 which read as follows:

“Decision no. 47/96 by the managing director of Slovenské telekomunikácie, š.p. of 2 November 1996. For the period of the settlement negotiations the council of creditors suspended, within the meaning of section 4e(2)(a) of the 1991 Bankruptcy Act, the exercise of functions of the persons authorised to act on behalf of the company under its articles listed in the register, and appointed Mr F. Eke as manager. During the period of the settlement proceedings, the director thus appointed shall represent the company and sign documents on its behalf. [The proceedings] were discontinued by a decision of the Bratislava City Court of 24 October 1996 ... in accordance with Act no. 292/1996. The Supreme Court upheld the Bratislava City Court's decision by its decision no. 1 Obo 2/97 of 26 March 1997.”

7. On 23 December 1998 the Minister of Transport and Telecommunications decided to dissolve Slovenské telekomunikácie, š.p. The company was transformed into a joint stock company, Slovenské telekomunikácie, a.s., which succeeded to all the rights and obligations of its predecessor. On those grounds, company Slovenské telekomunikácie, š.p. was deleted from the register of companies on 1 April 1999.

8. Under a contract of 18 July 2000 the Fund of National Property, with the agreement of the Ministry of Transport, Post and Telecommunications, sold 51% of the shares of Slovenské telekomunikácie, a.s. to Deutsche Telekom AG, which had its registered office in Bonn, Germany. Point 6 subjected the transaction to several conditions with suspensive effect. They included the absence of any binding decision, delivered by a court or other public authority, prohibiting the transaction agreed upon in the contract.

9. An annex to the contract lists the court proceedings in which the company was involved at that time. It includes a lawsuit with the second applicant's predecessor, referred to as the “Yellow Pages Dispute”. The annex indicates that the dispute concerned a contract, concluded in 1990 and amended in 1992, on the publishing of telephone directories. In 1995 the second applicant's predecessor claimed damages amounting to several billion Slovak korunas (SKK) for the alleged failure by Slovenské telekomunikácie, š.p. to comply with the contract. The latter put an end to the contract on 3 April 1997. Slovenské telekomunikácie, š.p. initiated proceedings, claiming that the company had no contractual relationship to the second applicant's predecessor. The first-instance court granted the claim and the proceedings were pending before the court of appeal at the relevant time.

10. Subsequently, the company Slovenské telekomunikácie, a.s. was twice renamed. Its current business name is Slovak Telekom, a.s.

2. Proceedings under the 1991 Bankruptcy Act (Bratislava City Court file no. 38 K 10/96)

11. On 16 January 1996 private company HBD Slovakia, spol. s r.o. (of which the second applicant is the legal successor) requested the Bratislava City Court to start settlement proceedings (dohodovacie konanie), within the meaning of sections 4 et seq. of the 1991 Bankruptcy Act, in respect of the State-owned company Slovenské telekomunikácie, š.p. The plaintiff claimed that the debtor had failed to comply with its contractual obligations in respect of several creditors.

12. According to the petition, the debts of Slovenské telekomunikácie, š.p., in respect of the four creditors it mentioned, amounted to
SKK 22,413,247,354.20^¹ and thus clearly exceeded its assets, which amounted to SKK 10,755,766,000. The debt in respect of the second applicant's predecessor stemmed from the debtor's failure to meet its obligations under a contract of 1990 concerning the production of telephone directories.

13. Finally, the plaintiff claimed that the debtor had to submit a list of its creditors within three days, to convene a meeting of creditors within thirty days and to abstain from alienating or mortgaging its property.

14. On 28 March 1996 HBD Slovakia, spol. s r.o. asked Slovenské telekomunikácie, š.p. to convene a meeting of its creditors.

15. On 4 April 1996 an advocate informed HBD Slovakia, spol. s r.o. that Slovenské telekomunikácie, š.p. did not consider that company as its contractual partner and that Slovenské telekomunikácie, š.p. therefore refused to start settlement proceedings and to convene a meeting of creditors. A copy of the letter was sent to Bratislava City Court.

16. On 20 August 1996 the Government of the Slovak Republic decided, following an inquiry addressed to it by the City Court, not to authorise an adjudication on the bankruptcy of Slovenské telekomunikácie, š.p. Such an authorisation was a prerequisite for declaring the above company bankrupt as it fell under section 67(4)(c) of the 1991 Bankruptcy Act. The Minister of Justice notified the Bratislava City Court of that decision on 9 September 1996.

17. On 24 October 1996 the Bratislava City Court discontinued the proceedings. Reference was made to section 2 of Law no. 292/1996 and to the fact that the defendant fell under section 67(3) of the 1991 Bankruptcy Act, as it was a State-owned company of strategic importance within the meaning of the relevant law. According to the decision, the proceedings in question concerned the adjudication of the company's bankruptcy.

18. On 19 November 1996 the second applicant's predecessor appealed, stating that the first-instance decision had been served on 5 November 1996. Its representative referred to the fact that a group of members of parliament had challenged Act no. 292/1996 before the Constitutional Court and requested that the appeal proceedings be stayed pending the Constitutional Court's decision.

19. On 11 December 1996 a meeting of creditors of Slovenské telekomunikácie, š.p. was held on the premises of a notary public in Bratislava. The four participants elected a council of creditors, within the meaning of section 4a(5) of the 1991 Bankruptcy Act. On the same day the council of creditors suspended the exercise of functions of the managers of Slovenské telekomunikácie, š.p. during the period of the settlement proceedings, with reference to section 4e(2) of the 1991 Bankruptcy Act. With reference to the same provision, the council of creditors appointed
Mr F. Eke as “director of Slovenské telekomunikácie, š.p. in settlement proceedings”. No representative of Slovenské telekomunikácie, š.p. was present.

20. On 26 March 1997 the Supreme Court upheld the City Court's decision of 24 October 1996. A stamp on the Supreme Court's decision of
26 March 1997 indicates that it became final on 24 July 1998.

21. On 24 April 1998 the second applicant lodged an appeal against the Bratislava City Court's decision of 24 October 1996. In the appeal the plaintiff stated that the City Court's decision had been duly served on
9 April 1998 and pointed out that section 2 of Act no. 292/1996 had been invalidated as a result of the Constitutional Court's finding of 4 March 1998 (see paragraph 81 below).

22. On 7 May 1998 the Ministry of Transport, Post and Telecommunications submitted an opinion on the matter. It indicated that the creditors had never directly contacted the Ministry following their initiative to start settlement proceedings, nor had they invited its representative to a meeting of creditors, notwithstanding that it was provided for by section 4d(3) of the 1991 Bankruptcy Act. The Ministry had not been informed of any re-stabilisation project within the meaning of section 4f of the above Act.

23. The Ministry's letter further indicated that on 17 April 1998 the second applicant had informed it that it had acquired the company Slovenské telekomunikácie, š.p. under a contract signed by Mr F. Eke, appointed as the company's director in the context of the settlement proceedings. With reference to section 5 of Law no. 192/1995, the Ministry considered such a transaction to be unlawful and irrelevant.

24. On 3 September 1998 the Supreme Court discontinued the proceedings. The decision stated that the plaintiff had earlier admitted that the first-instance decision had been served on 5 November 1996 and had been appealed on 19 November 1996. Even assuming that the service of the first-instance decision on 5 November 1996 had not been formally compliant with the applicable law, that appeal had been legally relevant as, in accordance with the relevant practice, an appeal lodged prior to the service of a court's decision had the effects of an appeal lodged in accordance with the law.

25. The Supreme Court concluded that the matter had become res judicata on 24 July 1998 following the service of its above decision of 26 March 1997.

3. Proceedings concerning the entry in the register of companies of the sale of several subsidiaries of Slovenské telekomunikácie, š.p.

26. On 30 January 1997 “Slovenské telekomunikácie, š.p. in settlement proceedings”, represented by Mr F. Eke, sold four subsidiaries of the company to the second applicant. The sale was approved on 28 January 1997 by the council of creditors, with reference to section 4e(3) of the 1991 Bankruptcy Act.

27. On 11 March 1997 “Slovenské telekomunikácie, š.p. in settlement proceedings”, represented by Mr F. Eke, requested the Bratislava I District Court to record the sale in the register of companies.

28. On 5 May 1997 Mr P.V., who was entered in the register of companies as the director of Slovenské telekomunikácie, š.p., requested that the above entry, under the head “Further legal issues” concerning settlement proceedings, be deleted. It was argued that the bankruptcy proceedings had been discontinued.

29. On 17 July 1997 the Bratislava I District Court delivered a decision, by which it allowed the entry in the register of companies of the sale of the company's subsidiaries.

30. On 1 August 1997 Slovenské telekomunikácie, š.p., appealed. Mr P.V., acting as director, argued that Slovenské telekomunikácie, š.p. had neither sold its subsidiaries nor had it requested a corresponding entry in the register of companies. Such a sale would run contrary to section 45 of
Law no. 92/1991.

31. On 18 August 1997 “Slovenské telekomunikácie, š.p. in settlement proceedings”, represented by Mr F. Eke, informed the District Court that the company had withdrawn the above appeal lodged by Mr P.V.

32. On 23 September 1997 the Bratislava Regional Court reversed the first-instance decision, in that it dismissed the above request for a modification in the register of companies. The decision stated that the Bratislava City Court had discontinued bankruptcy proceedings in respect of Slovenské telekomunikácie, š.p. on 24 October 1996 and that its decision had been upheld by the Supreme Court on 26 March 1997. Furthermore, Slovenské telekomunikácie, š.p. was explicitly listed in section 2(b) of Law no. 192/1995 as a company of strategic importance and, as such, fell under section 67(4)(c) of the 1991 Bankruptcy Act. In the appellate court's view, the actions taken by the council of creditors under the 1991 Bankrutpcy Act had no legal effect, as the bankruptcy proceedings in respect of Slovenské telekomunikácie, š.p. had been discontinued at the point when the relevant amendment had been made in the register of companies.

33. On 12 March 1998 “Slovenské telekomunikácie, š.p. in settlement proceedings” lodged an appeal on points of law. Its representative alleged that the decision of the court of appeal was erroneous and had been taken without having heard the parties.

34. On 11 January 1999 the second applicant requested the Supreme Court to admit it as a party to the cassation proceedings. Its representative stated that the point at issue concerned property and rights which the second applicant had acquired from “Slovenské telekomunikácie, š.p. in settlement proceedings”.

35. On 12 January 1999 the Supreme Court quashed both the
Bratislava I District Court's decision of 17 July 1997 and the Bratislava Regional Court's decision of 23 September 1997. It then discontinued the proceedings.

36. The Supreme Court stated that Slovenské telekomunikácie, š.p. was a legal person governed by the State-Owned Companies Act of 1990. Section 19 of that Act provided that actions on behalf of State-owned companies were taken by directors who were appointed and revoked by the authority which had established the company.

37. The decision stated that the council of creditors had taken legal actions in respect of the company Slovenské telekomunikácie, š.p. for which it had no standing under the 1991 Bankruptcy Act. Reference was made to
Articles 200a § 1 and 200b § 1 of the Code of Civil Procedure. The bankruptcy proceedings in respect of Slovenské telekomunikácie, š.p. had been discontinued by a decision delivered by the Supreme Court which had become final.

38. The Supreme Court did not hold a hearing with reference to
Article 243a § 1 of the Code of Civil Procedure. Its decision became final on 12 February 1999.

39. On 10 February 1999 “Slovenské telekomunikácie, š.p.” represented by Mr F. Eke lodged a petition under Article 130 § 3 of the Constitution with the Constitutional Court. The plaintiff alleged a violation of its right to judicial protection and to a public hearing with reference to the above Supreme Court's decision of 12 January 1999. It requested that the decision be quashed.

40. On 19 March 1999 a constitutional judge invited the legal representative of the plaintiff to eliminate any formal shortcomings in the submissions. In particular, the lawyer was invited to submit a letter of authority from the person duly authorised to act on behalf of Slovenské telekomunikácie, š.p. The letter stated that the Constitutional Court did not accept the explanation that the action on behalf of the company had been taken pursuant to a decision of the council of creditors. The lawyer was invited to bring the petition into conformity with the formal requirements within ten days of the receipt of the letter. The letter was served on 8 April 1999. In a letter dated 17 April 1999 and delivered to the Constitutional Court on 22 April 1999 the plaintiff's representative submitted further information.

41. In a decision dated 24 April 1999 the Constitutional Court rejected the petition since its formal shortcomings had not been eliminated. The decision stated that it had not been shown that Slovenské telekomunikácie, š.p. had duly authorised the lawyer, allegedly acting on its behalf, to represent it in the proceedings.

42. In a petition of 4 May 1999 Slovenské telekomunikácie, a.s. and Mr F. Eke challenged the Constitutional Court's decision of 24 April 1999. The Constitutional Court dismissed that petition on 16 June 1999.

43. On 29 June 1998 Mr F. Eke, on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”, lodged an action against the second applicant with the Bratislava Regional Court.

44. The plaintiff stated that the company had concluded contracts with the defendant on the transfer of Slovenské telekomunikácie, š.p. on 31 March 1998. However, the defendant had refused to comply and to conclude an agreement on a financial settlement relating to the transaction. The plaintiff claimed that the rights and obligations between the plaintiff company and the defendant, under the above contract on the transfer of the subsidiaries of the company, continued to exist.

45. In its observations of 19 October 1998 the second applicant argued that the contract of 31 March 1998 had been signed by Mr Eke, who had been appointed by the company's council of creditors. In the second applicant's view, the contract should have been signed both by Mr Eke and Mr P.V., who had been the company's original director prior to the nomination of the former.

46. On 3 May 2001 the plaintiff withdrew the claim stating that the matter had been submitted to an international judicial body.

47. Following the withdrawal of the claim, the Regional Court discontinued the proceedings on 14 May 2001. Its decision became final on 11 July 2001.

48. On 24 March 1999 the Bratislava Regional Court's judge involved in the above proceedings under the 1991 Bankruptcy Act submitted observations on the applicants' complaint and stated that, inter alia, no formal decision had been delivered to end the settlement proceedings initiated under the 1991 Bankruptcy Act.

49. The judge expressed the view that settlement proceedings within the meaning of the 1991 Bankruptcy Act had never actually started. In particular, the creditors had not shown that they had sent the petition to the debtor for settlement proceedings to be brought, and the latter had neither submitted a list of creditors nor had it convened a meeting of creditors. The requirements of section 4a(2) of the 1991 Bankruptcy Act had thus not been met. Settlement proceedings had not been brought by the court as no request had been made to Slovenské telekomunikácie, š.p. to convene a meeting of creditors within the meaning of sections 4a(3) and 4(1) of the
1991 Bankruptcy Act.

(c) Government material on lawsuits concerning Slovenské telekomunikácie, a.s. and its predecessor

50. Mr I. Matušík, acting on behalf of the second applicant, submitted a document which the Minister of Transport, Post and Telecommunications had presented in 2001. It contained information about lawsuits concerning claims by Mr I. Matušík and companies on behalf of which he had been authorised to act. The document indicated that the claims had stemmed from the alleged breach of a contract concerning the production of telephone directories, including commercial ones, which Mr Matušík had concluded with the predecessor of Slovenské telekomunikácie, š.p. in 1990 for a period of seven years. In 1992, following an arbitration decision and a claim for damages lodged by Mr Matušík, the contract was amended to include a contractual fine. The penalty due was to increase by 500% quarterly. According to the Government document, the amount claimed, calculated on the basis of the penalty clause, reached
SKK 400,000,000,000. Neither Slovenské telekomunikácie, a.s. nor its legal predecessor had acknowledged such claims.

51. The material further refers to different proceedings, including those under the 1991 Bankruptcy Act described above, as putting the proper functioning of the company in danger.

52. In 1997 the representatives of Slovenské telekomunikácie, š.p. lodged criminal complaints in the context of the above facts. By 2001 no relevant decision had been taken by the authorities involved.

53. Finally, the document indicated that the Slovakian authorities had undertaken vis-à-vis the foreign investor to take action, as far as the applicable law permitted, with a view to denying the claims in the context of the “Yellow Pages Dispute”. The document concluded that immediate measures were required, with a view to resolving the matter while respecting the legal order in force. Among other things, an acceleration of the proceedings pending before civil courts and prosecution authorities was necessary.

(d) Bankruptcy proceedings initiated in 1999 (Bratislava Regional Court, file no. 5 K 179/99)

54. In 1999 several creditors, including the second applicant, initiated bankruptcy proceedings in respect of Slovenské telekomunikácie, a.s.

55. On 29 January 2002 the Bratislava Regional Court dismissed the petition. It held that the plaintiffs' claims had not been reliably established and that separate proceedings were pending with a view to determining their justification.

57. On 24 March 2004 the cassation division of the Supreme Court dismissed the plaintiffs' appeal on points of law.

58. Those proceedings are the subject-matter of application no. 57238/00 pending before the Court.

59. On 6 July 2002, at the request of the Government's Agent, the Vice President of Slovak Telecom, a.s. submitted a statement on the complaints raised by the applicants in the present case. According to the statement, the former company Slovenské telekomunikácie, š.p. had not lodged a petition with the Court. Mr F. Eke had never been entitled to act on that company's behalf and the company Slovak Telecom, a.s. had no interest in the case.

60. As to the settlement proceedings under the 1991 Bankruptcy Act, no meeting of creditors had been convened in compliance with the relevant provisions, namely sections 4a(2) and (4). The action taken by several persons in the context of proceedings 38 K 10/96 before the Bratislava City Court had been therefore irrelevant from the point of view of the 1991 Bankruptcy Act. The same applied to the decisions taken by those persons, as they had not been adopted at a meeting of creditors convened in accordance with the then applicable law.

61. An entry in the register of companies of the above action was contrary to Article 200b § 1 of the Code of Civil Procedure and, in any event, it was of a purely declaratory nature. It had not been established in any of the relevant lawsuits that Mr F. Eke had been entitled to act on behalf of Slovenské telekomunikácie, š.p.

62. Pursuant to Article 130 § 3 of the Constitution, as in force until 30 June 2001, the Constitutional Court could commence proceedings upon a petition (podnet) presented by any individual or a corporation claiming that their rights had been violated.

63. In accordance with the Constitutional Court's practice under
Article 130 § 3 of the Constitution (as in force at the relevant period), the Constitutional Court lacked jurisdiction to interfere with the ordinary courts' jurisdiction or to quash or to substitute the ordinary courts' decisions in civil or criminal matters. It further lacked jurisdiction to draw legal consequences from the finding of a violation of a petitioner's rights. It could neither award damages to the person concerned nor impose a sanction on the public authority liable for the violation found.

64. Article 39 declares void any legal action which is contrary to the law by its content or purpose, which circumvents the law or is contra bonos mores.

65. In accordance with the Supreme Court's practice, a contract which by its content or purpose is contrary to the law, circumvents it or is contra bonos mores is void ex tunc.

66. Pursuant to Article 92 § 1, courts may allow a third person to join proceedings as a party at the request of one of the parties. However, that provision does not apply to proceedings on appeal (Article 216 § 1) or an appeal on points of law (Article 243c).

67. Article 200a § 1 provides that proceedings relating to the register of companies are brought upon the request of the natural or legal person whom the entry in the register concerns or by other persons entitled to do so under the relevant law.

68. Pursuant to Article 200b § 1, in proceedings concerning an entry in the register of companies, courts are obliged to examine whether the statutory requirements for making such an entry have been met. Paragraph 2 of Article 200b authorises courts to deliver decisions on the content of an entry in the register of companies without holding an oral hearing.

69. In accordance with the Supreme Court's practice, proceedings concerning an entry in the register of companies are non-contentious. A petition for an entry in the register of companies is to be supported by documents proving the relevant facts. Where a legal person initiates proceedings concerning an entry relating to it in the register of companies, the court involved decides exclusively on the rights and obligations of the petitioner as a party to such proceedings. Third parties are excluded from proceedings concerning entries in the register of companies (Collection of judicial decisions and opinions of the Supreme Court, nos. 31/1994, 38/1995 and 39/1995).

70. Article 27 § 2 provides that facts entered in the register of companies take effect in respect of everyone from the date of the relevant entry.

71. Under Article 28 § 1(e), information about a company entered in the register of companies shall comprise the name and address of the persons who are the representatives of the company under its articles and also specify the manner in which such persons are authorised to act on behalf of the company.

72. Article 31 § 1 provides that a request for an entry to be made in the register of companies is to be submitted either by authorised persons whom such an entry concerns or by persons entitled to do so in accordance with the law.

73. Pursuant to Article 32, courts or other authorities have to notify the court which holds the register of companies of any inconsistencies between the actual situation and the information in the register of companies as soon as they become aware of them in the context of their activity.

74. The second part of the 1991 Bankruptcy Act (Zákon o konkurze a vyrovnaní, Law no. 328/1991 Coll.) is entitled “Bankruptcy”. Between
1 June 1993 and 31 January 1998 sections 4 to 4g, in their relevant parts, read as follows:

1. A bankruptcy petition can be filed by a debtor, debtor's creditor, liquidator of a legal person or a different person where the law so provides. A declaration of bankruptcy is preceded by settlement proceedings. A court shall start settlement proceedings of its own initiative where a debtor or the debtor's domestic creditor does not initiate settlement proceedings within ten days of the date when the bankruptcy petition was filed. Prior to the end of the settlement proceedings a court shall not examine a composition scheme and it shall not decide on declaration of bankruptcy.

2. A creditor's bankruptcy petition is to be supported by documents indicating that the debtor owes a sum to the creditor ... and [the petition shall] set out facts indicating that the debtor is insolvent...

3. The aim of settlement proceedings is to allow the debtor to resolve the insolvency and to allow the creditors to have their claims satisfied...

2. A creditor who initiates settlement proceedings is obliged to submit a copy of the relevant petition to the debtor without delay. The debtor is obliged to submit to the court, within three days from the receipt of such petition, a list of creditors indicating the amounts due. The debtor is further obliged to convene a meeting of creditors within thirty days.

3. Where a petition for settlement is not filed by the debtor or its domestic creditor within the period set out in section 4(1), a court shall ask the debtor to convene a meeting of creditors within fifteen days. In such case settlement proceedings start on the date of service of the court's request.

4. A meeting of creditors, convened pursuant to sub-sections 1-3, shall be held within thirty days from the moment when it was convened.

(c) approves the council of creditors' proposal to put an end to settlement proceedings for non-compliance with the re-stabilisation project ...

7. Debtors included in the register of companies ... shall initiate, within seven days from the start of settlement proceedings, a relevant entry in the register of companies and the land register...

1. After settlement proceedings have started, a debtor can carry out business activities as defined in the relevant register.

2. After settlement proceedings have started, a debtor is not allowed to alienate or mortgage its real property ... and carry out any activity capable of causing prejudice to creditors unless the council of creditors decides otherwise...

1. At a meeting held pursuant to section 4a, the domestic creditors shall elect members of the council of creditors for the purpose of protecting their rights and interests...

3. Where the debtor is a State-owned company ... [a representative of] the authority by which it was established shall participate at meetings of creditors and the creditors' council...

1. Debtors included in the register of companies ... shall initiate, within seven days of the election of the council of creditors, a corresponding entry in the register of companies and the land register....

(a) suspend the exercise by the debtor's managers of their functions and appoint managers for the period of the settlement proceedings;

(b) entrust a person with control over the debtor's business activities during the period of the settlement proceedings;

(f) control the implementation of the re-stabilisation project, obtain all relevant information in the context of its elaboration and implementation; ...

1. The re-stabilisation project is intended to improve the debtor's financial situation with the aim of avoiding bankruptcy and ensuring the debtor's future effective development.

(b) the council of creditors in collaboration with the debtor and, where the latter is a State-owned enterprise, the authority by which it was established ...

4. The council of creditors is obliged to submit an approved re-stabilisation project to a court within sixty days of its election.

(a) a notary public informs it that a meeting of creditors was not convened within the period set out in section 4a(4);

(b) the council of creditors fails to submit an approved re-stabilisation project within the period set out in section 4f(4);

(c) the council of creditors fails to inform the court of the implementation of the re-stabilisation project more than three months after the settlement proceedings started;

(d) the council of creditors, in accordance with a decision adopted at a meeting of creditors, informs it that the re-stabilisation project has not been implemented.” ...

75. The remaining provisions of Part Two (sections 5-45) deal with the declaration of bankruptcy and bankruptcy proceedings.

76. Part Three of the 1991 Bankruptcy Act (sections 46-66) governs debtors' composition with creditors.

78. Pursuant to section 67(3), the 1991 Bankruptcy Act is not applicable to State bodies financed by the State budget, to municipalities and to legal persons established by virtue of law.

79. Pursuant to section 1 of Law no. 292/1996, section 67(3) of the 1991 Bankruptcy Act was amended, with effect from 16 October 1996, in that the provisions of that Act were not applicable in respect of State-owned companies listed in Law no. 192/1995.

80. Under section 2 of Law no. 292/1996, courts were obliged to discontinue bankruptcy proceedings in respect of debtors listed in section 67(3) of the 1991 Bankruptcy Act, where the person concerned had not been declared bankrupt at the moment of the entry into force of Law no. 292/1996 on 16 October 1996.

81. On 4 March 1998 the Constitutional Court found that section 1 of
Law no. 292/1996 was contrary to the Constitution to the extent that it excluded the commencement of bankruptcy proceedings in respect of legal persons established by law. The Constitutional Court further found that section 2 of Law no. 292/1996 was contrary to Article 1 of the Constitution which provides, inter alia, that the Slovak Republic is a State of law. In particular, the obligation to discontinue bankruptcy proceedings which were pending breached the principle of legal certainty in respect of creditors who had brought such proceedings in accordance with the law then in force. The finding became effective upon its publication in the Collection of Laws on
3 April 1998.

82. Section 67(4)(c) of the 1991 Bankruptcy Act, as in force from 1 June 1993 and throughout the relevant period, read:

“This Act shall not apply, with the exception of sections 4a-g and sections 46-66 in respect of ...

(c) debtors in the area of transport and telecommunications with an essential strategic economic importance for the State; an exemption from this rule can be granted by the Government of the Slovak Republic upon the proposal of the authority which established the company in issue.”

83. Section 18 of the State-Owned Companies Act (Zákon o štátnom podniku) of 1990 provides that the bodies of a State-owned company comprise its director and supervisory board.

84. Section 19(1) and (2) provide that the director is appointed and revoked by the central governmental authority which established the company.

85. Pursuant to section 19(3), the director acts on behalf of a State owned company.

86. Law no. 92/1991 sets out the conditions for the transfer of State owned property to other persons.

87. Section 45(1), as in force at the relevant time, prohibited State owned companies from concluding contracts on the transfer of property which served for their business activities.

88. Law no. 192/1995 was adopted with a view to safeguarding the interests of the State in the context of denationalisation of State-owned companies of strategic importance. It lost effect on 12 October 1999.

89. Section 2 enumerates companies which are considered to be of strategic importance for the State and which are exempt from the applicable law on denationalisation. Slovenské telekomunikácie, š.p. is included in sub-section 1(b)(2) of this provision.

90. Section 5(1) entitled authorities which had established State-owned companies of strategic importance to dissolve such companies without liquidation and to place their material property, as a whole, in a joint-stock company with the State as its only share-holder. All rights and obligations of a dissolved State-owned company were to be transferred to the newly established joint-stock company.

91. Pursuant to sub-section 2 of section 5, the Government's prior approval was required for the above action as well as for any transaction of the stock of the newly-established company.

95. The applicants complained that their rights to a fair and public hearing, to the peaceful enjoyment of their possessions and to an effective remedy had been breached in the proceedings leading to the Supreme Court's decision of 12 January 1999. They relied on Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1, which in their relevant parts provide as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing ... by [a] ... tribunal ...”

“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.”

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”

96. The Government first contended that the application was incompatible ratione personae with the provisions of the Convention to the extent that it had been lodged on behalf of the company Slovenské telekomunikácie, š.p. In particular, the relevant provisions on settlement proceedings laid down in the 1991 Bankruptcy Act had not been respected as the meeting of the alleged creditors had not been convened by the debtor. The establishment of a council of creditors at a meeting convened without the involvement of Slovenské telekomunikácie, š.p. and the actions of those appointed at that meeting, and subsequently taken on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”, had thus no legal basis and could not affect the rights and obligations of Slovenské telekomunikácie, š.p.

97. The entry in the register of companies, in the section “Further legal issues”, of the meeting of creditors and action taken by the council elected by it had therefore been erroneous. In any event, it had been of a purely declaratory nature and without legal effect.

98. Furthermore, the bankruptcy proceedings in respect of Slovenské telekomunikácie, š.p. had been discontinued by the Supreme Court at the time of the introduction of the application. Mr F. Eke therefore had had no standing to introduce the application on that company's behalf.

99. The relevant law excluded the transfer to other persons of State owned companies of strategic importance and to which Slovenské telekomunikácie, š.p. belonged. The contracts on the sale of that company's subsidiaries were thus void ex tunc.

100. The Government further argued that the second applicant abused the right of application within the meaning of Article 35 § 3 of the Convention. They pointed to the fact that, in the above lawsuit between the applicants, the representative of the second applicant had himself challenged the validity of a contract which Mr Eke had signed on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”. The entry in the register of companies concerning the transfer of subsidiaries of Slovenské telekomunikácie, š.p. had been of a declaratory nature only and had not established any ownership rights of the second applicant in respect of the relevant property. The Government concluded that the second applicant's complaint under Article 1 of Protocol No. 1 was incompatible ratione materiae with the provisions of the Convention. In the alternative, it should be rejected for the second applicant's failure to exhaust domestic remedies since that company had not shown that it had instituted judicial proceedings with a view to having its ownership right, in respect of that property, established by a court.

101. As to the second applicant's complaints under Article 6 § 1, the Government pointed to the specific nature of the proceedings concerning an entry in the register of companies. Considering that the relevant contracts on the transfer of subsidiaries of Slovenské telekomunikácie, š.p. were void ex tunc, the Government were of the opinion that the proceedings complained of fell outside the scope of Article 6 § 1.

102. The applicants first argued that, due to lacunae in Slovak law, Mr P. Kresák, who had submitted observations on behalf of the Government, had lacked standing to represent the respondent State in proceedings under the Convention. In their view, the Court should therefore disregard observations and documents submitted by Mr Kresák. In any event, the applicants considered that the documents submitted on behalf of the respondent State had distorted the relevant facts. The applicants had been unable to consult the relevant files with a view to checking the facts.

103. The applicants further argued that the settlement proceedings under the 1991 Bankruptcy Act had been conducted in accordance with the relevant law. In particular, the council of creditors had been established and had acted in conformity with the relevant provisions of the 1991 Bankruptcy Act. The Bratislava I District Court had correctly entered the relevant information in the register of companies.

104. By accepting and dealing with the action which Mr Eke had lodged on behalf of the first applicant against the second applicant on 29 June 1998, the court involved had proved that Mr Eke had had the capacity to act on behalf of the first applicant. In the applicants' view such capacity had lasted until the deletion of Slovenské telekomunikácie, š.p. from the register of companies. No formal decision had been issued to put an end to the settlement proceedings, notwithstanding that the law required such decision to be delivered.

105. In the proceedings complained of, the Slovakian courts had acted in an arbitrary and unlawful manner. In particular, in the proceedings concerning the entry in the register of companies of the transfer of subsidiaries of Slovenské telekomunikácie, š.p., the court of appeal and the court of cassation had failed to hear the applicants. The applicants had had no opportunity to submit their comments on the evidence available.

106. In a submission dated 28 March 2007 the representative of the second applicant maintained, with reference to a number of documents, that the Slovakian authorities had taken coordinated action, in bad faith, with a view to preventing him from obtaining relevant information and discouraging him from availing himself of his or his company's rights. Such action comprised, inter alia, disrespect for his requests under the Free Access to Information Act of 2000, numerous criminal complaints lodged in his respect or proceedings brought with a view to restricting his legal capacity to act before public authorities. Furthermore, the intelligence service had been involved with a view to preventing him from establishing the relevant facts, relevant evidence had been forged or destroyed and government officials had attempted to influence judicial decisions on the matter in issue.

107. The application on behalf Slovenské telekomunikácie, š.p. was lodged by Mr F. Eke.

108. At the material time that company was State-owned, it had been established by the Ministry of Transport, Telecommunications and Public Works on 1 January 1993. Section 19 of the State-Owned Companies Act of 1990 provided that the director, appointed and revoked by the central governmental authority which established the company, was entitled to act on behalf of such a company. Throughout the material time persons other than Mr F. Eke were entered in the register of companies as the director and deputy director, and, as the relevant entry indicated, were entitled to act on the company's behalf.

109. On 11 December 1996 the council of creditors appointed Mr F. Eke as director of the company in the context of the settlement proceedings initiated under the relevant provisions of the 1991 Bankruptcy Act. A corresponding entry was made in the register of companies under the heading “Further legal issues”. It indicated that, for the period of the settlement negotiations, the council of creditors had suspended, within the meaning of section 4e(2)(a) of the 1991 Bankruptcy Act, the exercise of functions of the persons authorised to act on behalf of the company under its articles listed in the register. It appointed Mr F. Eke as manager. During the period of the settlement proceedings the director thus appointed was to represent the company and sign documents on its behalf. The entry further indicated that the proceedings had been discontinued by the Bratislava City Court on 24 October 1996 and that the Supreme Court had upheld that decision on 26 March 1997.

110. The Court notes that the Supreme Court's decision of 26 March 1997 to discontinue the bankruptcy proceedings became final on 24 July 1998, that is before the introduction of the application. However, the parties' views differed as to whether that decision exclusively covered bankruptcy proceedings as such or whether it also extended to the settlement proceedings which the creditors had initiated under sections 4a-g of the 1991 Bankruptcy Act.

111. Irrespective of the reasons for the domestic courts' decisions in the proceedings in issue, section 67(4)(c) of the 1991 Bankruptcy Act excluded from its scope, unless the Government otherwise decided, debtors in the area of transport and telecommunications with an essential strategic economic importance. Slovenské telekomunikácie, š.p. was expressly listed in section 2 of Law no. 192/1995 as such a company. On 20 August 1996 the Government decided not to authorise adjudication on bankruptcy of that company. On 9 September 1996 the Minister of Justice notified the Bratislava City Court of that decision.

112. The only relevant provisions permitting the application of the 1991 Bankruptcy Act, in respect of similar companies, were sections 4a-g which related to settlement proceedings. The aim of settlement proceedings was to allow a debtor to resolve the insolvency and to allow the creditors to have their claims satisfied, by means of elaboration and implementation of a re-stabilisation project, and thus to prevent an adjudication of a debtor's bankruptcy. In particular, the purpose of a re-stabilisation project was to improve the debtor's financial situation, avoid bankruptcy, and to ensure the debtor's future effective development. The law required a re-stabilisation project to be elaborated by the council of creditors in collaboration with the debtor and, where the latter is a State-owned company, the authority by which it was established. Furthermore, in such situations, a representative of the authority by which the company was established was to participate at meetings of creditors and the creditors' council.

113. In the present case, the action taken by the creditors of Slovenské telekomunikácie, š.p. fell short of the relevant sections of the 1991 Bankruptcy Act. The Court notes, in particular, that Slovenské telekomunikácie, š.p. refused to accept its alleged debt in respect of the second applicant's predecessor. On 4 April 1996 its legal representative informed the latter that Slovenské telekomunikácie, š.p. denied any involvement in settlement proceedings and refused to convene a meeting of creditors. No representative of Slovenské telekomunikácie, š.p. was present at the meeting of creditors which was held on 11 December 1996 and which appointed Mr F. Eke as “director of Slovenské telekomunikácie, š.p. in settlement proceedings”.

114. In its observations of 7 May 1998, the Ministry of Transport, Post and Telecommunications stated that the plaintiffs had never directly contacted the Ministry following their initiative to start settlement proceedings, nor had they invited its representative to a meeting of creditors, notwithstanding that it was foreseen by section 4d(3) of the 1991 Bankruptcy Act. The Ministry had not been informed of a re-stabilisation project within the meaning of section 4f of the above Act. It was not shown in the proceedings before the Court that such plan had been elaborated, with the participation of Slovenské telekomunikácie, š.p. and the Minstry which had established that company, as required by law.

115. In these circumstances, the Court considers that the above appointment of Mr F. Eke as director of company Slovenské telekomunikácie, š.p. and the action which he took subsequently were not compliant with the relevant provisions of the 1991 Bankruptcy Act on settlement proceedings and the purpose of such proceedings. Mr F. Eke was therefore not entitled to act on that company's behalf. A similar conclusion was reached, in substance, by the Constitutional Court on 24 April 1999.

116. In addition, the Court finds relevant in this context the above arguments put forward by a judge of the Bratislava Regional Court, on 24 March 1999. According to those arguments, settlement proceedings within the meaning of the 1991 Bankruptcy Act had never actually started, due to the failure of those involved to comply with the relevant provisions.

117. In view of the above, the Court considers that the complaints on behalf of Slovenské telekomunikácie, š.p. were lodged by a person who had no standing to act on that company's behalf.

118. It follows that this part of the application is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.

119. The second applicant complained that the refusal to enter the transfer of several subsidiaries of Slovenské telekomunikácie, š.p. to the applicant in the register of companies was in breach of its property rights.

120. The Court reiterates that an applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions related to his or her “possessions” within the meaning of this provision. “Possessions” can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right. The Court has held that the applicants had no “legitimate expectation” where it could not be said that they had a currently enforceable claim that was sufficiently established. Similarly, no legitimate expectation can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant's submissions are subsequently rejected by the national courts (for recapitulation of the relevant case-law see, for example, Kopecký v. Slovakia [GC], no. 44912/98, §§ 35, 49 and 50, ECHR 2004 IX, with further references).

121. In the present case Mr F. Eke, on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”, sold four subsidiaries of the company to the second applicant. The sale was approved on 28 January 1997 by the council of creditors with reference to section 4e(3) of the 1991 Bankruptcy Act. The Bratislava I District Court allowed a corresponding entry in the register of companies.

122. Subsequently, Mr P.V., who was entered in the register of companies as director of Slovenské telekomunikácie, š.p., appealed, arguing that Slovenské telekomunikácie, š.p. had neither sold its subsidiaries nor had it requested a corresponding entry in the register of companies. The Bratislava Regional Court subsequently reversed the first-instance decision.

123. On 12 January 1999 the Supreme Court quashed the lower courts' decisions and discontinued the proceedings. It recalled that Slovenské telekomunikácie, š.p. was a legal person governed by the State-Owned Companies Act of 1990. Section 19 of that Act provided that actions on behalf of State-owned companies were taken by directors who were appointed and revoked by the authority which had established the company. In the Supreme Court's view, the council of creditors had taken legal actions in respect of the company Slovenské telekomunikácie, š.p. for which it had no standing under the 1991 Bankruptcy Act. The Court has above reached a similar conclusion when examining the standing of Mr F. Eke to act on behalf of Slovenské telekomunikácie, š.p.

124. The sale of subsidiaries of that company ran contrary to section 45 of Law no. 92/1991 which prohibited State-owned companies from concluding contracts on the transfer of property used for their business activities. The applicants have not shown that the sale was in compliance with the purpose of the settlement proceedings, as set out in sections 4(3) and 4f(1) of the 1991 Bankruptcy Act. In particular, under the relevant law, the aim of settlement proceedings was to allow a debtor to resolve the insolvency and to allow the creditors to have their claims satisfied, by means of elaboration and implementation of a re-stabilisation project, and thus to prevent an adjudication of a debtor's bankruptcy. The purpose of a re-stabilisation project was to improve the debtor's financial situation, avoid bankruptcy, and to ensure the debtor's future effective development. The Court notes in this respect that, in accordance with the Supreme Court's practice under Article 39 of the Civil Code, a contract which by its content or purpose is contrary to the law is void ex tunc.

125. In the context of the proceedings which Mr F. Eke had initiated against the second applicant, the latter's representative expressed the view that the contract should have been signed both by Mr F. Eke and Mr P.V., who had been entered in the register of companies as the director of the company. Thus, the representative of the second applicant had himself put in doubt the validity of the contract on the transfer of property of Slovenské telekomunikácie, š.p.

126. Furthermore, the requested entry in the register of companies of that transfer was of a declaratory nature and it could not serve as a determination or confirmation of the validity of the contracts. The Court considers that, in such circumstances, it was for the second applicant to have its title in respect of the property in issue determined by a court by means of a civil action. It sees no reason which prevented the second applicant from taking such action.

127. The above facts are sufficient for the Court to conclude that the second applicant's right of ownership, in respect of the companies which Mr F. Eke had sold to it on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”, was not sufficiently established to attract the guarantees of Article 1 of Protocol No. 1.

128. It follows that this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.

129. The second applicant further complained that its right to a fair and public hearing had been violated in the proceedings leading to the Supreme Court's decision of 12 January 1999.

130. Under the Court's case-law, for Article 6 § 1 in its “civil” limb to be applicable, there must be a dispute (“contestation” in the French text) over a “right” which can be said, at least on arguable grounds, to be recognised under domestic law. The dispute must be genuine and serious; it may relate not only to the actual existence of a right but also to its scope and the manner of its exercise. The outcome of the proceedings must be directly decisive for the right in question. Mere tenuous connections or remote consequences are not sufficient to bring Article 6 § 1 into play (see Balmer Schafroth and Others v. Switzerland, 26 August 1997, § 32, Reports of Judgments and Decisions 1997 IV, with further references).

131. The proceedings in issue concerned the request, made by Mr F. Eke on behalf of “Slovenské telekomunikácie, š.p. in settlement proceedings”, to enter in the register of companies the above-mentioned sale of four subsidiaries of Slovenské telekomunikácie, š.p. The proceedings were ultimately discontinued by the Supreme Court on the grounds that the council of creditors had taken legal actions in respect of the company Slovenské telekomunikácie, š.p., for which it had no standing under the 1991 Bankruptcy Act.

132. The Court has reached a similar conclusion above. It has also found that the sale of the subsidiaries ran contrary to the content and purpose of the relevant provisions of the 1991 Bankruptcy Act and that Article 39 of the Civil Code rendered such action void ex tunc.

133. Furthermore, in accordance with the Supreme Court's practice, proceedings concerning an entry in the register of companies are non contentious. Where a legal person initiates such proceedings in its respect, the court involved decides exclusively on the rights and obligations of the applicant as a party to such proceedings. Third parties are excluded from proceedings concerning entries in the register of companies. Pursuant to Article 92 § 1 of the Code of Civil Procedure, courts may allow a third person to join civil proceedings as a party at the request of one of the parties. However, that provision does not apply in proceedings on appeal or appeal on points of law. It has not been argued that leave was sought for the second applicant to join the proceedings as a party while the proceedings were pending before the court of first instance.

134. The requested entry in the register of companies of the transfer would be of a declaratory nature and it could not serve as a determination or confirmation of the validity of the contracts which were disputed. In the context of the proceedings which Mr Eke had initiated against the second applicant, the latter's representative himself had put in doubt the validity of the contracts which Mr Eke had concluded with the second applicant.

135. The position in the present case is to be distinguished from that in the case of Buj v. Croatia (no. 24661/02, § 19, judgment of 1 June 2006) where an inscription of changes in land ownership produced by the decision given in the inheritance proceedings, which was to be carried out ex officio by the court concerned, was found to be a functional equivalent to enforcement which attracted the guarantees of Article 6 § 1. As stated above, no binding decision confirming the validity of the contracts had been given obliging the court concerned to make ex officio a corresponding entry in the companies register.

136. In these circumstances, the outcome of the proceedings concerning
Mr Eke's petition cannot be said to have been directly decisive for the determination of the second applicant's civil rights and obligations within the meaning of Article 6 § 1 of the Convention.

137. It follows that this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.

138. As to the second applicant's complaint about the absence of an effective remedy, the Court reiterates that Article 13 applies only where an individual has an “arguable claim” to be the victim of a violation of a Convention right (see Boyle and Rice v. the United Kingdom, 27 April 1988, § 52, Series A no. 131). The Court has declared the second applicant's complaints under Article 6 § 1 of the Convention and under Article 1 of Protocol No. 1 inadmissible. Accordingly, the second applicant did not have an “arguable claim” and Article 13 is, therefore, not applicable.

139. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.

1. The equivalent of approximately 744 million euros.

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You are here: BAILII >> Databases >> European Court of Human Rights >> Slovenské telekomunikácie, s.p. and Herold Tele Media, s.r.o. v Slovakia - 47097/99 [2010] ECHR 1617 (28 September 2010) URL: http://www.bailii.org/eu/cases/ECHR/2010/1617.html Cite as: [2010] ECHR 1617