RF spol. s r.o. v Slovakia - 9926/03 [2010] ECHR 1745 (20 October 2010)

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The European Court of Human Rights (Fourth Section), sitting on 20 October 2010 as a Chamber composed of:

Nicolas Bratza, President,
David Thór Björgvinsson,
Ján Šikuta,
Päivi Hirvelä,
Ledi Bianku,
Nebojša Vučinić,
Vincent Anthony de Gaetano, judges
and Lawrence Early, Section Registrar,

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

The application was submitted by a limited liability company, RF spol. s r.o. (“RFSRO”), registered in Zilina.

In the course of the proceedings before the Court a limited liability company, Profit real Zilina, s.r.o. (“PRZSRO”), also registered in Zilina, submitted that it wished to pursue the application in the stead of RFSRO. The legal status of the applicant entity is described below.

Both RFSRO and PRZSRO were represented before the Court by Mr R. Skyba, a lawyer practising in Zilina.

The Government of the Slovak Republic (“the Government”) were represented by their Agent, Ms A. Poláčková, who was succeeded in that function by Ms M. Pirošíková.

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

In 1994 RFSRO entered into a contract for the purchase of real property from an individual.

In 1996 RFSRO brought an action for damages against the State in the person of the Ministry of Justice. RFSRO submitted that, at the time of the conclusion of the above-mentioned contract, it had believed the property was free of any charge, that it had established later that there had in fact been a mortgage on the property and that the State was responsible for failing to have the mortgage recorded in the Land Register.

On 18 December 1997 the Zilina Regional Court (Krajský súd) upheld a first-instance judgment granting the action and ordering the State to pay the equivalent of some 101,000 European Currency Units (ECU) to RFSRO in damages. The judgment became final, binding and enforceable.

Subsequently, RFSRO twice unsuccessfully sought judicial enforcement of the judgment, the proceedings were reopened and, thereby, the enforceability of the 1997 judgment was suspended. In the reopened proceedings, the 1997 judgment was eventually upheld. RFSRO then transferred its claim to PRZSRO and was eventually wound up and struck out of the Commercial Register (Obchodný register). The full details are given below.

On 27 October 1998, at the request of RFSRO, the Čadca District Court (Okresný súd) authorised judicial enforcement officer A. to enforce the 1997 judgment against the Ministry. The officer subsequently issued a notice of enforcement (upovedoenie o začatí exekúcie) informing the Ministry that enforcement proceedings had commenced and ordering it to settle its debt.

The Ministry in turn requested that the enforcement be suspended in view of the request for the proceedings to be reopened. The request was granted by the District Court on 13 November 1998.

On 24 November 2000 the District Court discontinued the enforcement proceedings, following the withdrawal by RFSRO of its request for enforcement, on the ground that neither A. nor any other enforcement officer was willing to carry out the enforcement due to “concerns for their existence as enforcement officers”.

On 8 December 2000, on a fresh petition by RFSRO, the District Court authorised enforcement officer B. to enforce the 1997 judgment.

On 12 January 2001 the Ministry requested B. to appear at the Ministry on 15 January 2001, with the case file.

The following matters are contested. According to the Government, on 26 January 2001, the Ministry carried out a routine inspection of the case file in the framework of exercising its power to review actions taken by enforcement officers, and there was no indication that the case file was retained by the Ministry. RFSRO submitted a note issued on the letterhead of the Ministry, dated 15 January 2001 and signed solely by the RFSRO’s legal representative, stating that the case file had been handed over to the secretariat of C., a Director General at the Ministry.

On 18 January 2001 B. invited RFSRO to reconsider its enforcement request “on the ground of concealment of further decisive matters which are revealed by the enclosures to [the Ministry’s appeal], which had preceded the enforcement request”.

In letters of 6 May and 13 November 2002 and 19 May 2003 B. informed the District Court that he could not accommodate the latter’s request to submit the case file, as on 15 January 2001 it had been handed over to, and was still in the possession of, the Ministry.

In 2003 RFSRO transferred its claim to a third private company, which later transferred it back to RFSRO.

On 3 November 2005 the District Court discontinued the enforcement in view of the reopening of the proceedings leading to the 1997 judgment (see below).

On 21 January 2002 RFSRO lodged a complaint with the Constitutional Court (Ústavný súd). It alleged a violation of Article 6 § 1 of the Convention in that B. had failed to proceed with the enforcement and the Ministry had obstructed the enforcement by keeping the file.

On 14 June 2002 the Constitutional Court declared the complaint inadmissible. It held that the failure to proceed with the enforcement was not imputable to B., as the file was held by the Ministry. The decision stated that the Ministry had requested the file in accordance with the relevant law authorising it to carry out State control of the activities of enforcement officers. Since RFSRO was in no way involved in such a State control, the Ministry could not be held liable for any violation of its right to a hearing within a reasonable time. Finally, the Constitutional Court held that the contested action of the Ministry could not entail any unjustified delays in the proceedings imputable to the District Court.

On 21 August 2002 the applicant made a second complaint to the Constitutional Court. It alleged a violation of Article 1 of Protocol No. 1 in that the Ministry had failed to abide by the 1997 judgment and had been obstructing its enforcement.

On 13 November 2002 the Constitutional Court declared the complaint inadmissible. It held that it was in the first place for the District Court to ensure that the sum in question was enforced. There was no indication that it had been prevented from doing so. There was accordingly no direct link between the conduct of the Ministry and the alleged violation of the rights of RFSRO under Article 1 of Protocol No. 1.

On 5 October 1998 the Ministry lodged a request for the proceedings leading to the 1997 judgment to be reopened, on the ground that the 1994 contract had been contested in another set of proceedings and that those proceedings were still pending. The 1994 contract was eventually declared null and void.

On 29 April 2005 the Regional Court upheld a first-instance decision to reopen the proceedings. These decisions were taken after two previous first-instance decisions on the question of reopening had been quashed on appeal.

In the reopened proceedings the action of 1996 was examined twice, by courts at two levels of jurisdiction.

The last judgment was given on 25 August 2009 by the Regional Court. Its actual effect was to uphold the judgment of 1997. It became final, binding and enforceable on 11 December 2009.

On 24 June 2010 the Supreme Court (Najvyšší súd) discontinued the proceedings in the Ministry’s appeal on points of law (dovolanie) on the ground that RFSRO had been wound up on 22 December 2009 and struck out of the Commercial Register on 6 February 2010.

On 4 November 2009 the Zilina District Court granted a request by the tax authorities for RFSRO to be wound up. The decision states that since 2004 RFSRO had failed to file tax returns, had been showing no signs of activity, had no known assets and was not present at its registered address. The decision could have been, but was not, challenged by way of an appeal and consequently became final on 22 December 2009.

On 1 January 2010 RFSRO and PRZSRO entered into a contract to transfer the adjudicated claim of RFSRO against the Ministry to PRZSRO, with immediate effect. These companies informed the Ministry of the transfer by a joint letter of 5 January 2010.

By force of the striking out of the Commercial Register, on 6 February 2010, RFSRO ceased legally to exist. Its assets and liabilities have not been liquidated. No legal successor is known to exist.

In a letter of 22 June 2010, on request under Rule 49 § 3 of the Rules of Court, the parties were invited to inform the Court of developments in the case and the status of RFSRO in view of the information from publicly available sources (http://www.orsr.sk) indicating that it had been struck out of the Commercial Register.

In a reply of 17 July 2010 the legal representative of both RFSRO and PRZSRO informed the Court that the former had indeed been struck out of the Commercial Register and that the latter wished “to continue the complaint proceedings” on the basis of the transfer of claim agreement of 1 January 2010.

The applicant company complained under Article 6 § 1 of the Convention and under Article 1 of Protocol No. 1 that the Ministry had failed to pay the sum in issue to it and that by its conduct the Ministry had prevented the enforcement of the relevant judicial decisions.

The applicant company complained that the Ministry had failed to pay the adjudicated amount and had obstructed the enforcement proceedings, contrary to Article 6 § 1 of the Convention, which reads as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... 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.”

The Government submitted that there was no conclusive evidence that the enforcement case file had actually been retained by the Ministry. They relied on the decisions of the Constitutional Court of 13 November and 14 June 2002 and argued that the enforcement and any possible problems with it in respect of the 1997 judgment were under the control and responsibility of the District Court and not the Ministry. They pointed out that at the national level RFSRO had failed to complain of inaction or delays on the part of the District Court. The Government concluded that the application was manifestly ill-founded.

In response to the above-mentioned letter of 22 June 2010 inviting the parties to comment on the status of RFSRO, the Government proposed that the application be struck out of the Court’s list of cases on account of the winding up and strike-out of RFSRO from the Commercial Register. They also submitted that PRZSRO could by no means be considered a universal successor of RFSRO and pointed out that PRZSRO and RFSRO had omitted to notify the purported transfer of the litigious claim to the Supreme Court, which at that time was seized of the Ministry’s appeal on points of law in the reopened proceedings concerning that claim.

RFSRO submitted that the enforcement case file had been seized and retained by C. and that the Ministry was merely trying to avoid paying its debt. Acting through its legal representative, it also submitted that it had had no knowledge of the proceedings on its wind-up and strike-out of the Commercial Register, and that it must have been initiated by the Ministry. By way of an example, it was submitted that there were a number of companies in a similar situation to RFSRO and that they had not been faced with requests for winding up. PRZSRO was nevertheless the creditor under the 1997 judgment, and wished to continue the application.

The Court observes that the application was brought in 2003 under Article 34 of the Convention by a private company, RFSRO, and that in 2010 that company ceased legally to exist, without a legal successor. It notes that this may constitute an “other reason” for which “it is no longer justified to continue the examination of the application” within the meaning of Article 37 § 1 (c) of the Convention provided “respect for human rights as defined in the Convention and the Protocols thereto” does not require otherwise, pursuant to Article 37 § 1 in fine of the Convention.

For that matter, as to the facts, the Court finds it to be of significance that the claim asserted by RFSRO was pecuniary in nature, that in the impugned proceedings this claim was asserted by RFSRO, and that all the relevant decisions concerned RFSRO.

As to the applicable legal principles, the Court reiterates that while under Article 34 of the Convention the existence of a “victim of a violation” is indispensable for putting the protection mechanism of the Convention into motion, this criterion cannot be applied in a rigid, mechanical and inflexible way throughout the whole proceedings. As a rule, and in particular in cases which primarily involve pecuniary and, for this reason, transferable claims, the existence of other persons to whom that claim is transferred is an important criterion, but cannot be the only one. Human rights cases before the Court generally also have a moral dimension, which it must take into account when considering whether to continue with the examination of an application after the applicant has ceased to exist. All the more so if the issues raised by the case transcend the person and the interests of the applicant (see OAO Neftyanaya kompaniya YUKOS v. Russia (dec.), no. 14902/04, § 441, 29 January 2009, with further references). This would be the case in particular where an application concerns the legislation or a legal system or practice of the defendant State (see Micallef v. Malta [GC], no. 17056/06, § 46, ECHR 2009 ..., with further references).

While it is true that the claim determined in the impugned proceedings was pecuniary in nature and as such transferable, and that it was in fact later transferred to a third private entity, the Court observes that there was no connection between the impugned proceedings and the legal collapse of RFSRO (for contrast see, for example, OAO Neftyanaya kompaniya YUKOS, cited above, § 443 and Capital Bank AD v. Bulgaria, no. 49429/99, § 80, ECHR 2005 XII (extracts)).

Allegations on behalf of RFSRO to the effect that its collapse was influenced by the Ministry have not been substantiated by any material fact or evidence and are actually contradicted by the fact that, although it was open to it to do so, RFSRO did not challenge the winding up decision by way of an appeal and other legal remedies potentially available.

It is also noted that following its dissolution RFSRO acquired no legal successor.

In the light of the above considerations the Court finds no special circumstances relating to respect for human rights as defined in the Convention and its Protocols which require it to continue the examination of the application in respect of RFSRO (for contrast see, for example, Karner v. Austria, no. 40016/98, § 27, ECHR 2003 IX, and Tehrani and Others v. Turkey, nos. 32940/08, 41626/08 and 43616/08, § 56, 13 April 2010). Accordingly, the application should be struck out of the Court’s list of cases in so far as it has been brought by that entity.

As to the status of PRZSRO, the Court observes that it was not a party to the impugned proceedings nor was it concerned with any of the relevant decisions. The Court also notes that no allegation has been made on the part of PRZSRO that it was in any way directly affected by the facts complained of.

The Court reiterates that Article 34 of the Convention requires that an individual applicant should claim to have been actually affected by the violation alleged and does not provide a basis for an actio popularis (see, for example, Karner, cited above, § 24, with further references).

For the sake of completeness, the Court further observes that it is open to PRZSRO to assert any claims against the Ministry acquired under the transfer of claim agreement of 1 January 2010 by legal means and methods available (by way of contrast and comparison, see, for example, Business Şi Investiţii Pentru Toţi v. Moldova, no. 39391/04, § 31, 13 October 20094).

It follows that, in so far as brought by PRZSRO, 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.

Decides to strike the application out of its list of cases in so far as it has been brought by RF spol. s r.o.;

Declares the application inadmissible in so far as it has been brought by Profit real Zilina, s.r.o.

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You are here: BAILII >> Databases >> European Court of Human Rights >> RF spol. s r.o. v Slovakia - 9926/03 [2010] ECHR 1745 (20 October 2010) URL: http://www.bailii.org/eu/cases/ECHR/2010/1745.html Cite as: [2010] ECHR 1745