MICHAELA HUSEROVA, ADMINISTRATOR IN BANKRUPTCY OF UNION BANKA and STRODEN MANAGEMENT LTD v Slovakia - 760/04 [2010] ECHR 1946 (9 November 2010)

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	European Court of Human Rights
You are here: BAILII >> Databases >> European Court of Human Rights >> MICHAELA HUSEROVA, ADMINISTRATOR IN BANKRUPTCY OF UNION BANKA and STRODEN MANAGEMENT LTD v Slovakia - 760/04 [2010] ECHR 1946 (9 November 2010) URL: http://www.bailii.org/eu/cases/ECHR/2010/1946.html Cite as: [2010] ECHR 1946

Application no. 760/04
by MICHAELA HUSEROVÁ, ADMINISTRATOR IN BANKRUPTCY OF UNION BANKA, a.s. IN LIQUIDATION and STRODEN MANAGEMENT LIMITED
against Slovakia

The European Court of Human Rights (Fourth Section), sitting on 9 November 2010 as a Chamber composed of:

Nicolas Bratza, President,
Lech Garlicki,
Ljiljana Mijović,
Ján Šikuta,
Mihai Poalelungi,
Nebojša Vučinić,
Vincent Anthony de Gaetano, judges,
and Lawrence Early, Section Registrar,

Having regard to the above application lodged on 17 December 2003 and, in respect of the second applicant, on 18 July 2006,

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

Having regard to the further information regarding recent developments provided by the second applicant,

1. On 29 May 2003 the Regional Court in Ostrava (Czech Republic) started bankruptcy proceedings in respect of Union banka, a.s., a bank with its seat in Ostrava. It appointed Ms Michaela Huserová as the administrator in bankruptcy of that joint stock company. Ms Huserová introduced the application in that capacity on 17 December 2003 (“the first applicant”).

2. Stroden Management Limited (the second applicant) is a company with its registered office in Larnaca, Cyprus. The application on its behalf was introduced by Mr Marios Vardas on 18 July 2006.

3. The applicants were represented before the Court by Mr A. Blaha, a lawyer practising in Bratislava. The respondent Government were represented by their agent Ms M. Pirošíková.

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

5. On 28 September 1998 the General Director of Slovenský plynárenský priemysel, then a State-owned company dealing with transportation and distribution of gas in Slovakia, drew five promissory notes in favour of SEZOOS Group, a.s., a joint stock company with its registered office in Vsetín (Czech Republic). The notes were drawn for the sum of 70 million Czech korunas (CZK) each.

6. In October 1998 Union banka, a.s. acquired the notes from SEZOOS Group, a.s. for CZK 324,204,712. In two documents issued in November and December 1998 the drawer of the notes acknowledged that SEZOOS Group, a.s. had met all its financial obligations in respect of Slovenský plynárenský priemysel.

7. The General Director of Slovenský plynárenský priemysel was shot on 11 January 1999.

8. Subsequently the company Slovenský plynárenský priemysel refused to pay to Union banka, a.s. its debt owed under the above promissory notes.

9. On 25 March 1999, Union banka, a.s. lodged a claim before the Bratislava Regional Court against Slovenský plynárenský priemysel seeking a payment order in respect of the five promissory notes.

10. On 17 May 1999 the Regional Court issued a payment order obliging Slovenský plynárenský priemysel to pay CZK 350 million plus 6% default interest as from 25 March 1999 plus costs and expenses to Union banka, a.s.

11. Slovenský plynárenský priemysel objected to the payment order and hearings were held before the Regional Court on 25 October and 24 November 1999. Following a further hearing on 17 April 2000, the Regional Court confirmed its order of 17 May 1999. The defendant appealed the same day.

12. On 29 November 2001 the Supreme Court, acting as a court of appeal, upheld the judgment of the Regional Court. The Supreme Court (court of appeal) granted permission for an appeal on points of law to be filed against its decision.

13. The judgment of the Supreme Court (court of appeal) became final on 10 January 2002. On 21 January 2002, the Slovenský plynárenský priemysel filed their appeal on points of law.

14. On 30 October 2002 the Supreme Court (cassation chamber composed of five judges different from those who had dealt with the appeal) rejected the defendant’s appeal on points of law as inadmissible. The court found that: (i) the court of appeal in its judgment had not stipulated the reasons for admitting the use of such remedy as required by the law; and (ii) no other statutory ground for admitting an appeal on points of law had been established. In the reasons for its decision the court of cassation stated, inter alia, that the court of appeal had proceeded in accordance with the law.

15. Union banka, a.s. sought the enforcement of the judicial decision in its favour. The enforcement was thwarted as the debtor constantly challenged the judges involved for bias.

16. On 22 January 2003 the daily newspaper Sme reported that the Government of the Slovak Republic had passed a decision according to which it would not comply with the judicial decisions concerning the promissory notes in issue. Those notes were considered to be the result of a fraudulent action. The article further stated that the Association of Slovak Judges had expressed its concern as regards the Government’s position.

17. On 20 December 2002 the Prosecutor General filed an extraordinary appeal on points of law against the decisions of the Regional Court of 17 April 2000 and the Supreme Court of 29 November 2001 granting the claim of Union banka, a.s. for payment of the sums due under the promissory notes. He also requested postponement of the enforceability of the decisions challenged.

18. The case fell to be examined by the cassation chamber of the Supreme Court, the composition of which was determined in accordance with the work schedule of the Supreme Court for 2002. The chamber started dealing with the case. The first applicant submitted written observations on the extraordinary appeal on points of law.

19. In February 2003 the term of office of the President of the Supreme Court expired. As a new President had not yet been appointed, the Vice-President started carrying out the President’s duties as from 17 February 2003.

20. On or around 17 February 2003 the acting President modified the work schedule of the Supreme Court for 2003. This modification resulted in a re-composition of the cassation chamber before which the extraordinary appeal on points of law was pending. The reason for the modification, which was approved by the Judicial Council established at the Supreme Court, was to prevent judges belonging to different sections (e.g. civil-law section and business-law section) from sitting in one chamber.

21. On 27 February 2003 the re-composed cassation chamber of the Supreme Court suspended the enforceable effect of the judgments by which the claim of Union banka, a.s. had been granted.

22. On 5 March 2003 Union banka, a.s. filed an objection of bias against the judges of the re-composed chamber and challenged all the judges of the Supreme Court’s re-composed chamber on the grounds that the change in judges dealing with the case had been contrary to its right to a hearing by a tribunal established by law.

23. On 27 May 2003 the Supreme Court found no reason for excluding the five judges of the cassation chamber. The change of judges had resulted from a modification of the work schedule. Nothing indicated that the judges involved were biased.

24. On 19 June 2003 the cassation chamber allowed the extraordinary appeal on points of law, quashed the Regional Court’s judgment of 17 April 2000 and the Supreme Court’s judgment of 29 November 2001 and remitted the case to the Regional Court.

25. The judgment stated that the appeal on points of law had been filed against the first-instance and court of appeal’s judgments. The Supreme Court (cassation chamber) had subsequently found, without dealing with the merits of the case, that an appeal on points of law against those judgments had not been admissible. The extraordinary remedy filed by the Prosecutor General was therefore admissible under Articles 243e § 1 and 243f of the Code of Civil Procedure. The Supreme Court dismissed the argument that the proceedings should have been stayed ex lege on the ground that bankruptcy proceedings had been started in respect of Union banka, a.s. in the Czech Republic.

26. As to the merits, the Supreme Court held that the lower courts had not established all relevant facts with a view to determining whether or not the plaintiff had deliberately acted to the detriment of the debtor when acquiring the promissory notes. Further evidence needed to be taken on that issue.

27. The Supreme Court notified the first applicant of its judgment of 19 June 2003 in writing.

28. On 8 December 2003 the Regional Court in Bratislava stayed the proceedings. The decision stated that criminal proceedings were pending against two persons before the Regional Court in Bratislava and the Regional Court in Ostrava. The offences imputed to the accused concerned issues which were relevant for the determination of the claim of Union banka a.s.

29. On 30 December 2003 Union banka, a.s. filed an appeal against the decision to stay the proceedings. On 26 January 2004 the Supreme Court dismissed the appeal.

30. In July 2004 the second applicant acquired the five promissory notes issued by the General Director of Slovenský plynárenský priemysel in 1998. On 29 July 2004 Union banka, a.s. filed a motion to change the party to the proceedings to the second applicant. On 25 January 2005, the Regional Court allowed the second applicant to replace the first applicant as the party to the proceedings.

31. On 4 May 2005 the second applicant’s representative requested the Regional Court in Bratislava to proceed with the case concerning the promissory notes.

32. On 25 May 2005 the General Director of Slovenský plynárenský priemysel informed the second applicant that the company shared the position which the Government of the Slovak Republic had taken on 7 March 2001. According to that position, the promissory notes were void as they had been drawn fraudulently.

33. On 19 December 2008, the Regional Court upheld the payment order of 17 May 1999. On 19 February 2009 Slovenský plynárenský priemysel appealed the decision.

34. On 15 January 2010, the second applicant was advised that the Regional Court judgment had been quashed by the Supreme Court on 9 December 2009 and that the case had been remitted to the Regional Court. The second applicant had not been advised of the hearing nor had it been invited to attend and make representations. A copy of the written judgment was received on 2 February 2010.

35. On 10 March 2003 the first applicant complained to the Constitutional Court that the bank’s right to a hearing by an impartial tribunal established by law had been violated as a result of the modification of the Supreme Court’s work schedule and the ensuing re-composition of the cassation chamber.

36. On 18 June 2003 the Constitutional Court rejected the complaint on the ground that the plaintiff had not challenged the Supreme Court judges who were assigned to deal with the case following the change to the court’s work schedule.

37. On 22 September 2003 Ms M. Huserová, in her capacity as administrator in bankruptcy of Union banka, a.s., lodged a constitutional complaint. With reference to the Supreme Court’s judgment of 19 June 2003 she alleged a violation of Articles 6 § 1 of the Convention and Article 1 of Protocol No. 1 as well as of a number of constitutional provisions.

38. On 4 August 2004 the representative of the second applicant informed the Constitutional Court that the company wished to replace the administrator in bankruptcy of Union banka, a.s. in the constitutional proceedings.

39. On 28 February 2006 the Constitutional Court rejected the complaint on the ground that Ms Huserová lacked standing to lodge it. With reference to the relevant statutory provisions the decision stated that an administrator in bankruptcy was a person through whom a court ensured the attainment of the aim of bankruptcy proceedings. As such, the administrator in bankruptcy participated in bankruptcy proceedings without being, however, a party to such proceedings. An administrator in bankruptcy could not, therefore, allege the violation of a right to judicial and other legal protection which was exclusively reserved to parties to proceedings.

40. On 12 July 2007 the second applicant lodged a complaint with the Constitutional Court alleging unreasonable delay in the proceedings and alleging a violation of Article 6 § 1 and Article 1 of Protocol No. 1.

41. On 3 March 2009 the second applicant withdrew its complaint regarding the length of the proceedings in light of the judgment in its favour issued by the Regional Court on 19 December 2008. On 12 March 2009 the Constitutional Court accordingly closed the proceedings.

42. On 24 February 2010 the second applicant lodged a complaint with the Constitutional Court alleging a breach of Article 6 § 1 in the proceedings before the Supreme Court as a result of the composition of the Supreme Court. The proceedings are pending.

43. Article 243e § 1 of the Code of Civil Procedure entitles the Prosecutor General to challenge, upon petitions of parties or other persons affected, final judicial decisions violating the law where such is required to protect rights and lawful interests of persons or the State and where such protection cannot be ensured by other legal means.

44. Article 243f § 1 allows for an extraordinary appeal on points of law to be filed under Article 243e where, inter alia, the judicial decision in issue is based on an erroneous legal assessment of the matter. Paragraph 2 (c) excludes the possibility of filing an extraordinary appeal on points of law in respect of decisions on ordinary and extraordinary appeals on points of law.

(ii) the re-composition of the cassation chamber of the Supreme Court following the modification of the work schedule in February 2003 was unlawful;

(iii) in deciding to quash the judgment of the Regional Court for the first time, the Supreme Court had disregarded the fact that the proceedings should have been stayed following the introduction of bankruptcy proceedings in respect of Union banka, a.s. in the Czech Republic;

(iv) the judgment of 19 June 2003 was not delivered publicly and the proceedings leading to that judgment were unfair;

(v) the Constitutional Court decided arbitrarily in dismissing the complaints of 10 March 2003 and 22 September 2003;

(vi) the Regional Court in Bratislava had stayed the proceedings and refused to proceed with the case without any relevant reason after its judgment of 17 April 2000 had been quashed;

(vii) the proceedings concerning the claim under the promissory notes had lasted an excessively long time.

45. On an unknown date, Ms Huserová was replaced as administrator in bankruptcy of Union banka, a.s, by Mr Lukáš Raida.

46. On 24 June 2010, the applicants’ legal representative, Mr Blaha, informed the Court that Mr Raida had not granted him authority to proceed with the application before the Court on behalf of Union banka, a.s., as the creditors of the bank wished to bring the bankruptcy to an end as quickly as possible and the proceedings before the Court hindered the bankruptcy process. At the same time, Mr Blaha confirmed that the second applicant wished to proceed with the application before the Court.

47. In light of the above, the Court considers that the first applicant may be regarded as no longer wishing to pursue the application, within the meaning of Article 37 § 1 (a) of the Convention. Furthermore, in accordance with Article 37 § 1 in fine, the Court finds no special circumstances regarding respect for human rights as defined in the Convention and its Protocols which require the continued examination of the case. In view of the above, it is appropriate to strike the case out of the list in so far as it concerns the first applicant.

48. The Government argued that the application was inadmissible ratione personae in respect of the second applicant as it had decided to enter the domestic proceedings on 24 January 2005, by which time the alleged violations had already occurred. In particular, the Government contended, the second applicant must already have been aware that the final decision endorsing the claim of Union banka, a.s. to payment of the debt guaranteed by the notes had been quashed.

49. Accordingly, the Government concluded, the second applicant could not claim to be a victim of a violation of Article 6 or of Article 1 of Protocol No. 1 in respect of the impugned acts.

50. The second applicant argued that the objection of the Government did not take into account the continuity of the judicial proceedings and the effects of the bankruptcy proceedings in respect of Union banka, a.s. It was clear that the second applicant was the successor of the first applicant in respect of all the impugned acts.

51. It further pointed to the decision of the Constitutional Court of 28 February 2006, which concerned the alleged violation of the rights of the plaintiff in the case then pending before the Regional Court regarding enforcement of the promissory notes. At that time, the second applicant was the plaintiff in the pending case and was, in the second applicant’s view, therefore a victim of the alleged violations of Article 6 of the Convention and Article 1 of Protocol No. 1.

52. The Court notes that all the Article 6 complaints originally lodged, save the complaint regarding the length of the proceedings, related to the proceedings which took place prior to the second applicant’s purchase of the promissory notes in July 2004 and well before the Regional Court’s second consideration of the case and its ruling of 19 December 2008, in which it found in favour of the second applicant and upheld the payment order of 17 May 1999. In the circumstances, and even assuming that the second applicant was directly affected by acts which occurred prior to its purchase of the promissory notes, the Court concludes that the second applicant is no longer a victim of any Article 6 violation in respect of any of these acts. These complaints are therefore manifestly ill-founded within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.

53. In respect of the complaint regarding the length of the proceedings, the Court notes that the applicant withdrew its relevant constitutional complaint in March 2009. It therefore follows that the length complaint is rejected pursuant to Article 35 §§ 1 and 4 for failure to exhaust domestic remedies.

54. As regards the complaint under Article 1 of Protocol No. 1 that the quashing of the decision of the Regional Court following the extraordinary appeal on points of law interfered with the second applicant’s property rights, the Court emphasises that this interference occurred on 19 June 2003, over a year before the second applicant acquired any ownership rights over the notes, and was not subject to further appeal. The second applicant has therefore failed to establish any interference with its property rights as a result of that decision. As regards any more general complaint of interference with property rights, the proceedings regarding the promissory notes are ongoing and are currently pending before the Regional Court. Accordingly, the Court concludes that any general complaint under Article 1 of Protocol No. 1 is premature and must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.

55. Finally, the Court notes that in its most recent communication to the Court, the second applicant complained under Article 6 about the decision of the Supreme Court in December 2009. A relevant constitutional complaint has been lodged and is currently pending before the Constitutional Court. It follows that this complaint is also premature and must therefore also be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.

Decides to strike the application out of its list of cases in so far as it relates to the first applicant;