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FIFTH
SECTION
CASE OF
BEGUŠ v. SLOVENIA
(Application
no. 25634/05)
JUDGMENT
STRASBOURG
15
December 2011
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Beguš
v. Slovenia,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Dean Spielmann,
President,
Elisabet Fura,
Boštjan M.
Zupančič,
Ann Power-Forde,
Ganna
Yudkivska,
Angelika Nußberger,
André
Potocki, judges,
and Claudia Westerdiek,
Section Registrar,
Having
deliberated in private on 22 November 2011,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 25634/05)
against the Republic of Slovenia lodged with the Court
under Article 34 of the Convention for the Protection of Human
Rights and Fundamental Freedoms (“the Convention”) by a
Slovenian national, Mr Igor Beguš (“the applicant”),
on 6 July 2005.
2. The
Slovenian Government (“the Government”) were represented
by their Agent, Mrs T. Mihelič Zitko, State Attorney.
3. The
applicant alleged, in particular, that his right to a trial within a
reasonable time had been breached in the civil proceedings to which
the company Energohit d.o.o. had been a party.
- On
30 November 2010 the President of
the Third Section decided to give notice of the application to
the Government. The Court subsequently changed the
compsition of its Sections (Rule 25 § 1 of the Rules of Court)
and the present case has been assigned to the newly composed Fifth
Section (Rule 52 § 1). It was decided to rule on the
admissibility and merits of the application at the same time (Article
29 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant was born in 1953 and lives in
Ljubljana.
- The
applicant is the director and sole owner of the limited liability
company Energohit d.o.o., which provides consultancy, engineering and
representation services.
A. The proceedings concerning the request for
enforcement on the basis of a valid purchase order and ensuing
contentious proceedings
- On
25 October 1996 the applicant, representing his company Energohit,
instituted enforcement proceedings against another company, L., for
the payment of a bill for 887,250 Slovenian tolars (SIT).
On 5 November 1996 the Ljubljana Local Court, relying on a valid
purchase order submitted by the applicant’s company, upheld his
request. The operative part of the court’s decision stated that
company L. should pay the debt to the applicant’s company and
that, if not paid, this claim should be enforced.
- Company
L. lodged an objection. It argued that the purchase order to which
the applicant’s company referred had not been signed by it but
by another company. Following the objection, the Ljubljana Local
Court, on 9 December 1996, set aside its enforcement decision
and the case was transferred to the Ljubljana District Court to
decide on the dispute.
- Further
to the Ljubljana Local Court’s decision of 9 December 1996, the
proceedings, which were governed by legislation concerning commercial
disputes, were conducted before the Ljubljana District Court. The
latter held three hearings, the first one on 16 February 2000. On
20 April 2000 the court upheld the applicant’s company’s
claim for SIT 523,250 and rejected the remainder finding that it
had already been paid. The judgment was served on the applicant’s
company on 29 August 2000.
- Following
an appeal by company L., the judgment was quashed on 19 September
2002. Subsequently, the Ljubljana District Court re-examined the
case, and, after holding two hearings, rejected the applicant’s
company’s claim on 28 March 2003. The judgment was served on
the applicant’s company on 8 July 2003.
- Further
to the applicant’s company’s appeal, the second judgment
was also quashed (on 20 May 2004) and the case was re-examined at a
new hearing held by the Ljubljana District Court on 22 October 2004.
On that date the court upheld the claim for the sum of SIT 523,250 in
a judgment, which was served on the applicant’s company on 28
January 2005. Company L.’s appeal was rejected by the Ljubljana
Higher Court on 16 June 2005. On that date the judgment of 22
October 2004 became final and enforceable. The Ljubljana Higher
Court’s judgment was served on the applicant’s company on
9 July 2005.
B. The enforcement of the judgment of 22 October 2004
- On
5 October 2005 the applicant’s company lodged a request for
execution of the above judgment against company L.’s monetary
assets, movable and immovable property. The applicant was twice asked
to supplement the request with the necessary documents. On 20
December 2005 the Ljubljana Local Court gave a decision allowing the
enforcement.
- On
23 February 2006 the court appointed an enforcement officer.
- On
12 May 2006 the applicant’s company asked the court to order
company L. to supply a list of its assets. On 22 May 2006 the court
issued an order in line with the applicant’s company’s
request. On 21 June 2006 company L. supplied the list.
- On
5 January 2007 the court decided that the seizure of company L.’s
immovable property should be considered in separate proceedings,
which were discontinued, presumably without success, on 11 June 2008.
Subsequently, the applicant’s company was requested to specify
which further assets could be subject to the enforcement.
- Further
to receiving a letter from company L.’s bank noting that there
were no monetary assets and no transactions on its bank account, the
court, on 25 March 2009, discontinued this aspect of the enforcement.
The applicant’s company lodged an appeal, which was rejected on
17 June 2009 by the Ljubljana Higher Court.
-
On 25 September 2009 the enforcement officer informed the court that
company L. had moved from its address, which was brought to the
applicant’s company’s attention. On 15 February 2010 the
applicant’s company informed the court of the new address.
- In
the course of the proceedings the applicant’s company twice
requested a review of alleged irregularities in the process of
execution; however, no decision appears to have been issued in reply
to these requests.
- On
13 July 2010 company L. was removed from the register of companies
following a request by the tax authorities to that effect. As a
result, the enforcement proceedings were discontinued on 21 December
2010. The applicant’s company did not request that the
enforcement be continued against potential active shareholders in
accordance with the relevant provisions of the Financial Operations,
Insolvency Proceedings and Compulsory Dissolution Act.
II. RELEVANT DOMESTIC LAW
- The Protection of the Right to Trial without Undue
Delay Act (Official Gazette nos. 49/2006 and 58/2009 – “the
2006 Act”) entered into force on 17 May 2006. On 1 January 2007
it became operational and has been implemented since that date. It
applies to parties to court proceedings, participants in proceedings
conducted under the statute regulating non-contentious procedure,
and injured parties in criminal proceedings.
- According
to the 2006 Act, a claimant may use a supervisory appeal and a motion
for deadline in order to expedite the proceedings. In addition to
these acceleratory remedies, the 2006 Act also provides for the
opportunity to obtain redress by means of a compensatory remedy,
namely by bringing a claim for compensation. With regard to a
compensatory remedy, the 2006 Act provides that two cumulative
conditions must be satisfied in order for a party to be able to lodge
a claim for compensation. Firstly, during the proceedings the
applicant must have successfully availed himself of the supervisory
appeal or have lodged a motion for a deadline, regardless of the
outcome. Secondly, the proceedings must have been terminated.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION AS REGARDS LENGTH OF PROCEEDINGS
- The
applicant complained that the domestic
contentious and enforcement proceedings had been unreasonably
lengthy. He invoked Article 6 § 1 of the Convention, which, in
so far as relevant, reads as follows:
“In the determination of his civil rights and
obligations ... everyone is entitled to a ... hearing within a
reasonable time by [a] ... tribunal ...”
A. Admissibility
1. Victim status
- The
Government objected, stating that the applicant could not be
considered as a victim of the alleged violation since he had not been
a party to the impugned proceedings. They admitted that the applicant
was the sole owner, director and representative of company Energohit
d.o.o. However, his role in the proceedings was only to represent his
company and not to act on his own behalf. The Government disagreed
with the Court’s position in Ankarcrona v. Sweden
((dec.), no. 35178/97, ECHR 2000-VI) and
maintained that a limited liability company had its own legal
personality and provided limited liability to its owners who could be
liable for its obligations only in extreme circumstances leading to
the piercing of the corporate veil. The same applied
to limited companies which were owned by one shareholder only. As a
general remark, the Government also stated that any compensation
awarded to the owner would have an effect only in his personal sphere
and would not mean anything for the company, which could
theoretically also cause detriment to the company’s creditors.
One could not therefore say that there was no potential conflict of
interest between a limited liability company and its only
shareholder. While the Court’s position in Ankarcrona
v. Sweden could perhaps be acceptable in respect of unlimited
companies, it could not be accepted in respect of companies with
limited liability for the owners.
- The
applicant argued that the owners of limited liability companies were
commonly liable with their personal assets for the company’s
debts, which was even demonstrated by his case in which the defendant
company ceased to exist and the enforcement could be continued
directly against its shareholders. The applicant further maintained
that he was the director, a representative with unlimited authority,
and the sole owner of the company in question. The company’s
interests were identical to his own.
- The
Court reiterates that the concept of “victim” under
Article 34 of the Convention must be interpreted autonomously and
irrespective of domestic concepts such as those concerning an
interest or capacity to act. There must, however, be a sufficiently
direct link between the applicant and the harm which he considers he
has sustained on account of the alleged violation (Gorraiz
Lizarraga and Others v. Spain, no. 62543/00, § 35, ECHR
2004 III). The Court further reiterates that where the acts or
omissions complained of affect a company, the application should in
principle be brought by that company. Disregarding a company’s
legal personality as regards the question of being a “victim”
will be justified only in exceptional circumstances (see, among
others, Agrotexim and Others v. Greece, 24 October 1995,
§ 66, Series A no. 330 A). However, the sole owner of a
company can claim to be a “victim” within the meaning of
Article 34 of the Convention in so far as the impugned measures taken
in respect of his company are concerned, because in the case of a
sole owner there is no risk of differences of opinion among
shareholders or between shareholders and a board of directors as to
the reality of infringement of Convention rights or to the most
appropriate way of reacting to such an infringement (see
Ankarcrona, cited above; Nosov v. Russia (dec)
no. 30877/02, 20 October 2005; and Khamidov v. Russia,
no. 72118/01, §§ 119-126, ECHR 2007 XII
(extracts)).
- Turning
to the present case, the Court observes that Energohit -limited
liability company was the party to the impugned proceedings. Yet, the
applicant lodged the application in his own name alleging that it was
him who was a victim of the alleged unreasonable length of
proceedings. The Court notes that while the applicant did not claim
that there were any obstacles for the company to apply to the Court,
it is also not in dispute between the parties that the applicant was
the sole owner and the director of the company. Having regard to the
case-law on the issue, which also concerns companies with limited
liability (see paragraph 25 above), and since
the Government failed to establish that in the present case there
existed competing interests between the applicant on the one hand and
any other person or entity on the other (see, by contrast, Veselá
and Loyka v. Slovakia (dec.), no. 54811/00, 13 December
2005), the Court concludes that the applicant could reasonably claim
to be a victim within the meaning of Article 34 of the Convention. It
therefore rejects this objection of the Government.
2. Exhaustion of domestic remedies
- The
Government further argued that the applicant’s company failed
to exhaust domestic remedies in respect of the above complaint. They
argued that a distinction should be drawn between the proceedings
that ended on 9 July 2005, in respect of which the applicant’s
company could have used remedies which had been available to it prior
to the 2006 Act, and the subsequent enforcement proceedings which
were still ongoing and in respect of which the applicant’s
company had at its disposal remedies provided by the 2006 Act. The
Government further submitted that the second set of proceedings had
been suspended pending the applicant’s request for
continuation.
- The
applicant argued that one could not distinguish between the two sets
of the proceedings as they concerned the same issue.
- The
Court reiterates that it may only deal with a matter after all
domestic remedies have been exhausted. It further notes that while
the proceedings concerning the enforcement of the judgment of 22
October 2004 may be regarded as a continuation of the previous
contentious proceedings, they nevertheless represent a distinct set
of proceedings for the purpose of remedies available in respect of
complaints of undue delay. The Court notes in this connection that it
has previously assessed a requirement of exhaustion of domestic
remedies in cases against Slovenia by distinguishing between
different stages or sets of proceedings (see Robert Lesjak v.
Slovenia, no. 33946/03, §§ 40-53, 21 July 2009; Blekić
v. Slovenia (dec.), no. 14610/02, §§
72-85 7, July 2009; and Sirc v. Slovenia,
no. 44580/98, §§ 166-178, 8 April 2008). It
moreover observes that applicants must comply with the applicable
rules and procedures of domestic law when making use of domestic
remedies (see Ben Salah, Araqui and Dhaime v. Spain (dec.),
no. 45023/98, ECHR 2000-IV).
- The
Court takes note of the Government’s argument that the 2006 Act
applied only to the enforcement proceedings which were instituted on
5 October 2005 and have not yet been terminated (see paragraphs
12-19 above). They
acknowledged that the 2006 Act had not applied to the earlier
contentious proceedings which ended on 9 July 2005 with the service
of the Ljubljana Higher Court’s judgment of 16 June 2005 (see
paragraphs 7-11 above),
that is, prior to the entry into force of the 2006 Act. As regards
these proceedings, the Court notes that the only remedies available
to the applicant’s company were therefore those that were found
to be ineffective in its judgment in Lukenda v. Slovenia (no.
23032/02, §§47-71, ECHR 2005 X). Since the
Government have not submitted any arguments which would require it to
distinguish the situation as regards the proceedings ending on 9 July
2005 from the one concerned in Lukenda judgment, the Court
concludes that this part of the application cannot be rejected for
non-exhaustion of domestic remedies.
- The
Court notes, on the other hand, that as regards the enforcement
proceedings which began on 5 October 2005 and has continued after the
2006 Act’s entry into force (see paragraphs 12-19
above), the applicant’s company failed to exhaust the remedies
available to it under that Act. Referring to its findings in Korenjak
v. Slovenia ((dec.) no. 463/03, §§ 62 71, 15
May 2007) and Zunič v. Slovenia ((dec.) no.
24342/04, §§ 43 55, 18 October 2007), the Court
notes that the applicant’s company should have availed itself
of the acceleratory remedies. In addition, provided that it uses the
acceleratory remedies, it can also claim compensation for
non-pecuniary damage after the termination of the proceedings, which
are currently awaiting the applicant’s action. In the absence
of any plausible arguments as to why these remedies would be
ineffective with respect to the enforcement proceedings, the Court
finds that this part of the application must be rejected for
non-exhaustion of domestic remedies in accordance with Article 35 §§
1 and 4 of the Convention.
3. Conclusion
- The
Court notes that the complaint concerning the contentious proceedings
is not manifestly ill-founded within the meaning of Article 35 § 3
(a) of the Convention. It further notes that it is not inadmissible
on any other grounds. It must therefore be declared admissible.
B. Merits
- The
applicant argued that the contentious
proceedings had lasted an unreasonably long time. The fact that the
decision to allow enforcement was issued extremely quickly showed
that the proceedings did not concern a complex issue. The applicant
also stressed that the court had needed three years to schedule the
first hearing in the case and that proceedings concerning enforcement
requests should by their nature have been dealt with swiftly.
- The
Government did not dispute the applicant’s argument that there
had been an unreasonable delay in the proceedings in question.
However, they argued that, apart from the initial delay, the court
was active in the case.
- The
Court reiterates that the reasonableness of the length of proceedings
must be assessed in the light of the circumstances of the case and
with reference to the following criteria: the complexity of the case,
the conduct of the applicant and the relevant authorities and what
was at stake for the applicant in the dispute (see, among other
authorities, Frydlender v. France [GC], no. 30979/96, §
43, ECHR 2000-VII).
-
The Court notes that the relevant period started to run on 25 October
1996, when the applicant’s company instituted enforcement
proceedings with the Ljubljana Local Court (see paragraph 7
above). The case was soon transferred to the Ljubljana District Court
and the proceedings, which were of contentious nature, ended on 9
July 2005 when the Ljubljana Higher Court’s judgment of 16 June
2005 was served on the applicant’s company (see paragraph 11
above). The Court observes that within the aforementioned period the
contentious proceedings took eight years and seven months at two
levels of jurisdiction. It further observes that there was an initial
delay of more than three years before the first hearing was held (see
paragraph 9 above) in the proceedings. Further
delays occurred owing to three remittals of the case on appeal, for
which the applicant’s company cannot be blamed (see
Wierciszewska v. Poland, no. 41431/98, § 46, 25 November
2003, and DeZelak v. Slovenia, no. 1438/02, § 25, 6 April
2006).
- The
foregoing considerations are sufficient to enable the Court to
conclude that in the instant case the length of the proceedings
failed to meet the “reasonable-time” requirement.
There
has accordingly been a breach of Article 6 § 1 of the
Convention.
II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
-
Under Article 6 § 1 the applicant also complained that the
domestic proceedings had been unfair, alleging, in particular, that
the courts wrongly assessed the evidence. Disagreeing with the
courts’ decisions, he also complained that the courts had been
biased.
- Under
Article 7 of the Convention the applicant complained that the
domestic courts had not followed domestic legislation.
- Under
Article 10 of the Convention, the applicant complained that his right
to freedom of expression had been violated as he had not been
appointed a member of the executive board of a large Slovenian
company as a result of his public criticism of the sale by the
Government of this company to a certain multinational company.
- Under
Article 13 of the Convention, the applicant complained that he had
been unable to become a member of the above-mentioned executive board
without any formal explanation being given to him.
- Lastly,
under Article 14 of the Convention, the applicant complained that he
had been discriminated against by the State and its agents because of
his criticism of foreign investment in Slovenia. In this respect he
also complained that a mistake had been made in his academic title
when his name was put on the list of candidates during the 2004
elections.
- As
regards the above complaints, the applicant maintained that he had no
intention of availing himself of any remedies as the courts in any
event did not respect the law.
- Having
examined the above complaints, the Court finds, in the light of all
the materials in its possession, and in so far as the matters
complained of are within its competence, that they do not disclose
any appearance of a violation of the Articles relied on by the
applicants. It follows that this part of the application is
manifestly ill-founded and must be rejected in accordance with
Article 35 §§ 3 (a) and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- The
applicant claimed 56,000 euros (EUR) in respect
of pecuniary damage and EUR 150,000 for non-pecuniary damage. As
regards the latter the applicant submitted that it concerned his
distress as well as damage incurred in respect of the deterioration
of his quality of life in the period after October 2005.
- The
Government contested the claim.
- The
Court does not discern any causal link between the violation found
and the pecuniary damage alleged; it therefore rejects this claim. On
the other hand, it awards the applicant EUR
4,000 in respect of non-pecuniary damage.
B. Costs and expenses
- The
applicant did not specify any claim for costs
and expenses but only submitted that he would claim reimbursement of
expenses for his trip to Strasbourg if there was to be a hearing in
his case. The Court therefore makes no award in this connection.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the complaint concerning the length of
the contentious proceedings which ended on 9 July 2005 admissible and
the remainder of the application inadmissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention on account of the length of the
aforementioned proceedings;
- Holds
(a) that
the respondent State is to pay the applicant,
within three months from the date on which the judgment
becomes final in accordance with Article 44 § 2 of the
Convention, EUR 4,000 (four thousand euros), plus any tax that
may be chargeable, in respect of non-pecuniary damage;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amount at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant’s
claim for just satisfaction.
Done in English, and notified in writing on 15 December 2011,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia
Westerdiek Dean Spielmann
Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74
§ 2 of the Rules of Court, the separate opinion of Judge Fura is
annexed to this judgment.
D.S.
C.W.
CONCURRING OPINION OF JUDGE FURA
The
Chamber reached the conclusion that there had been a violation of
Article 6 of the Convention in this case because of the excessive
length of the proceedings, rejecting the Government’s argument
that the applicant had not been a victim. In so doing the chamber
applied the established case-law of the Court where it has been found
that the sole owner of a limited company is entitled to bring the
application in his own name, even if no exceptional reasons
preventing the company to bring the case are alleged to exist (see
the case-law cited in paragraphs 25 and 26 of the judgment and
Gubiyev v. Russia, no. 29398/03, paragraphs 53-54, 19 July
2011, not final). Even though I accept that the case-law exists I am
not sure it is a good line of case-law. Maybe it ought to be
reconsidered.
I do
not think it is a proper order that an applicant can bring a case
before the Court without having been a party to the proceedings on
the domestic level, except for in exceptional cases. Allowing this
would run counter to the principle of subsidiarity, in my opinion and
in theory you could have two parallel complaints filed.
In
the case at hand the company of which the applicant was the sole
owner was a party to the domestic proceedings the Court found to be
excessively long. I fail to see why the company could not bring the
complaint before our Court since it is not alleged that it was
incapable of doing so because of for example liquidation or
bankruptcy. I also fail to see why an individual who creates a
limited company in order, amongst other things, to avoid personal
liability for debts, should not be required to respect the
formalities attaching to that creation – for example that it is
the company which acts in respect of legal proceedings.
I
have a lot of sympathy for the argument developed by the Government
referred to in paragraph 23 of the judgment stating that “any
compensation awarded to the owner would have an effect only in his
personal sphere and would not mean anything for the company, which
would theoretically also cause detriment to the company’s
creditors. While the Court’s position in Ankarcrona v.
Sweden could perhaps be acceptable in respect of unlimited
companies, it could not be accepted in respect of companies with
limited liability for the owners.”
So
the main rule ought to be that there is no piercing of the corporate
veil, unless there are good reasons. This is where I find the
application of the said case-law to the circumstances of this case
problematic. The applicant lodged the complaint in his own name
claiming to be the victim of a violation without even alleging that
there was any difficulty let alone any obstacle for the company to
apply to the Court. While accepting that there can be cases in which
there exists a conflict of interest between the company as such and
the owner and where there would be a necessity to recognize the
standing of the owner as an applicant in his own right, separate from
that of the company, I fail to see the need for it in a case like the
one before us. For me it is simply not enough that there are no
competing interests and/or differences of opinion between the owner
and the company, in addition there has to be a need to acknowledge
victim status to the owner. I am not convinced that there is such a
need in this case.
