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FIFTH
SECTION
CASE OF
MINARIK v. THE CZECH REPUBLIC
(Application
no. 46677/06)
JUDGMENT
STRASBOURG
10
February 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 Minarik v. the
Czech Republic,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Peer Lorenzen, President,
Karel
Jungwiert,
Mark Villiger,
Isabelle
Berro-Lefèvre,
Zdravka Kalaydjieva,
Angelika
Nußberger,
Julia Laffranque, judges,
and
Claudia Westerdiek, Section
Registrar,
Having
deliberated in private on 18 January 2011,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 46677/06) against the Czech
Republic lodged with the Court under Article 34 of the Convention for
the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a German national, Ms Susanne Minarik (“the
applicant”), on 14 November 2006.
- The
applicant was represented by Mr P. Zima, a lawyer practising in
Prague. The Czech Government (“the Government”) were
represented by their Agent, Mr V. A. Schorm, of the Ministry of
Justice.
- The
applicant alleged, in particular, a violation of her right of access
to court under Article 6 of the Convention.
- On
25 November 2009 the President of the Fifth Section decided to give
notice of the application to the Government. It was also decided to
examine the merits of the application at the same time as its
admissibility (Article 29 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant was born in 1975 and lives in Willstät, Germany.
- The
applicant was a minority shareholder in Sokolovská uhelná,
a.s. (“the company”), a joint-stock company incorporated
under Czech law.
- On
4 May 2005 the general meeting of the company adopted, by a vote
of the main shareholder, a resolution on the winding up of the
company and the transfer of all its assets to the main shareholder.
- On
25 June 2005 the applicant lodged with the Plzeň Regional Court
(krajský soud) an action to have the resolution set
aside, asserting that it had been adopted contrary to applicable law,
bilateral investment treaties and her property rights. She also
asserted that the law on which the resolution had been based was
itself unconstitutional. At the same time, she informed the court
administering the Companies Register (obchodní rejstřík)
about her action and asked it not to allow the entry in the register
of the winding up of the company and the transfer of all its assets
to the main shareholder until the legality of the resolution had been
decided by the Regional Court. These set-aside proceedings are still
pending.
- The
applicant received cash compensation based on the value of her shares
as at 31 December 2001. The amount of compensation was based on an
evaluation made by an expert appointed by a court on the proposal of
the main shareholder.
- On
30 June 2005 the court in charge of the Companies Register approved
the registration of the transfer and the deletion of the company from
the Companies Register. No hearing was held prior to that decision,
which was not served on the applicant as she did not have standing to
participate in the proceedings.
- On
11 July 2005 the Prague High Court (vrchní soud)
rejected the applicant’s appeal contesting the
above-mentioned decision. It ruled that since the applicant did not
have standing to take part in the impugned proceedings, she was not
entitled to appeal their outcome.
- On
11 May 2006 the Constitutional Court (Ústavní soud)
rejected the applicant’s constitutional appeal, in which she
claimed an impairment of her right to a fair trial and the right to
property in relation to the companies register proceedings on the
basis that (i) she had not been allowed to be a party to those
proceedings as a result of the application of Article 220h(4) of the
Commercial Code and (ii) that this had created an irreversible
situation. The Constitutional Court rejected the appeal as manifestly
ill-founded, holding that the Commercial Code had not impaired her
right of access to court because, apart from the companies register
proceedings, there were other proceedings available to the applicant
in which she could have asserted her rights. It further held that the
applicant’s claims that such other proceedings would not
guarantee adequate protection of her rights could not be reviewed,
because the present appeal had been directed only against the
decisions in the companies register proceedings.
II. RELEVANT DOMESTIC LAW AND PRACTICE
- The
relevant domestic law and practice are set out in the Court’s
judgment Kohlhofer and Minarik v. the Czech Republic, nos.
32921/03, 28464/04 and 5344/06, §§
40-70, 15 October 2009.
- In
decision no. Pl. ÚS. 51/03 of 22 February 2005 (referred to at
paragraph 36 of the above-mentioned Kohlhofer and Minarik
judgment), the Constitutional Court rejected a request of the Ostrava
Regional Court to strike down several provisions of the Commercial
Code regulating the winding up of a company. The Regional Court had
determined that those provisions had been applicable to proceedings
before it instituted by minority shareholders seeking to set aside a
resolution on the winding up of a company and the transfer of all its
assets to the main shareholder. The Constitutional Court held as
follows:
“[Under the provisions on the concrete review of
the constitutionality of any law,] the Constitutional Court can only
decide on the constitutionality of a law that is applicable to the
proceedings.
...
According to Section 131(3)(c) of the Commercial Code, a
court will reject an action to set aside a general meeting resolution
if the decision to allow the entry [in the commercial register] of
the transfer of all company’s assets to the main shareholder
has become final.
As mentioned above, the Ostrava Regional Court stayed
the proceedings on 14 January 2003, that is, two months after
the decision to allow the entry of the transfer of all of the
company’s assets to the main shareholder became final. If the
Ostrava Regional Court sent its request to strike down the provisions
of the Commercial Code only in December 2003, it is obvious that it
did so at a time when it could not have decided on the merits of the
action because of the [effect of] Section 131(3)(c) of the
Commercial Code. In other words, it could not have used the
provisions whose constitutionality it disputes. Thus, these
provisions are not “a law that is applicable to the
proceedings.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicant complained that the Commercial Code had enabled the
transfer of her property – her minority shareholding –
against her will without any effective remedy against an abuse of
power by the majority shareholder.
She
relied on 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 ...”
- The Government disputed the applicant’s
assertions.
A. Admissibility
- The
Government maintained that the application had been inadmissible for
non-exhaustion of domestic remedies for being premature. They argued
that only the proceedings before the courts administering the
commercial register had ended, whilst the other actions – to
set aside the general meeting resolution and to determine the value
of the compensation – were still pending. They maintained that
the provisions of law which had hindered the applicant from seeking a
review of the lawfulness of the matter (Articles 131(3)(c) and
220h(3) and (4) of the Commercial Code) are likely to be
reinterpreted in view of the decision of the Court in Kohlhofer
and Minarik v. the Czech Republic, cited above.
- The
applicant disputed that objection, asserting that she had no prospect
of success in the pending proceedings. She maintained that the Czech
courts do not consider the Court’s decisions as binding
precedents. She added that, in any case, the company had been
dissolved and that setting aside the winding-up resolution was highly
unlikely for both practical and legal reasons, because the rights of
third parties acquired in good faith are also protected by the
Commercial Code.
- The
Court reiterates that the rule of exhaustion of domestic remedies
referred to in Article 35 § 1 of the Convention is based on the
assumption that the domestic system provides an effective remedy in
respect of the alleged breach. It is for the Government claiming
non-exhaustion to satisfy the Court that an effective remedy was
available in theory and in practice at the relevant time: that is to
say, that the remedy was accessible, capable of providing redress in
respect of the applicant’s complaints and offered reasonable
prospects of success (V. v. the United Kingdom [GC],
no. 24888/94, § 57, ECHR 1999-IX). Where a suggested remedy
did not offer reasonable prospects of success, for example in the
light of settled domestic case law, the fact that the applicant did
not use it is not a bar to admissibility (Radio France and Others
v. France (dec.), no. 53984/00, § 34, ECHR
2003-X (extracts)). Moreover, an applicant does not need to exercise
remedies which, although theoretically of a nature as to constitute
a remedy, do not in reality offer any chance of redressing the
alleged breach (Yoyler v. Turkey (dec.), no. 26973/95, 13
January 1997). In addition, particular attention should be paid to,
inter alia, the speediness of the remedial action itself, it
not being excluded that the adequate nature of the remedy can be
undermined by its excessive duration (Doran v. Ireland,
no. 50389/99, § 57, ECHR 2003 X (extracts)). In
the Czech context, the Court has held that applicants who wished to
challenge the lawfulness of a winding-up resolution were not required
to pursue, or await, constitutional proceedings on a set-aside
decision (Kohlhofer and Minarik v. the Czech Republic,
cited above, § 79).
- The
domestic situation has not changed since the Kohlhofer and Minarik
judgment was adopted. The Government did not cite any decision which
would signal a change in the domestic case-law, and the relevant
legislation has not been amended. In this context, the Court notes
that the applicant unsuccessfully challenged the decision to delete
the company from the Companies Register all the way up to the
Constitutional Court.
- The Court notes that the Government stressed that the
outcome of the set-aside proceedings in the instant case cannot be
anticipated, especially in view of the Court’s decision in the
above-mentioned case of Kohlhofer and Minarik v. the Czech
Republic, which the domestic courts might follow. The
Court agrees that this possibility cannot be ruled out and in general
a domestic interpretation of rights in line with the Court’s
case law must be welcomed. Nevertheless, the Court considers
that in view of the unchanged legislation on this point and the
established case-law of the domestic courts, such a change in
interpretation remains to a large extent speculative.
- Thus, independently of the problems which would be
created for third parties if the winding-up resolution were to be set
aside at some date in the future, the Court considers that the
applicant was not required to await the outcome of the set-aside
proceedings before lodging an application with the Court.
Consequently, the Government’s objection in this respect must
be dismissed.
- As
for the outcome of the compensation proceedings which, according to
the Government, the applicant should have awaited, the Court
considers, as in the case of Kohlhofer and Minarek (cited
above, para. 80) that the question of this alternative remedy is
inseparably linked to the Government’s plea on the merits that
such a remedy justified the limitation on the applicant’s
access to court in the set-aside proceedings. The Court therefore
joins this legal question to its examination on the merits of the
application.
- The
Court notes that this complaint 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 maintained that Czech legislation had made it impossible
for her to challenge the winding-up resolution before a court. The
applicant considered that her application had the same
characteristics as that of Kohlhofer and Minarik v. the Czech
Republic, cited above, where the Court found a violation
of Article 6 of the Convention.
- The
Government took the view that in several aspects the present case
differs from Kohlhofer and Minarik v. the Czech Republic, cited
above, particularly because of the prospect of significant change in
domestic case-law and legislation following the Court’s
judgment in that case. The Government further invited the Court to
reconsider its conclusions in the Kohlhofer and Minarik judgment,
finding the dissenting opinion in that case to be preferable. They
maintained that the restrictions on the applicant’s access to
court had been proportionate and that the applicant’s shares
had constituted financial property rights which could be fully
protected in the pending compensation proceedings.
- The
Court recalls that it has already found a violation of Article 6 §
1 of the Convention in cases raising the same issues as the present
application (see Kohlhofer and Minarik v. the Czech Republic,
cited above), where applicants had no access to court to contest
general meeting resolutions which had deprived them of their shares.
- The
Court firstly notes that the Government’s argument concerning
the prospect of a change in domestic case-law and the fact that the
set-aside proceedings are still pending before the first-instance
court has been examined above and rejected (§ 21).
- The
Court cannot agree with the Government’s argument that the
applicant’s rights connected with the shares are primarily
property of a nature which can be sufficiently protected in the
compensation proceedings: the applicant however seeks access to the
courts regarding the legality of the act of deprivation of her
property – that is, of the shares themselves. It is for
shareholders as property owners to decide themselves what other use,
if any, apart from monetary value, they find in their property.
Therefore the Court is unable to authoritatively determine that the
applicant’s shares represented only a monetary value or to
speculate as to what other use they were to her. It suffices to note
that by law shareholders enjoy many rights of a non-pecuniary nature
which they might find useful for whatever reason, such as the right
to be invited to and to attend
general meetings, or the right to be acquainted with the contents of
annual, extraordinary, interim or consolidated financial statements
and reports, and so on.
- For
these reasons, the compensation proceedings cannot be considered as
sufficiently protective of the applicant’s claim that she had
been illegally deprived of her ownership of the shares, that is, her
personal property, which clearly engages the applicant’s civil
rights under Article 6 of the Convention.
- Having
examined all the material submitted to it, the Court considers that
there is no new fact or convincing argument capable of persuading it
to reach a different conclusion in the present case than in Kohlhofer
and Minarik v. the Czech Republic, cited above. Accordingly, the
Court dismisses the Government’s objection of non-exhaustion of
domestic remedies in this respect and finds that there has been a
violation of Article 6 § 1 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO
THE CONVENTION
- The
applicant complained that the resolution on the winding up of the
company had been tantamount to an expropriation of shares of the
minority shareholders and thus that the second sentence of Article 1
of Protocol No. 1 to the Convention is applicable. She maintained
that that provision had been violated because the interference had
not been lawful, had been contrary to general principles of
international law, that there had been no public interest in the
action and that it had not been proportionate.
Article
1 of Protocol No. 1 reads as follows:
“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 maintained that the applicant’s complaints under
this provision of the Convention were inadmissible.
- The
Court observes that the proceedings for compensation, crucial in the
light of Article 1 of Protocol No. 1, are still pending.
- It
follows that this part of the application is premature within the
meaning of Article 35 § 1 of the Convention (see Kohlhofer
and Minarik v. the Czech Republic, cited above, § 112)
and must therefore be declared inadmissible pursuant to Article 35 §
4 of the Convention.
III. APPLICATION OF ARTICLE 13 OF THE CONVENTION
- The
applicant complained that she had not had at her disposal any remedy
against the interference with her property rights which forms the
subject of her application. She relied on Article 13 of the
Convention, which reads as follows:
“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.”
- The
Court notes that this complaint is linked to that made by the
applicant under Article 1 of Protocol No. 1, which has been declared
inadmissible as premature.
- It
follows that this complaint is manifestly ill-founded pursuant to
Article 35 § 3 (a) of the Convention and must therefore be
declared inadmissible in accordance with Article 35 § 4 of the
Convention.
IV. 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.”
- The
applicant claimed 2,500 euros (EUR) for costs and expenses incurred
before the Court.
- The
Government did not consider this amount to be unreasonable or
unsupported by documentation.
- According
to the Court’s case-law, an applicant is entitled to the
reimbursement of costs and expenses only in so far as it has been
shown that these have been actually and necessarily incurred and are
reasonable as to quantum. In the present case, regard being had to
the documents in its possession and to the above criteria, the Court
considers it reasonable to award the sum of EUR 2,500 for the
applicant’s costs and expenses incurred in the proceedings
before the Court.
- The
Court considers it appropriate that 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
- Declares the complaint concerning Article 6 §
1 admissible and the remainder of the application inadmissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention;
- 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 2,500 (two thousand
five hundred euros), plus any tax that may be chargeable to the
applicant, in respect of costs and expenses, to be converted into
Czech korunas at the rate applicable at the date of settlement;
(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.
Done in English, and notified in writing on 10 February 2011,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
