IMOBILIJE MARKETING D.O.O. and Ivan DEBELIC v Croatia - 23060/07 [2011] ECHR 794 (3 May 2011)

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Application no. 23060/07
by IMOBILIJE MARKETING D.O.O. and Ivan DEBELIĆ
against Croatia

The European Court of Human Rights (First Section), sitting on 3 May 2011 as a Chamber composed of:

Anatoly Kovler, President,
Nina Vajić,
Elisabeth Steiner,
Khanlar Hajiyev,
George Nicolaou,
Mirjana Lazarova Trajkovska,
Julia Laffranque, judges,
and Søren Nielsen, Section Registrar,

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

The first applicant, Imobilije Marketing d.o.o., is a limited liability company incorporated under Croatian law, which has its registered office in Rab. The second applicant, Mr Ivan Debelić, is a Croatian national who was born in 1939 and lives in Rab. He is an advocate practising in Rab. The first applicant was represented before the Court by the second applicant. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. StaZnik.

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

On 14 June 1999 the applicants concluded a lease agreement with Mrs K.K. whereby they as lessors leased their business premises to her for a period of five years (from 1 April 1999 until 1 April 2004). In return, K.K. as a lessee was obliged to pay them in Croatian kunas (HRK) the counter value of 10,000 German marks (DEM) per year. For the first year K.K. agreed to pay the applicants in kunas the counter value of: (a) DEM 2,000 upon the conclusion of the agreement, (b) DEM 1,000 by 20 July 1999; and (c) DEM 7,000 by 30 August 1999. For every subsequent year K.K. agreed to pay in kunas the counter value of: (a) DEM 3,000 by 1 April of the current year for the following year, and (b) DEM 7,000 by the end of the current year for that year.

The agreement was concluded in the form of a notarial deed (javnobiljeZnička isprava) and contained an enforcement clause entitling the applicants to directly institute enforcement proceedings against K.K. if she failed to pay the annual rent.

Given that by 20 July 1999 K.K. had paid only the counter value of DEM 1,500 of the amount due by that date, on 26 July 1999 the applicants instituted enforcement proceedings before the Rab Municipal Court (Općinski sud u Rabu) with a view to collecting the unpaid amounts. By 26 October 2009 the applicants had instituted another ten sets of enforcement proceedings before the same court with a view to satisfying their claims arising from the above-mentioned lease agreement. However, even though the court had frozen K.K.’s bank account already on 1 September 1999, the applicants were unable to satisfy any of their claims owing to the lack of funds on that account. It would appear that eight out of the eleven enforcement proceedings are still pending,

Meanwhile, on 23 August 1999 the applicants instituted non-contentious proceedings before the Rab Municipal Court asking the court to issue a preliminary measure (prethodna mjera) – a type of security measure (mjera osiguranja) – freezing K.K.’s bank account for the sum corresponding in kunas to the counter value of DEM 47,000, that is, the remaining amount of rent that would become due before the expiry of the lease agreement on 1 April 2004. They argued that K.K.’s behaviour, in particular her failure to pay the full amount of the rent due by 20 July 1999, suggested that it was likely that she would not pay the future instalments of the rent as they become due.

Following an appeal by the applicants, on 15 October 2003 the Rijeka County Court (Zupanijski sud u Rijeci) quashed the first-instance decision and remitted the case.

In the resumed proceedings, on 4 August 2006 the Rab Municipal Court again dismissed the applicants’ request.

Following an appeal by the applicants, on 23 October 2006 the Rijeka County Court again quashed the first-instance decision and remitted the case.

On 24 September 2007 the Rab Municipal Court dismissed the applicants’ request for a third time. The court found the applicants’ request superfluous because their claim had been sufficiently secured. In particular, the court found that the applicants had frozen K.K.’s bank account already on 1 September 1999 in the above-mentioned enforcement proceedings.

On 28 May 2009 the Rijeka County Court dismissed the applicants’ appeal and upheld the first-instance decision endorsing the reasons contained therein. It added that it was not allowed to issue a preliminary measure after the claim to be secured had become enforceable.

On 1 October 2009 the applicants lodged an appeal on points of law (revizija) against the second-instance decision. It would appear that the case is currently pending before the Supreme Court (Vrhovni sud Republike Hrvatske).

3. The proceedings following the applicants’ request for protection of the right to a hearing within a reasonable time

On 3 May 2007 the applicants lodged a request with the Rijeka County Court for protection of the right to a hearing within a reasonable time in respect of the above non-contentious proceedings.

On 22 September 2009 the Rijeka County Court found a violation of the applicants’ right to a hearing within a reasonable time and awarded them each HRK 5,000 in compensation.

The relevant part of the Courts Act (Zakon o sudovima, Official Gazette nos. 150/2005, 16/2007 and 113/2008), which entered into force on 29 December 2005, reads as follows:

“(1) A party to court proceedings who considers that the competent court failed to decide within a reasonable time on his or her rights or obligations or a criminal charge against him or her, may lodge a request for the protection of the right to a hearing within a reasonable time with the immediately higher court.

(2) If the request concerns proceedings pending before the High Commercial Court of the Republic of Croatia, the High Court for Administrative Offences of the Republic of Croatia or the Administrative Court of the Republic of Croatia, the request shall be decided by the Supreme Court of the Republic of Croatia.

(3) The proceedings for deciding the request referred to in paragraph 1 of this section shall be urgent. The rules of non-contentious procedure shall apply mutatis mutandis in those proceedings and, in principle, no hearing shall be held.

(1) If the court referred to in section 27 of this Act finds the request well founded, it shall set a time-limit within which the court before which the proceedings are pending must decide on a right or obligation of, or a criminal charge against, the person who lodged the request, and shall award him or her appropriate compensation for the violation of his or her right to a hearing within a reasonable time.

(2) The compensation shall be paid out of the State budget within three months from the date the party’s request for payment is lodged.

(3) An appeal, to be lodged within fifteen days with the Supreme Court, lies against a decision on the request for the protection of the right to a hearing within a reasonable time. No appeal lies against the Supreme Court’s decision but one may lodge a constitutional complaint.”

The Enforcement Act (Ovršni zakon, Official Gazette of the Republic of Croatia, nos. 57/1996, 29/1999, 42/2000, 173/2003, 194/2003, 151/2004, 88/2005, 121/2005 and 6720/08) regulates both enforcement proceedings (ovršni postupak) in civil law matters and security proceedings (proceedings for the issuance of interim measures, postupak osiguranja).

The Act provides for six types of security (interim) measure (mjere osiguranja), two of which are voluntary and four of which are compulsory.

The two voluntary measures are: (a) judicial and notarial pledge security on the basis of the agreement of the parties (sudsko i javnobiljeZničko zaloZnopravno osiguranje traZbina na temelju sporazuma stranaka) and (b) judicial and notarial (fiduciary) security by transferring ownership of a property or by transferring a right (sudsko i javnobiljeZničko (fiducijarno) osiguranje prijenosom vlasništva na stvari i prijenosom prava).

The four compulsory measures are: (a) security by compulsory mortgaging of an immovable property (osiguranje zasnivanjem zaloZnog prava na nekretnini), (b) security by anticipatory enforcement (osiguranje prethodnom ovrhom), (c) security by preliminary measures (osiguranje prethodnim mjerama), and (d) provisional measures (privremene mjere).

The relevant provisions of the Enforcement Act regulating preliminary measures provide as follows:

“(1) A preliminary measure shall be imposed with a view to securing a monetary claim on the basis of:

1. a decision of a court or an administrative authority that has not [yet] become enforceable,

2. a settlement concluded before a court or an administrative authority, if the claim determined therein has not [yet] become due,

(2) The court shall on the basis of the documents referred to in paragraph 1 of this section impose a preliminary measure if the requesting party [i.e. the creditor] demonstrates that without such a security [measure] there is a probable risk that the satisfaction of the claim [i.e. the collection of the debt] would be frustrated or seriously hindered.”

3. A prohibition on the bank to pay the opposing party [i.e. the debtor] or a third party, at the opposing party’s order, an amount from his or her account for which the preliminary measure has been imposed.

(3) By the implementation of the preliminary measure, the requesting party [i.e. the creditor] shall acquire the right of pledge on the object of the security [measure].

(4) The sum of money deposited by the opposing party in the bank, on which the prohibition of payment has been imposed, may not be transferred from that account until the prohibition is in force, except to satisfy the secured claim.”

“A period for which a preliminary measure is imposed may not be longer than fifteen days after the conditions for enforcement have been met.”

Croatian legal scholars classify security (interim) measures (mjere osiguranja) into three main categories according to their purpose: (a) protective (conserving) measures, (b) regulatory measures, and (c) anticipatory measures.

Protective measures are those measures whose purpose is to create conditions for the future satisfaction of a creditor’s claim. Judicial and notarial pledge security, judicial and notarial fiduciary security, security by compulsory mortgaging of an immovable property, all preliminary measures and the majority of provisional measures are considered as protective measures.

Regulatory measures are those measures whose purpose is to temporarily regulate relations between the parties. Certain provisional measures are considered regulatory measures.

Anticipatory measures are those measures whose purpose is to satisfy a creditor’s claim in advance. The anticipatory enforcement and certain provisional measures are considered anticipatory measures.

In terms of their effects, Croatian legal scholars classify security (interim) measures into three main categories: (a) those that lead to (complete or partial) satisfaction of creditors’ claims (the anticipatory enforcement and certain provisional measures), and (b) those that create certain rights in rem (judicial and notarial pledge security, judicial and notarial fiduciary security, security by compulsory mortgaging of an immovable property and all preliminary measures), and (c) those that create certain quasi rights in rem or which de facto remove or reduce the risk of a future impossibility to satisfy a creditor’s claim (all provisional measures).

The applicants complained that the length of the above-mentioned non-contentious proceedings for a preliminary measure had been incompatible with the “reasonable time” requirement, laid down in Article 6 § 1 of the Convention, which 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...”

The Government disputed the admissibility of this complaint on two grounds. They first argued that Article 6 § 1 of the Convention was not applicable to the proceedings in question. In the alternative, the Government contended that the applicants were not, or were no longer, victims of the violation complained of.

The Government noted that in the present case the applicants had instituted non-contentious proceedings in order to secure their monetary claim by the imposition of a preliminary measure prohibiting the bank from paying the debtor or a third person an amount of money corresponding to that claim from the debtor’s bank account.

The Government explained that under Croatian law preliminary measures were instruments intended to secure monetary claims which had not yet become enforceable. They were imposed by a court on the basis of court decisions or other documents having the same effect (in-court settlements or, as in the instant case, a notarial deed) if the requesting party demonstrated a probable risk that without that security the satisfaction of his or her claim would be frustrated or seriously hindered.

As regards the nature, subject and purpose of the preliminary measure sought by the applicants, the Government submitted that it was a preventive measure whose purpose was not to satisfy the creditor’s claim but to eliminate the risk of impeding or seriously hindering the satisfaction of that claim when it became enforceable by freezing the debtor’s bank account. Accordingly, this measure was, by its nature, primarily conserving and not regulatory. Consequently, in the non-contentious proceedings complained of the court had not determined civil rights or obligations but had only assessed whether without that security measure there was a probable risk that the satisfaction of the applicants’ claim would be frustrated or seriously hindered.

As regards the effect of the preliminary measure in question on the right at stake, the Government argued that the measure only temporarily prevented the transfer of the amount owed from the debtor’s bank account but did not lead to the satisfaction of the creditor’s claim.

In the light of the foregoing, the preliminary measure sought by the applicants could not, in the Government’s view, be considered “effectively to determine the civil right at stake” within the meaning of the Micallef test (see Micallef v. Malta [GC], no. 17056/06, § 85, 15 October 2009). Such determination had occurred in the enforcement proceedings the applicants had instituted in order to obtain compulsory execution of the notarial deed and satisfy their claim contained therein. As the imposition or non-imposition of the preliminary measure in question could not have had any influence on the outcome of those enforcement proceedings, that is, the satisfaction of the applicants’ claim, the Government concluded that the proceedings complained of did not involve a determination of “civil rights and obligations” and that, accordingly, Article 6 § 1 was not applicable to those proceedings.

If the court were to find Article 6 § 1 of the Convention to be applicable to the non-contentious proceedings in which the applicants sought the imposition of the preliminary measure, the Government argued that this complaint was nevertheless inadmissible because the applicants could not be considered victims of the violation complained of. In this connection they referred to the finding of the Rab Municipal Court in its decision of 24 September 2007, which was endorsed by the Rijeka County Court in its decision of 28 May 2009, according to which the imposition of the preliminary measure sought by the applicants had not been warranted because their claim had been sufficiently secured in the above-mentioned enforcement proceedings.

The Government further pointed out that on 22 September 2009 the Rijeka County Court had found a violation of the applicants’ right to a hearing within a reasonable time in respect of the non-contentious proceedings in question and awarded them appropriate compensation. Therefore, even if the applicants could have initially claimed to have been victims of a violation of Article 6 § 1 of the Convention on account of the excessive length of those proceedings, that violation had been remedied before the domestic authorities and the applicants had lost their victim status.

The applicants did not make any specific submissions as regards the admissibility but maintained their view that there has been a violation of Article 6 § 1 of the Convention in the present case.

The Court reiterates that Article 6 § 1 of the Convention under its “civil head” applies only to proceedings determining civil rights or obligations. It further notes that the proceedings complained of concern an interim measure and that all interim measures are not determinative of civil rights and obligations.

The Court set forth the criteria under which Article 6 § 1 of the Convention could be applicable to proceedings concerning interim measures in its judgment in the case of Micallef v. Malta (cited above, §§ 83-86):

“84. First, the right at stake in both the main and the injunction proceedings should be “civil” within the autonomous meaning of that notion under Article 6 of the Convention (see, inter alia, Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 39, Series A no. 301 B; König v. Germany, 28 June 1978, §§ 89-90, Series A no. 27; Ferrazzini v. Italy [GC], no. 44759/98, §§ 24-31, ECHR 2001-VII; and Roche v. the United Kingdom [GC], no. 32555/96, § 119, ECHR 2005 X).

85. Second, the nature of the interim measure, its object and purpose as well as its effects on the right in question should be scrutinised. Whenever an interim measure can be considered effectively to determine the civil right or obligation at stake, notwithstanding the length of time it is in force, Article 6 will be applicable.”

As regards the first criterion, the Court notes that the above-mentioned enforcement proceedings are to be considered the “main proceedings” for the purposes of the Micallef test. In those proceedings the applicants sought to recover their outstanding instalments of the rent from K.K. In the non-contentious proceedings for a preliminary measure, which are to be considered the “injunction proceedings” for the purposes of the Micallef test, the applicants sought to safeguard the future satisfaction of their claim to instalments of the rent that had not yet become due. Since the right to receive rent from a lessee, which was at stake in both “the main” and “the injunction proceedings”, is a “civil” right within the meaning of Article 6 § 1 of the Convention, the Court finds that the first criterion of the Micallef test is satisfied in the present case.

As regards the second criterion, the Court notes that under Croatian law preliminary measures, such as the one the applicants sought to obtain in the above non-contentious proceedings, are considered, having regard to their object and purpose, as protective (conserving) measures, that is to say, measures whose purpose is to safeguard the future satisfaction of a creditor’s claim (see above, under Relevant domestic law, 2 (b) The position of legal scholars). In terms of their effect they only create certain rights in rem (a pledge in particular, see section 287(3) of the Enforcement Act above) and do not lead to either the complete or partial satisfaction of a creditor’s claim (ibid.).

The Court further notes that in the present case the applicants have been unable to satisfy any of their claims arising from the lease agreement of 14 June 1999 due to the lack of funds on their debtor’s account. This was so even though that account had been frozen in the above-mentioned enforcement proceedings already on 1 September 1999, that is, only seven days after the applicants had sought the imposition of the preliminary measure in question in the non-contentious proceedings, which measure would have had the same effect. Therefore, the length of the non-contentious proceedings complained of in the period after 1 September 1999 could not have had any influence on the prospects of the satisfaction of the applicants’ claims. They thus became irrelevant and lost their purpose. The length of those non-contentious proceedings in the period between 23 August and 1 September 1999, amounting to only seven days, cannot be considered excessive. Accordingly, it cannot be argued that the length of the non-contentious proceedings in question caused prejudice to the applicants’ interests and drained, to a substantial extent, the final outcome of the main proceedings of its significance (see Balyuk v. Ukraine (dec.), no. 17696/02, 6 September 2005; and, by converse implication, Markass Car Hire Ltd v. Cyprus, no. 51591/99, (dec.) 23 October 2001).

In these circumstances, the Court is of the opinion that the preliminary measure sought by the applicants cannot be considered to “effectively determine the civil right or obligation at stake” within the meaning of the Micallef test, and that therefore the second criterion of that test is not satisfied in the present case. The Court thus refers to its pre-Micallef case-law, which is still valid in circumstances such as those prevailing in the present case, according to which Article 6 § 1 of the Convention does not apply to protective proceedings (procédure de caractère conservatoire) in which interim relief is sought (see Maillard Bous v. Portugal, no. 41288/98, § 19, 28 June 2001).

Accordingly, Article 6 § 1 of the Convention does not apply to the proceedings complained of.

It follows that this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected pursuant to Article 35 § 4.

The applicants further complained that the length of the above-mentioned non-contentious proceedings for a preliminary measure had also violated their right to the peaceful enjoyment of their possessions. They relied on Article 1 of Protocol No. 1 to the Convention, which 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 disputed the admissibility of this complaint by arguing that the applicants were not, or were no longer, victims of the violation complained of.

The Government repeated, mutatis mutandis, their above arguments concerning the applicants’ victim status raised in the context of the complaint under Article 6 § 1 of the Convention, whereas the applicants remained silent on the issue.

The Court does not find it necessary to examine the Government’s objection concerning the applicants’ victim status because this complaint is in any event inadmissible for the following reasons.

The Court first reiterates that under the Convention the State cannot be held responsible for the obligations of private actors, nor can the Convention be interpreted so as to compel the States to take the place of private individuals or companies which, having become insolvent, are no longer able to pay off their debts (see, for example and mutatis mutandis, Bobrova v. Russia, no. 24654/03, § 16, 17 November 2005).

It further refers to its above finding under Article 6 § 1 of the Convention according to which it cannot be argued that the length of the non-contentious proceedings complained of caused any prejudice to the applicants’ interests or had a decisive impact on the main proceedings. For the same reasons the length of those proceedings could not have had any adverse consequences on the applicants’ right to peacefully enjoy their possessions either.

It follows that this complaint is inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must therefore be rejected pursuant to Article 35 § 4 thereof.

Lastly, the applicants complained under Article 13 of the Convention, taken in conjunction with Article 6 § 1 thereof that they had not had at their disposal an effective domestic remedy for their complaint about the length of the non-contentious proceedings. Article 13 reads:

“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 Article 13 does not contain a general guarantee of legal protection of all substantive rights. It relates exclusively to those cases in which the applicant alleges, on arguable grounds, that one of his rights or freedoms set forth in the Convention has been violated.

In this connection the Court refers to its findings above according to which the applicants’ main complaint under Article 6 § 1 of the Convention is incompatible ratione materiae.

It follows that this complaint is also incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected pursuant to Article 35 § 4.

On 1 June 2010, in their reply to the Government’s observations, the applicants for the first time relied on Article 14 of the Convention and Article 1 of Protocol No. 12 thereto. Article 14 reads as follows:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

“1. The enjoyment of any right set forth by law shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

2. No one shall be discriminated against by any public authority on any ground such as those mentioned in paragraph 1.”

The Court notes that these complaints are wholly unsubstantiated. They are therefore inadmissible under Article 35 § 3 (a) as manifestly ill-founded and must therefore be rejected pursuant to Article 35 § 4 of the Convention.

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You are here: BAILII >> Databases >> European Court of Human Rights >> IMOBILIJE MARKETING D.O.O. and Ivan DEBELIC v Croatia - 23060/07 [2011] ECHR 794 (3 May 2011) URL: http://www.bailii.org/eu/cases/ECHR/2011/794.html Cite as: [2011] ECHR 794