THIRD SECTION
DECISION
Application no. 55631/12
ALMEDIA SPOL. S R.O.
against Slovakia
The European Court of Human Rights (Third Section), sitting on 6 November 2018 as a Committee composed of:
Dmitry Dedov, President,
Alena Poláčková,
Jolien Schukking, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having regard to the above application lodged on 22 August 2012,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant company,
Having deliberated, decides as follows:
THE FACTS
1. The applicant company, ALMEDIA spol. s r.o., is a private limited company which was established under Slovakian law in 1999 and has its registered office in Trebišov. It was represented before the Court by Mr J. Brázdil, a lawyer practising in Zvolen.
The Government of the Slovak Republic (“the Government”) were represented by their Agent, Ms M. Pirošíková.
The circumstances of the case
2. The facts of the case, as submitted by the parties, may be summarised as follows.
1. Background
3. The applicant company is a business specialising in, among other things, the large‑scale distribution of pharmaceuticals. In that context it provided pharmaceutical and other products that were used for the benefit of patients insured by a private health insurer (“the original debtor”).
4. On 1 July 1999 the Ministry of Health withdrew the original debtor’s licence to provide health insurance as it had failed to comply with the applicable regulations. This meant, among other things, that by operation of law the original debtor entered winding up and liquidation proceedings.
Under section 34(3) of the Health Insurance Act (Law no. 273/1994 Coll., as amended – “the Act”) the Ministry decided that the original debtor’s insurance policies would be assigned to the State-owned General Health Insurer (“GHI”).
The Ministry also ruled that, pursuant to section 34(3) of the Act, the original debtor’s liabilities to private healthcare establishments and its receivables would be transferred to the GHI.
5. On 19 July 1999 the applicant company obtained a court order against the original debtor for a payment in consideration for the products provided to the patients insured by the original debtor. As no appeal was filed, the order became final and binding on 20 August 1999.
6. In 2001 the original debtor was declared insolvent and, as transpired at the communication stage of the proceedings before the Court, the applicant company registered the adjudicated claims against it in the proceedings concerning the insolvency estate.
7. On 1 November 2004 the Act was replaced by new legislation containing no provisions for the transfer of liabilities from insolvent health insurers to the GHI or other designated insurers. As regards the rules existing on that matter until that date, it contained no transitional provisions.
8. In 2006 the insolvency proceedings were terminated because there were not enough assets to pay for the costs of the proceedings.
9. In 2007 the original debtor was struck off the companies’ register, whereby it legally ceased to exit.
10. Further context is provided in the Court’s decision in Slivková v. Slovakia (no. 32872/03, 14 December 2004).
2. Enforcement
11. On 8 January 2009 the applicant company applied for enforcement against the GHI of the claim adjudicated under the order of 19 July 1999. Relying on section 34(3) of the Act, it explained that it had directed the application against the GHI despite it not being the recipient of the order because the original debtor’s liabilities had been assigned to the GHI.
12. The GHI objected to the enforcement and its objections were upheld on 11 March 2010 by the Bratislava V District Court and, following an appeal by the applicant company, on 20 September 2011 by the Regional Court. This effectively meant that the order in question could not be enforced against the GHI. The courts’ reasoning may be summarised as follows.
The GHI was not the original debtor’s universal legal successor. It was incumbent on the applicant company to show unequivocally that the GHI had become liable to settle the debt of the original debtor. In order to do so, it was necessary to show that the debt had not been settled in the course of the original debtor’s liquidation. That was to be done by submitting documentary evidence, which the applicant company had failed to do. The applicant company had thereby failed to establish that the debt was enforceable against the GHI.
3. Final decision
13. The applicant company challenged the decisions of 11 March 2010 and 20 September 2011 by way of a complaint under Article 127 of the Constitution, alleging a violation of its rights of access to court and to protection of property, arguing as follows.
The case involved a sui generis form of universal succession, consisting of a transfer of rights and obligations to the GHI by operation of law at various times. With respect to the outstanding liabilities towards healthcare establishments, these were transferred to the GHI if and when they could not be settled from the original debtor’s assets. In the present case, that condition had been fulfilled when the original debtor’s liquidation had been stayed owing to the insolvency order against it and when the insolvency proceedings had been terminated for lack of assets. Those facts had been uncontested and, in correlation with the said sui generis succession, they amounted to an automatic transfer of the original debtor’s debt to the GHI without the need for any further substantiation.
It had been wrong and disproportionate of the enforcement courts to place a burden on it to prove that the debtor had not settled the applicant company’s debt. Firstly, the non-existence of a fact was generally not susceptible of being proven and secondly, the applicant company, along with numerous other creditors in a similar position, had no access to documentation concerning the settlement of the original debtor’s liabilities by the GHI.
In sum, the ordinary courts’ decisions had been arbitrary and had deprived the applicant company of any possibility of having the order in the property claim enforced.
14. On 14 February 2012 the Constitutional Court declared the complaint inadmissible. In so far as it concerned the District Court, the applicant company’s claims fell to be determined by the Regional Court, which excluded the Constitutional Court’s jurisdiction under the principle of subsidiarity.
As for the Regional Court, the Constitutional Court considered that there was no indication of a violation of the applicant company’s procedural rights. As regards its property claim, it reiterated its established case-law, under which a general court could not bear “secondary liability” for a violation of fundamental rights and freedoms of a substantive nature unless there had been a constitutionally relevant violation of the rules of procedure. As no such procedural issues had been established, the property claim was manifestly ill-founded.
The decision was served on the applicant company on 12 March 2012 and was not amenable to appeal.
4. Another similar case involving the applicant company
15. On 31 March 2014 the Regional Court dismissed an objection by the GHI to the applicant company’s application for enforcement of a court order of 30 July 1999 against the original debtor for the payment of an amount of money in an unrelated but similar case. It held, inter alia, that there could be no doubt that the GHI was the original debtor’s legal successor and that the only outstanding question was when the original debtor’s liabilities had been transferred to the GHI. The Regional Court pointed out that, in law, that was when it was not possible to settle the wound-up health insurer’s liabilities from its assets. Based on the facts of the case, that had been on the date when the decision to terminate the original debtor’s insolvency proceedings on the grounds that its insolvency estate was insufficient to cover the costs of the proceedings had become final and binding.
16. However, as established at the communication stage of the proceedings before the Court, on 28 June 2016 the Supreme Court quashed the decision of 31 March 2014 following an appeal on points of law by the GHI, which ultimately led to the termination of the enforcement proceedings.
In its judgment, the Supreme Court endorsed the views previously established in an earlier unrelated but similar case that had led to a decision of the Constitutional Court of 15 May 2015 (case no. ÚS II. 316/15). In particular, it held that the decisive date for the transfer of liabilities under section 34(3) of the Act was the date when it became impossible to settle the wound-up health insurer’s liabilities from its assets. In the case of the original debtor, this had been when the insolvency proceedings in respect of its estate had been terminated on account of a lack of assets to cover the costs of the proceedings. In concrete terms, this had been in 2006 (see paragraph 8 above). However, at that time section 34(3) of the Act no longer existed as it had been replaced without any transitional provisions by another piece of legislation on 1 November 2004 (see paragraph 7 above). Accordingly, the debt of the original debtor had never been transferred to the GHI.
COMPLAINTS
17. Relying on Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention, the applicant company complained that the proceedings in its enforcement application had been unfair and that their outcome had been arbitrary, in violation of its rights of access to court and to peaceful enjoyment of its possessions.
THE LAW
A. Article 6 § 1 of the Convention
18. The applicant company alleged a violation of its right of access to court under Article 6 § 1 of the Convention, the relevant part of which provides:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
19. In support of this complaint, the applicant company mainly contested the domestic courts’ findings of fact and law and what it considered to be an arbitrary reversal of the burden of proof to its disadvantage as regards its inability to have its claim settled from the original debtor’s assets.
20. In reply, the Government first pointed out that the applicant company’s claim as such had been against the original debtor and that it had failed to assert that claim in the original debtor’s liquidation and insolvency proceedings. On that basis, they argued primarily that the applicant company had failed to exhaust domestic remedies as required under Article 35 § 1 of the Convention.
Furthermore, considering the domestic courts’ decisions free from any arbitrariness or irregularity, they also argued that the complaint was manifestly ill‑founded.
21. In response, the applicant company disagreed, reiterating its complaint and submitting that it had actually registered its claim adjudicated against the original debtor in the latter’s insolvency proceedings (see paragraph 6 above).
22. In a further reply, the Government submitted that their additional enquiries had revealed that the applicant company had in fact registered several claims in the original debtor’s insolvency proceedings and that a number of these had been contested in various proceedings.
23. The Court, for its part, observes firstly that the Government have contested the admissibility of the present complaint under the rule of exhaustion of domestic remedies. In so far as their argument rested on the allegation that the applicant company had failed to assert its claim in the original debtor’s insolvency proceedings, this may have been superseded by the facts that have come to light thereafter. However, the Court considers that it is not necessary to give the Government’s non-exhaustion plea a definitive answer because the complaint is in any event inadmissible for the reasons laid out below.
24. In that connection, the Court reiterates that, in accordance with Article 19 of the Convention, its duty is to ensure the observance of the obligations undertaken by the Contracting Parties to the Convention. In particular, it is not its function to deal with errors of fact or law allegedly committed by a national court, unless and in so far as they may have infringed rights and freedoms protected by the Convention. Moreover, while Article 6 of the Convention guarantees the right to a fair hearing, it does not lay down any rules on the admissibility of evidence or the way it should be assessed, which are therefore primarily matters for regulation by national law and the national court (see Garćia Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999-I, with further references). The Court’s task under the Convention is to ascertain whether the proceedings as a whole, including the way in which evidence was taken, were fair (see, for example, Petrenco v. Moldova, no. 20928/05, § 41, 30 March 2010).
25. As to the present case, the Court observes that the “determination” of the applicant company’s “civil rights and obligations” within the meaning of Article 6 § 1 of the Convention in relation its business with the original debtor as such was completed by the issuance of the court order of 19 July 1999.
26. As to the subsequent proceedings, aimed at having the order enforced, the Court reiterates that execution of a judgment given by any court is to be regarded as an integral part of the “trial” for the purposes of Article 6 of the Convention (see, for example, Hornsby v. Greece, 19 March 1997, § 40, Reports of Judgments and Decisions 1997‑II, and Sika v. Slovakia, no. 2132/02, § 25, 13 June 2006).
27. The applicant company’s enforcement application in the present case was based on the contention that its claim originating in its business with the original debtor and adjudicated in relation to the original debtor had passed onto the GHI.
28. That contention was examined at two levels of ordinary jurisdiction and to some extent also by the Constitutional Court. The courts based their assessment of the applicant company’s contention concerning the provisions of section 34(3) of the Act, which they interpreted as requiring it to show that it had been impossible for it to obtain satisfaction of its claim from the assets of the original debtor. They observed that rather than providing any concrete evidence to that effect, the applicant company had contented itself with citing the relevant legal provisions, which in their common view was not enough.
29. The Court notes that rather than arguing any procedural unfairness in terms of Article 6 of the Convention, the applicant company sought to challenge the outcome of the proceedings and the distribution of the burden of proof. On that point, it argued before the Constitutional Court that the non‑existence of a fact such as the inability of the original debtor to settle its debt to the applicant company was in general not susceptible of being proven, and that the GHI was in fact in a much better position than the applicant company to establish the original debtor’s inability to pay its debts.
30. Noting the general nature of these arguments, the Court considers that they concerned the inconvenience of the distribution of the burden of proof for the applicant company and its compliance with the applicable domestic law rather than any genuine inability for the applicant company to discharge it. Nor has any such inability been substantiated before the Court.
31. In these circumstances, the domestic courts’ reasoning and conclusions cannot be considered manifestly arbitrary, irregular or otherwise wrong. Moreover, there has not been any allegation or other indication that, throughout the proceedings, there was any limitation on the applicant company’s ability to state its arguments, challenge the submissions made by the defendant, and submit any evidence it considered relevant to the outcome.
32. The applicant company’s claim was duly examined by a “tribunal” and its dismissal presents neither any issue of access to court nor any other issue of fairness within the meaning of Article 6 § 1 of the Convention. To the extent that the complaint under that provision has been substantiated, it is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
B. Article 1 of Protocol No. 1
33. The applicant company also argued that its inability to have its claim enforced against the GHI had violated its property rights under Article 1 of Protocol No. 1, which reads:
“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.”
34. In support of its complaint, the applicant company raised similar arguments as under Article 6 § 1 of the Convention, alleging that the domestic courts had erred in fact and law, particularly as regards the distribution of the burden of proof. In that regard they relied, among other things, on the Regional Court’s decision of 31 March 2014 in which it found in an unrelated but similar case of its own that previously adjudicated debts of the original debtor had been transferred to the GHI at the latest on the date when the decision to terminate the original debtor’s insolvency proceedings on the grounds that its insolvency estate was insufficient to cover the costs of the proceedings had become final and binding (see paragraph 15 above). Moreover, the applicant company argued that the domestic courts had limited themselves to questions of lawfulness and procedural fairness, but had omitted to entertain the question of its property rights per se. As a result, they had frustrated the applicant company’s legitimate expectation of having its adjudicated claim satisfied.
35. The Government responded by firstly raising a non-exhaustion argument along the same lines as in relation to the complaint under Article 6 § 1 of the Convention (see paragraph 20 above). Nevertheless, they acknowledged that the applicant company’s claim adjudicated under the court order of 19 July 1999 constituted a possession. However, this was so only in relation to the original debtor. They pointed out that, in contrast to that, the present application concerned the applicant company’s unsuccessful attempt to have that claim enforced against another entity, the GHI. In that regard, the Government referred to the conclusions of the domestic courts in the present case, namely that the applicant company had failed to establish that the original debtor’s debt had actually been transferred to the entity against which the applicant company had sought enforcement. In so far as the applicant company relied on the Regional Court’s decision of 31 March 2014, the Government submitted that that decision had in fact been reversed on the GHI’s appeal on points of law by the Supreme Court on 28 June 2016, the latter adopting a binding legal view not supporting the applicant company’s case (see paragraph 16 above). The applicant company could not therefore have had any legitimate expectation of having its claim enforced against the GHI. Accordingly, for the purposes of the present application, it had not had any possessions in terms of Article 1 of Protocol No. 1 and its complaint under that provision was incompatible ratione materiae with the provisions of the Convention.
36. The applicant company disagreed, reiterating its complaint, making a similar submission as regards its complaint under Article 6 § 1 of the Convention (see paragraph 21 above) and challenging the relevance of any jurisprudential developments subsequent to the judicial decisions in the present case.
37. As to the Government’s non-exhaustion plea, as in relation to the complaint under Article 6 § 1 of the Convention (see paragraph 23 above), the Court considers that it is not necessary to give it a definitive answer because the complaint is in any event inadmissible for the reasons laid out below.
38. It reiterates at the outset that an applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions related to his “possessions” within the meaning of this provision. “Possessions” can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right. By way of contrast, the hope of recognition of a property right which it has been impossible to exercise effectively cannot be considered a “possession” within the meaning of Article 1 of Protocol No. 1, nor can a conditional claim which lapses as a result of the non-fulfilment of the condition (for a recapitulation of the relevant principles, see Kopecký v. Slovakia ([GC], no. 44912/98, § 35, ECHR 2004‑IX). Where the proprietary interest is in the nature of a claim it may be regarded as an “asset” only where it has a sufficient basis in national law, for example where there is settled case‑law of the domestic courts confirming it (ibid., § 52).
39. In the present case it has not been disputed between the parties that the applicant company’s claim adjudicated under the court order in question in its nature constituted a possession within the meaning of Article 1 of Protocol No. 1. However, the Court notes that this order was addressed only to the original debtor, a private entity, which itself legally ceased to exist in 2007. Therefore, unless the original debtor’s debt under that order had been transferred to another entity, in the present case the GHI, any possession it constituted for the applicant company extinguished with the demise of the original debtor.
40. The Court notes that the question of the transfer of the original debtor’s debt to the GHI and the distribution of the burden of proof in that respect are precisely the matters on which the applicant company disagreed with the conclusions of the domestic courts.
41. In particular, it based its enforcement application against the GHI on section 34(3) of the Act, which provided for the transfer of debts of the original debtor to the GHI when it became impossible to meet its liabilities from its assets. As to when that condition had been fulfilled, the applicant company merely referred to the known facts of the original debtor’s insolvency and subsequent dissolution. The courts, for their part, concluded in a procedure that the Court has found above to have been fair, that it was necessary for the applicant company to show its inability to have its claim satisfied from the original debtor’s assets by means of individual and concrete evidence, and that the applicant had failed to do so.
42. In these circumstances, and to the extent the applicant company’s complaint has been substantiated, the Court finds no indication that its claim had a sufficient basis in national law or that it had any legitimate expectation within the meaning of its case-law of having its enforcement application against the GHI recognised.
43. In so far as it has relied in the proceedings before the Court on the Regional Court’s decision of 31 March 2014, the Court observes firstly that that decision was given only after the decisions contested in the present case. Moreover, and more importantly, the Court notes that that decision was in fact ultimately reversed by the Supreme Court. Although the latter accepted the line pursued by the applicant that, under section 34(3) of the Act, debts of the original debtor would normally be transferred to the GHI at the moment when the insolvency proceedings in respect of the original debtor were completed, the court at the same time found that no such transfer had taken place since, at the given time, section 34(3) of the Act no longer existed. In these circumstances, the decision of 31 March 2014 changes nothing with regard to the conclusion that the applicant could not be said to have any possession in terms of Article 1 of Protocol No. 1 (see Kopecký, cited above, § 60).
Accordingly, this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 29 November 2018.
Fatoş AracıDmitry Dedov
Deputy RegistrarPresident
Full & Egal Universal Law Academy