Avotiņš v. Latvia [GC]

Information Note on the Court’s case-law 196

May 2016

Avotiņš v. Latvia [GC] - 17502/07

Judgment 23.5.2016 [GC]

Article 6

Civil proceedings

Article 6-1

Fair hearing

Equality of arms

Enforcement in Latvia of judgment delivered in Cyprus in the debtor’s absence: no violation

Facts – In May 1999 the applicant, a Latvian national, and a commercial company registered in Cyprus signed before a notary a formal acknowledgement of debt in which the applicant stated that he had borrowed a sum of money from the company and undertook to repay the sum in question, with interest, by 30 June of the same year. The document was governed by Cypriot law and the Cypriot courts had jurisdiction to rule on any dispute arising out of it.

In 2003 the company sued the applicant in a Cyprus court for failure to repay his debt. In May 2004, ruling in the applicant’s absence, the court ordered him to pay the debt together with interest. According to the judgment, the applicant had been duly notified of the hearing but had not appeared.

In February 2006, at the company’s request, a Latvian court ordered the recognition and enforcement of the Cypriot judgment and the recording of a charge against the applicant’s property in the land register.

The applicant claimed that he had learnt by chance in June 2006 of the existence of both the Cypriot judgment and the Latvian court’s enforcement order. He did not attempt to challenge the Cypriot judgment before the domestic courts but appealed against the Latvian enforcement order in the Latvian courts.

In a final judgment of January 2007 the Senate of the Latvian Supreme Court granted the company’s request and ordered the recognition and enforcement of the Cypriot judgment and the recording of a charge against the applicant’s immovable property in the land register. On the basis of that judgment a court issued a writ of execution and the applicant complied with the judgment. The charge against his property was lifted shortly afterwards.

In his application to the European Court the applicant complained that by enforcing the judgment of the Cypriot court, which, in his view, was clearly defective as it had been given in breach of his defence rights, the Latvian courts had failed to comply with Article 6 § 1 of the Convention. He had alleged before the Latvian courts that the summons to appear before the court in Cyprus and the company’s request had not been duly served on him in good time, with the result that he had been unable to defend his case. Consequently, the Latvian courts should have refused to enforce the Cypriot judgment.

In a judgment of 25 February 2014 (see Information Note 177), a Chamber of the Court held unanimously that there had been no violation of Article 6 § 1. On 8 September 2014 the case was referred to the Grand Chamber at the applicant’s request.

Law – Article 6 § 1

(a) Applicability – The Cypriot court judgment ordering the applicant to pay a contractual debt had concerned the substance of a “civil” obligation on the part of the applicant. Article 6 § 1 was therefore applicable.

(b) Presumption of equivalent protection (Bosphorus presumption) – The application of the presumption of equivalent protection in the legal system of the European Union was subject to two conditions, namely the absence of any margin of manoeuvre on the part of the domestic authorities and the deployment of the full potential of the supervisory mechanism provided for by European Union law.

With regard to the first condition, the provision to which the Senate of the Supreme Court had given effect was contained in a Regulation (Brussels I), which was directly applicable in the Member States in its entirety, and not in a Directive, which would have been binding on the State with regard to the result to be achieved but would have left it to the State to choose the means and manner of achieving it. The provision in question allowed the refusal of recognition or enforcement of a foreign judgment only within very precise limits and subject to certain preconditions. It was clear from the interpretation given by the Court of Justice of the European Union (CJUE) that this provision did not confer any discretion on the court from which the declaration of enforceability was sought. The Court therefore concluded that the Senate of the Latvian Supreme Court had not enjoyed any margin of manoeuvre in this case.

As to the second condition, namely the deployment of the full potential of the supervisory mechanism provided for by European Union law, the Senate of the Supreme Court had not requested a preliminary ruling from the CJEU regarding the interpretation and application of the relevant Article of the Regulation. However, this second condition had to be applied without excessive formalism and taking into account the specific features of the supervisory mechanism in question.

The applicant had not advanced any specific argument concerning the interpretation of the relevant provision of the Regulation and its compatibility with fundamental rights such as to warrant a finding that a preliminary ruling should have been requested from the CJEU, nor had he submitted any request to that effect to the Senate of the Latvian Supreme Court. Hence, the fact that the matter had not been referred for a preliminary ruling was not a decisive factor in the present case. The second condition for application of the Bosphorus presumption should therefore be considered to be satisfied.

In view of the foregoing considerations, the presumption of equivalent protection was applicable in the present case, as the Senate of the Supreme Court had done no more than implement Latvia’s legal obligations arising out of its membership of the European Union.

(c) Allegation that the protection of the rights guaranteed by the Convention had been manifestly deficient – The Court sought to ascertain whether the protection of fundamental rights afforded by the Senate of the Latvian Supreme Court had been manifestly deficient in the present case such that the presumption of equivalent protection was rebutted, with regard to both the provision of European Union law that had been applied and its implementation in the specific case of the applicant.

The requirement to exhaust remedies arising from the mechanism provided for by the relevant provision of the Regulation as interpreted by the CJEU was not in itself problematic in terms of the guarantees of Article 6 § 1 of the Convention.

In the proceedings before the Senate of the Supreme Court, the applicant had complained that he had not received any summons or been notified of the Cypriot judgment. In so doing he had relied on the grounds for non-recognition provided for by the relevant provision of the Regulation. That provision stated expressly that such grounds could be invoked only on condition that proceedings had previously been commenced to challenge the judgment in question, in so far as it was possible to do so. The fact that the applicant had relied on that provision without having challenged the judgment as required necessarily raised the question of the availability of that legal remedy in Cyprus in the circumstances of the present case. In such a situation the Senate had not been entitled simply to criticise the applicant, as it had done in its judgment of January 2007, for not appealing against the judgment concerned, and to remain silent on the issue of the burden of proof with regard to the existence and availability of a remedy in the State of origin; Article 6 § 1 of the Convention, like the relevant provision of the Regulation, had required it to verify that this condition had been satisfied, in the absence of which it could not refuse to examine the applicant’s complaint. The determination of the burden of proof, which, as the European Commission had stressed, was not governed by European Union law, had therefore been decisive in the present case. Hence, that point should have been examined in adversarial proceedings leading to reasoned findings. However, the Supreme Court had tacitly presumed either that the burden of proof lay with the applicant or that such a remedy had in fact been available to him. This approach, which reflected a literal and automatic application of the relevant provision of the Regulation, could in theory lead to a finding that the protection afforded had been manifestly deficient such that the presumption of equivalent protection of the rights of the defence guaranteed by Article 6 § 1 was rebutted. Nevertheless, in the specific circumstances of the present application the Court did not consider this to be the case, although this shortcoming was regrettable.

Cypriot law had afforded the applicant, after he had learned of the existence of the judgment, a perfectly realistic opportunity of appealing despite the length of time that had elapsed since the judgment had been given. In accordance with Cypriot legislation and case-law, where a defendant against whom a judgment had been given in default applied to have that judgment set aside and alleged, on arguable grounds, that he or she had not been duly summoned before the court which gave judgment, the court hearing the application was required – and not merely empowered – to set aside the judgment given in default. In the period between June 2006 (when he had been given access to the entire case file at the premises of the first‑instance court and had been able to acquaint himself with the content of the Cypriot judgment) and January 2007 (when the hearing of the Senate of the Supreme Court had taken place), the applicant had had sufficient time to pursue a remedy in the Cypriot courts. However, for reasons known only to himself, he had made no attempt to do so.

The fact that the Cypriot judgment had made no reference to the available remedies did not affect the Court’s findings. It was true that the Latvian Civil Procedure Law required the courts to indicate in the text of their decisions the detailed arrangements and time-limits for appealing against them. However, while such a requirement was laudable in so far as it afforded an additional safeguard which facilitated the exercise of litigants’ rights, its existence could not be inferred from Article 6 § 1 of the Convention. It had therefore been up to the applicant himself, if need be with appropriate advice, to enquire as to the remedies available in Cyprus after he had become aware of the judgment in question.

On this point the applicant, who was an investment consultant, should have been aware of the legal consequences of the acknowledgment of debt which he had signed. That document had been governed by Cypriot law, had concerned a sum of money borrowed by the applicant from a Cypriot company and had contained a clause conferring jurisdiction on the Cypriot courts. Accordingly, the applicant should have ensured that he was familiar with the manner in which possible proceedings would be conducted before the Cypriot courts. Having omitted to obtain information on the subject he had contributed to a large extent, as a result of his inaction and lack of diligence, to bringing about the situation of which he complained before the Court and which he could have prevented so as to avoid incurring any damage.

Hence, in the specific circumstances of the case, the Court did not consider that the protection of fundamental rights had been manifestly deficient such that the presumption of equivalent protection was rebutted.

Lastly, with regard to the applicant’s other complaints under Article 6 § 1, and in so far as it had jurisdiction to rule on them, the Court found no appearance of a violation of the rights secured under that provision.

Conclusion: no violation (sixteen votes to one).

(See Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi v. Ireland [GC], 45036/98, 30 June 2005, Information Note 76; M.S.S. v. Belgium and Greece [GC], 30696/09, 21 January 2011, Information Note 137; and Michaud v. France, 12323/11, 6 December 2012, Information Note 158).

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