CASE OF CASE OF VLAŠIĆ AND LASTRIĆ v. CROATIA

SECOND SECTION

CASE OF VLAŠIĆ AND LASTRIĆ v. CROATIA

(Applications nos. 7687/22 and 15362/22 –

see appended list)

JUDGMENT
 

STRASBOURG

11 June 2024

This judgment is final but it may be subject to editorial revision.

In the case of Vlašić and Lastrić v. Croatia,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

 Lorraine Schembri Orland, President,
 Frédéric Krenc,
 Davor Derenčinović, judges,
and Dorothee von Arnim, Deputy Section Registrar,

Having regard to:

the applications (nos. 7687/22 and 15362/22) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 1 February and 15 March 2022, respectively, by the applicants listed in the appended table (“the applicants”), who were all of Croatian nationality and represented by Mr F. Galić, a lawyer practising in Zagreb;

the decisions to give notice of the complaints concerning access to a court, excessive length of proceedings and the peaceful enjoyment of possessions to the Croatian Government (“the Government”), represented by their Agent, Ms Š. Stažnik, and to declare inadmissible the remainder of the applications;

the parties’ observations;

Having deliberated in private on 21 May 2024,

Delivers the following judgment, which was adopted on that date:

SUBJECT MATTER OF THE CASE

1.  The applications concern the deprivation of property arising from the Government Decision of 23 September 1999 (“the Government Decision”) on the restructuring and recovery of Croatia Bank (“the bank”) depriving the bank’s shareholders, including the applicants and/or their predecessor, of their shares, the lack of access to court in that regard, and excessive length of proceedings.

2.  In particular, on 4 July 2006 the applicant in the first case and the predecessor (father and husband) of the applicants in the second case (see the appended table) brought a civil action in the Zagreb Commercial Court against the bank and the State Agency for Deposit Insurance and Bank Resolution (hereafter “DAB”), asking the court to (a) issue a declaratory judgment confirming that they were still the holders of a specific number of shares, (b) order the Agency to transfer the corresponding number of shares from its portfolio to them, and (c) order the bank to record them as holders of that number of shares in the bank’s register of shareholders. The first-instance court dismissed the action by a judgment of 12 June 2014, which was upheld by the High Commercial Court on 8 September 2015. On 16 November 2016 the Supreme Court dismissed their appeal on points of law and the plaintiffs then lodged a constitutional complaint.

3.  On 27 June 2018 the predecessor of the applicants in the second case died and they were declared his heirs on 11 September 2018. At that time the case was pending before the Constitutional Court but the applicants in question did not inform that court of his death and did not take over the proceedings.

4.  On 16 September 2021 the Constitutional Court dismissed the constitutional complaint, and on 30 September 2021 notified the complainants’ representative of its decision.

5.  Before the Court, the applicants in both cases complained that, on the basis of the Government Decision, they and/or their predecessor had been deprived of their shares without compensation. They further complained that the Government Decision had been unconstitutional and that the domestic courts had refused to examine its conformity with the Constitution and relevant primary legislation. Lastly, they complained about the excessive length of the proceedings. They relied on Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 thereto.

THE COURT’S ASSESSMENT

6.  Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.

(a)   Exhaustion of domestic remedies and compliance with the six-month rule

7.  The Government argued that, prior to the adoption of the Government Decision, the applicants and/or their predecessor had not exhausted domestic remedies because they had not: (i) convened an extraordinary General Meeting of the bank, (ii) brought an action for judicial review in the Administrative Court against the decision of the Croatian National Bank appointing a temporary administrator, or (iii) brought a civil action for damages against the members of the bank’s Management Board and the Supervisory Board on account of their failure to conduct business with due care and diligence.

8.  In the alternative, the Government submitted that the applicants had failed to comply with the six-month time-limit because, in the absence of an effective remedy against the Government Decision, the six-month time-limit had started running from the date of its adoption on 23 September 1999.

9.  The Court notes that the Government never raised the above arguments in the leading case of Project-Trade d.o.o., no. 1920/14, 19 November 2020. In any event, having regard to its findings in that case, the Court notes that the applicants and/or their predecessor in the present cases resorted to the remedy which at the time seemed to have reasonable prospects of success and reiterates that if more than one potentially effective remedy is available the applicants are only required to have used one of them (ibid., § 54). The fact that the remedy in question lacked any prospects of success and was therefore ineffective was established only on 24 July 2013 (ibid., § 56). At that time the remedies suggested by the Government (see paragraph 7 above), regardless of their (in)effectiveness, were no longer available as the relevant time-limits had expired (compare ibid., § 57).

10.  This means that the applicants and/or their predecessor were not required to use those remedies, and that, by lodging their applications with the Court within six months from the service of the Constitutional Court’s decision in their case (see paragraph 4 above), they have complied with the six-month time-limit (see ibid., §§ 48-59, and Pintar and Others v. Slovenia, nos. 49969/14 and 4 others, §§ 103 and §§ 106-107, 14 September 2021). The Government’s objections must therefore be rejected.

(b)   Applicability of Article 1 of Protocol No. 1

11.  The Government also argued that Article 1 of Protocol No. 1 was not applicable to the period following the adoption of the Government Decision, as at that time the applicants and/or their predecessor had no longer been the shareholders of the bank and could not have had a legitimate expectation that their property rights over the shares would be restored. They also submitted that, at the time of the adoption of the Government Decision, those shares had already become worthless.

12.  Having regard to its findings in Project-Trade d.o.o., cited above, § 75, and Pintar and Others, cited above, § 91, the Court considers that the Government Decision resulting in the revocation and cancellation of the applicants’ and/or their predecessors’ shares constituted an interference with their right to peaceful enjoyment of their possessions. This objection must therefore also be rejected.

13.  The Court notes that the three applicants in the second case were never parties to the domestic proceedings complained of (see paragraph 3 above).

14.  Even though the Government did not raise an objection concerning the victim status of those applicants, that is an issue which the Court must examine of its own motion (see Project-Trade d.o.o., cited above, § 43, and the case-law cited therein).

15.  The Court notes that the applicants in question had a material interest in the outcome of the case before the domestic courts, in that a judgment in favour of their predecessor would have affected them as his heirs, who stood to inherit any pecuniary award that may have resulted from the domestic proceedings complained of. The alleged lack of access to a court thus had a direct effect on those applicants’ property rights. That being so, and having regard to its case-law on the matter (see Stoimenovikj and Miloshevikj v. North Macedonia, no. 59842/14, §§ 24-26, 25 March 2021), the Court finds that the applicants in the second case may claim to be victims of the alleged violation of Article 6 § 1 of the Convention on account of a lack of access to a court and of the alleged violation of Article 1 of Protocol No. 1 (see paragraph 5 above).

16.  The Court further notes that these complaints are not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. They must therefore be declared admissible.

17.  The Court notes that, in a case raising similar issues to the present one, it has already found a violation of Article 6 § 1 of the Convention on account of the lack of access to a court due to a shareholder’s inability to effectively challenge the Government Decision before the courts. It has further found a violation of Article 1 of Protocol No. 1 as the interference with the shareholder’s possessions was not accompanied by sufficient procedural guarantees against arbitrariness and was thus unlawful (see Project-Trade d.o.o., cited above, §§ 62-88).

18.  Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case.

19.  There has accordingly been a breach of Article 6 § 1 of the Convention on account of the lack of access to a court and a breach of Article 1 of Protocol No. 1.

20.  The Court notes that when on 25 March 2022 notice of the applicant’s complaints concerning access to court, the length of the proceedings and the peaceful enjoyment of possessions was given to the Government, the President of the Section, acting as a single judge pursuant to Rule 54 § 3 of the Rules of Court, declared her length‑of‑proceedings complaint inadmissible for non-exhaustion of domestic remedies in so far as it concerned the period before 14 March 2013.

21.  It follows that the relevant period to be examined is the period between 14 March 2013 and 30 September 2021, when the Constitutional Court notified the applicant’s representative of its decision of 16 September 2021 (see paragraph 4 above). It thus lasted some eight years and six and a half months at four levels of jurisdiction.

22.  The Court notes that, to the extent that this complaint concerns that period, it is neither manifestly ill‑founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.

23.  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 applicants and the relevant authorities and what was at stake for the applicants in the dispute (see Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).

24.  The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present case (see, for example, Parlov-Tkalčić v. Croatia, no. 24810/06, §§ 56-65, 22 December 2009, and Šundov v. Croatia, no. 13876/03, §§ 19-31, 13 April 2006).

25.  Having examined all the material submitted to it, the Court has not found any fact or argument capable of justifying the length of the proceedings in question in the relevant period. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.

26.  There has accordingly been a breach of Article 6 § 1.

27.  The Court notes that the applicants in this case never participated in the proceedings complained of (see paragraph 3 above). Thus, they cannot be considered to have been affected by their length, for instance by having experienced distress, inconvenience and uncertainty normally associated with a violation of the right to a hearing within a reasonable time (see Comingersoll S.A. v. Portugal [GC], no. 35382/97, § 29, ECHR 2000‑IV). In these circumstances, the Court finds that the applicants, although heirs of a direct victim, cannot be considered victims of the violation complained of (see, for instance, Bezzina Wettinger and Others v. Malta, no. 15091/06, §§ 62-69, 8 April 2008, and Makri and Others v. Greece (dec.), no. 5977/03, 24 March 2005).

28.  It follows that this complaint is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and that it must be rejected in accordance with Article 35 § 4.

APPLICATION OF ARTICLE 41 OF THE CONVENTION

29.  The applicant in the first case claimed 408,329.28 euros (EUR) and the applicants in the second case claimed EUR 430,853.67 in respect of pecuniary damage, corresponding to the value of their shares and increased by statutory default interest accrued on these amounts from 23 September 1999 to 29 November 2022. They also claimed EUR 15,000 each in respect of non-pecuniary damage. Lastly, the applicant in the first case claimed EUR 20,967.14 for the costs and expenses incurred before the domestic courts and EUR 1,000 for those incurred before the Court. The same amounts were claimed jointly by the applicants in the second case.

30.  The Government contested these claims.

31.  Having regard to its findings in the leading case of Project-Trade d.o.o., cited above, §§ 110-111, and to the possibility under domestic law for the applicants in both cases to request the reopening of the proceedings at issue, the Court rejects their claims for pecuniary damage.

32.  On the other hand, the Court finds that the applicants must have sustained non-pecuniary damage. It therefore awards EUR 4,850 to the applicant in the first case, and EUR 3,750 jointly to the applicants in the second case, plus any tax that may be chargeable.

33.  As to the costs and expenses incurred before the domestic courts, the Court considers it reasonable to award all the applicants in both cases EUR 830 jointly for the costs incurred before the Constitutional Court, plus any tax that may be chargeable to them. The remainder of their claim must be rejected, given that they will be able to have those costs reimbursed should the proceedings complained of be reopened.

34.  As to the costs incurred before it, the Court considers it reasonable to award all the applicants in both cases EUR 1,300 jointly, plus any tax that may be chargeable to them.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a)  that the respondent State is to pay the applicants, within three months, the following amounts:

(i)  EUR 4,850 (four thousand eight hundred and fifty euros) to the applicant in the first case, and EUR 3,750 (three thousand seven hundred and fifty euros) jointly to the applicants in the second case, plus any tax that may be chargeable, in respect of non‑pecuniary damage;

(ii)  EUR 2,130 (two thousand one hundred and thirty euros) to the applicants jointly, plus any tax that may be chargeable to them, in respect of costs and expenses;

(b)  that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts 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 11 June 2024, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

 Dorothee von Arnim Lorraine Schembri Orland
 Deputy Registrar President

APPENDIX

List of applicants

No.

Application no.

Date of introduction

Applicant’s Name

Year of birth

Place of residence

1.

7687/22

01/02/2022

Lorna VLAŠIĆ

1968

Zagreb

2.

15362/22

15/03/2022

Srđan LASTRIĆ

1974

Zagreb

Amira LASTRIĆ

1946

Zagreb

Iva LASTRIĆ

1973

Zagreb