SECOND SECTION
CASE OF CONSTRUCT CONFORT S.R.L. v. THE REPUBLIC OF MOLDOVA
(Application no. 16974/15)
JUDGMENT
STRASBOURG
28 May 2019
This judgment is final but it may be subject to editorial revision.
In the case of Construct Confort S.R.L. v. the Republic of Moldova,
The European Court of Human Rights (Second Section), sitting as a Committee composed of:
Ivana Jelić, President,
Valeriu Griţco,
Darian Pavli, judges,
and Hasan Bakırcı, Deputy Section Registrar,
Having deliberated in private on 30 April 2019,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 16974/15) against the Republic of Moldova lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a company incorporated under Moldovan law, Construct Confort SRL (“the applicant company”), on 4 April 2015.
2. The applicant company was represented by Ms I. Țirulinic, a lawyer practising in Chişinău. The Moldovan Government (“the Government”) were represented by their Agents, Mr M. Gurin and Ms R. Revencu.
3. The applicant alleged, in particular, that its rights guaranteed under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention had been breached as a result of an abusive quashing of a final judicial decision issued in its favour.
4. On 2 December 2015 notice of the application was given to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant company is a limited liability company incorporated under Moldovan Law.
6. On 24 December 2012 and 21 June 2013 respectively the applicant company initiated two sets of civil proceedings challenging two decisions issued by the State Tax Inspectorate of Străşeni (Inspectoratul Fiscal de Stat Străşeni – “the Inspectorate”) under which it had been fined for non‑compliance with the VAT reporting regulations. On 5 September 2013 these two sets of proceedings were joined.
7. On 26 December 2013 the Străşeni District Court upheld the applicant company’s claims and overturned the impugned decisions. The representative of the Inspectorate was not present when the judgment was delivered, despite having been duly informed of the date and the time of the hearing.
8. On 5 February 2014 the Inspectorate lodged an appeal against the judgment of the Străşeni District Court. No request for an extension of the legal time-limit for lodging an appeal was made. The applicant company objected to the appeal and argued that it had been lodged outside the thirty‑day time-limit and that the Inspectorate had not requested an extension of the legal time-limit for lodging it.
9. In a decision of 3 September 2014 the Chişinău Court of Appeal calculated the applicable time-limit and found that it had expired on 27 January 2014 and, accordingly, that the Inspectorate had been late in lodging its appeal. It therefore decided to strike the appeal out of its list of cases as time-barred. The Inspectorate lodged an appeal on points of law against that decision. It argued that the Chişinău Court of Appeal could not strike out the appeal after having commenced its examination of the merits of the case.
10. On 8 October 2014 the Supreme Court of Justice quashed the Chişinău Court of Appeal’s strike-out decision of 3 September 2014. Without contesting the Court of Appeal’s calculation of the time-limit for lodging the appeal, the Supreme Court of Justice accepted the argument put forward by the Inspectorate and found that the Court of Appeal had breached the rules of procedure by adopting a strike-out decision after having started an examination of the merits of the case. Ultimately, the case was referred back to the Chişinău Court of Appeal for re-examination.
11. On 28 January 2015, after rehearing the case, the Chişinău Court of Appeal upheld the Inspectorate’s appeal, quashed the judgment of the Străşeni District Court of 26 December 2013 and rendered a new judgment whereby the applicant company’s action was rejected as ill-founded.
12. On 10 June 2015 the Supreme Court of Justice declared an appeal on points of law lodged by the applicant company inadmissible.
II. RELEVANT DOMESTIC LAW
13. The relevant provisions of the Code of Civil Procedure read as follows:
Article 254. Irrevocable and final judgments
“...
(2) Irrevocable judgments are:
a) judgments delivered by first-instance courts, after the expiry of the legal time‑limit for appeal, where the parties have not made use of their right to appeal.”
Article 362. Time-limit for lodging an appeal
“(1) The time-limit for lodging an appeal is thirty days from the date of the delivery of the operative part of the judgment, unless the law provides otherwise.”
Article 365. Content of an appeal
“...
(11) The elements of an application for appeal provided under paragraph (1) sub‑paragraphs (d), (e) and (h) [concerning the factual and legal reasoning of the appeal] may be included in a further appeal lodged after the fully reasoned judgment has been provided.”
Article 369. Restitution of an appeal
“(1) The appellate court shall dismiss an appeal, by means of an interlocutory judgment, if:
...
b) the appeal was lodged outside the legal time-limit and the appellant has not requested an extension of the legal time-limit for lodging it ...”
Explanatory decision of the Plenary Supreme Court of Justice
no. 6 of 11 November 2013
“...
5. In accordance with Article 362 of the [Code of Civil Procedure], the time-limit for lodging an appeal is thirty days from the date of the delivery of the judgment, unless the law provides otherwise, regardless of whether or not the party was present at the time of the pronouncement of the judgment.
...
6. For persons who have omitted to lodge an appeal within the time-limit for good reasons, the time-limit may be reinstated, upon request, by the appellate court.”
THE LAW
14. The applicant company complained that the Supreme Court of Justice’s decision of 8 October 2014 had breached its right to a fair trial as provided in Article 6 of the Convention, which reads, in so far as relevant, as follows:
“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law ...”
15. The applicant company also complained that by allowing the appeal on points of law lodged by the Inspectorate, the Supreme Court of Justice had infringed its right to peaceful enjoyment of its possessions as secured by Article 1 of Protocol No. 1 to the Convention, which provides, in so far as relevant, 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 ...”
I. ADMISSIBILITY OF THE COMPLAINTS
16. The Government argued that the applicant company had failed to exhaust domestic remedies when lodging its appeal on points of law with the Supreme Court of Justice against the decision of the Chişinău Court of Appeal of 28 January 2015. In the Government’s opinion, the applicant company should have raised the argument concerning the late submission of the Inspectorate’s appeal therein.
17. The applicant company disagreed and argued that it had exhausted all the domestic remedies available to it. The question of the admissibility of the Inspectorate’s appeal had been irrevocably decided by the Supreme Court of Justice in its final decision of 8 October 2014, when it overturned the Court of Appeal’s decision to strike out the appeal as time-barred. The applicant company contended that it had, therefore, not been obliged to raise this issue again before the Supreme Court of Justice when that court had examined the merits of the case.
18. The Court reiterates that in the area of the exhaustion of domestic remedies there is a distribution of the burden of proof. It is incumbent on the Government claiming non-exhaustion to satisfy the Court that the remedy was an effective one available in theory and in practice at the relevant time, that is to say, that it was accessible, was one which was capable of providing redress in respect of the applicant’s complaints and offered reasonable prospects of success (see, among other authorities, Akdivar and Others v. Turkey, 16 September 1996, §§ 66-68, Reports of Judgments and Decisions 1996-IV).
In the present case, the applicant company raised an objection concerning the expiry of the time-limit for the Inspectorate’s appeal to be lodged against the judgment of the Străşeni District Court of 26 December 2013 (see paragraph 8 above). That objection was dismissed by the Supreme Court of Justice in a final decision of 8 October 2014. Thus, the Court cannot agree with the view that the applicant company failed to exhaust domestic remedies. The Government’s objections must consequently be dismissed.
19. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION
20. The applicant company argued that the judgment of the Străşeni District Court had been delivered on 26 December 2013, and accordingly the thirty-day time-limit for lodging an appeal against that judgment had expired on 25 January 2014. The Inspectorate’s appeal had been lodged on 5 February 2014, that is ten days after the expiry of the time-limit. Moreover, the Inspectorate had not requested an extension of the time-limit. Accordingly, the Supreme Court of Justice’s decision of 8 October 2014 had amounted to a breach of Article 6 § 1 of the Convention.
21. The Government disagreed with the applicant company and argued that the time period in which a party had a right to appeal began on the date on which the parties were served with a copy of the reasoned judgment.
22. The Court reiterates that the right to a fair hearing before a tribunal as guaranteed by Article 6 § 1 of the Convention must be interpreted in the light of the Preamble to the Convention, which, in its relevant part, declares the rule of law to be part of the common heritage of the Contracting States. One of the fundamental aspects of the rule of law is the principle of legal certainty, which requires, among other things, that where the courts have finally determined an issue, their ruling should not be called into question (see Brumărescu v. Romania [GC], no. 28342/95, § 61, ECHR 1999‑VII).
23. The Court further reiterates that it is not its task to take the place of the domestic courts in interpreting domestic legislation. It is primarily for the national authorities, notably the courts, to resolve problems of such interpretation. This applies in particular to the interpretation by courts of rules of a procedural nature such as the prescribed time for lodging appeals. The Court’s role is confined to ascertaining whether the effects of such an interpretation are compatible with the Convention in general and, in particular, with the principle of legal certainty, guaranteed by Article 6 of the Convention (see, mutatis mutandis, Platakou v. Greece, no. 38460/97, § 37, ECHR 2001‑I).
24. Turning to the circumstances of the present case, it is noted that in accordance with Article 254 (2) of the Code of Civil Procedure, a judgment delivered by a first-instance court becomes final once the time-limit for the lodging of an appeal has expired. Under Article 362 of the same Code, as interpreted by the Plenary Supreme Court of Justice (see paragraph 13 above), the time-limit for lodging an appeal is thirty days from the date of the delivery of the operative part of the judgment, irrespective of whether the parties were present or not at that delivery. Article 369 (1) (b) of the Code of Civil Procedure provides that where a party has failed to observe the time-limit for lodging an appeal and does not request its extension, the appellate court must strike the appeal out of its list of cases.
25. In its decision of 3 September 2014, the Chişinău Court of Appeal calculated the time-limit which the Inspectorate had for lodging its appeal and came to the conclusion that the deadline had expired on 27 January 2014. The above calculation was not challenged by the Inspectorate or disputed by the Supreme Court of Justice and appears to be in line with the explanatory judgment of the Plenary Supreme Court of Justice (see paragraph 13 above). Accordingly, the Court cannot but find that the time‑limit for lodging the Inspectorate’s appeal against the judgment of 26 December 2013 expired on 27 January 2014 and that therefore the appeal of 5 February 2014 was lodged out of time.
26. In such circumstances, the Court considers that, by allowing the Inspectorate’s appeal on points of law on 8 October 2014, the Supreme Court of Justice set at naught an entire judicial process which had ended in a final and enforceable judicial decision and which was thus res judicata. As a result, it infringed the principle of legal certainty and breached the applicant’s right to a fair hearing under Article 6 § 1 of the Convention (see Brumărescu, cited above, §§ 61 and 62).
27. There has accordingly been a violation of Article 6 of the Convention.
III. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
28. The applicant company complained that the Supreme Court’s decision of 8 October 2014 had had the effect of infringing its right to peaceful enjoyment of its possessions as secured by Article 1 of Protocol No. 1 to the Convention.
29. The Court reiterates that a judgment debt may be regarded as a “possession” for the purposes of Article 1 of Protocol No. 1 (see, among other authorities, Burdov v. Russia, no. 59498/00, § 40, ECHR 2002-III, and the cases cited therein). Furthermore, quashing such a judgment after it has become final and unappealable will constitute an interference with the judgment beneficiary’s right to the peaceful enjoyment of that possession (see Brumărescu, cited above, § 74). Even assuming that such an interference may be regarded as serving a public interest, the Court finds that it was not justified since a fair balance was not preserved and the applicant was required to bear an individual and excessive burden (see Brumărescu, cited above, § 75-80).
30. It follows that there has been a violation of Article 1 of Protocol No. 1 to the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
31. 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.”
A. Pecuniary damage
32. The applicant company claimed a total of 442,544.46 Moldovan lei (MDL – equivalent to 21,073.44 euros (EUR) at the time) in pecuniary damage, of which MDL 250,394.50 (equivalent to EUR 11,923.49 at the time) represented the amount awarded to the applicant company in the final judgment of the Străşeni District Court of 26 December 2013, comprising reimbursement of the VAT, fines and charges that it had previously paid. The remainder, in the amount of MDL 192,149.92 (EUR 9,149.95), corresponded to the lost interest on those sums, calculated on the basis of the provisions of the Civil Code concerning the calculation of default interest.
33. The Government argued that there was no causal link between the sum claimed in respect of pecuniary damage and the alleged violation.
34. The Court considers that the applicant company must have suffered pecuniary damage as a result of being unable to use and enjoy the sums awarded to it by the final judgment of 26 December 2013 (see Prodan v. Moldova, no. 49806/99, § 71, ECHR 2004‑III (extracts)). Taking into consideration the circumstances of this particular case, the Court awards the applicant the sum of EUR 15,544.66 in respect of pecuniary damage.
B. Non-pecuniary damage
35. The applicant company claimed MDL 250,394.50 (equivalent to EUR 11,923.49 at the time) in respect of non-pecuniary damage.
36. The Government did not depart from their position as set out in paragraph 35 above and contended that the applicant company’s claims were excessive and inconsistent with the awards the Court usually makes in such cases.
37. The Court reiterates that it may award pecuniary compensation for non-pecuniary damage to a commercial company. Non-pecuniary damage suffered by such companies may include aspects that are to a greater or lesser extent “objective” or “subjective”. Aspects that may be taken into account include the company’s reputation, uncertainty in planning, disruption in the management of the company (for which there is no precise method of calculating the consequences) and lastly, albeit to a lesser degree, the anxiety and inconvenience caused to the members of the management team (see Comingersoll S.A. v. Portugal [GC], no. 35382/97, § 35, ECHR 2000-IV, and Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, § 221, ECHR 2012).
38. Having regard to the circumstances of the present case and the nature of the violations found, the Court considers it reasonable to award the applicant company the amount of EUR 2,000 in respect of non-pecuniary damage.
C. Costs and expenses
39. The applicant company also claimed MDL 10,000 (equivalent to EUR 476 at the time) for the costs and expenses incurred before the Court and MDL 250 (equivalent to EUR 11 at the time) for secretarial expenses. He provided the Court with supporting documents.
40. The Government objected and argued that the amounts claimed were excessive.
41. The Court reiterates that in order for costs and expenses to be included in an award under Article 41 of the Convention, it must be established that they were actually and necessarily incurred and were reasonable as to quantum (see, for example, Mozer v. the Republic of Moldova and Russia [GC], no. 11138/10, § 240, 23 February 2016). Having regard to all the relevant factors and to Rule 60 § 2 of the Rules of Court, the Court awards the entire amount claimed for costs and expenses.
D. Default interest
42. The Court considers it appropriate that the default interest rate 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, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 of the Convention;
3. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;
4. Holds
(a) that the respondent State is to pay the applicant, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 15,544.66 (fifteen thousand five hundred and forty-four euros and sixty-six cents), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii) EUR 2,000 (two thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(iii) EUR 487 (four hundred and eighty-seven euros), plus any tax that may be chargeable to the applicant, 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 28 May 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Hasan Bakırcı Ivana Jelić
Deputy RegistrarPresident
Full & Egal Universal Law Academy