CASE OF S.C. TEXTINC S.A. v. ROMANIA

FOURTH SECTION

CASE OF S.C. TEXTINC S.A. v. ROMANIA

(Application no. 52018/10)

JUDGMENT

STRASBOURG

6 February 2018

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

In the case of S.C. Textinc S.A. v. Romania,

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

Paulo Pinto de Albuquerque, President,
Egidijus Kūris,
Iulia Motoc, judges,
and Andrea Tamietti, Deputy Section Registrar,

Having deliberated in private on 16 January 2018,

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

PROCEDURE

1. The case originated in an application (no. 52018/10) against Romania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Romanian company, S.C. Textinc S.A. (“the applicant company”), on 26 July 2010.

2. The applicant company was represented by Mr P. Sălăjan, a lawyer practising in Arad. The Romanian Government (“the Government”) were represented by their Agent, Ms C. Brumar, from the Ministry of the Foreign Affairs.

3. On 24 February 2016 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

4. The applicant company, S.C. Textinc S.A., is a Romanian company whose registered office is in Timişoara.

5. On 12 December 2008 the Timişoara Finance Inspectorate (hereinafter, “the T.F.I.”) instituted enforcement proceedings against the applicant company on the grounds that it had an outstanding tax liability for the year 2008 amounting to 237,128 Romanian lei (RON).

6. The applicant company, represented by its appointed lawyer, Mr. P. Sălăjan, challenged before the Timişoara District Court the T.F.I.’s decision to open enforcement proceedings. It claimed that it had no outstanding fiscal debts and submitted documentary evidence in this respect.

7. At the first hearing in the proceedings the T.F.I. acknowledged that the applicant company had no outstanding tax liability and that the enforcement proceedings had been instituted in error. Invoking Article 275 of the Romanian Code of the Civil Procedure (hereinafter, “the CCP” – see paragraph 15 below), it also contended that as it had acknowledged its error at the first hearing in the proceedings it should not be ordered to pay the costs and expenses incurred by the applicant company.

8. By a judgment of 16 February 2009 the Timişoara District Court allowed the applicant company’s challenge concerning the T.F.I.’s decision to open enforcement proceedings and ordered the T.F.I. to pay the applicant RON 9,893; this sum represented respectively the fees of the applicant company’s lawyer (9,700 RON), stamp duty and trial tax (193 RON). The court held that although the T.F.I. had acknowledged its error at the first hearing it could not be exonerated from the payment of the costs and expenses incurred by the applicant company, as the challenge proceedings were the result of a mistake on its part. The court further noted that the T.F.I. had started enforcement proceedings against the applicant company for a non-existent debt and that the latter had accordingly had to hire a lawyer and pay the trial fees in order to defend itself. The court also noted that the applicant company had submitted evidence to support its request for the reimbursement of the expenses it had incurred.

9. The T.F.I. lodged an appeal on points of law against the judgment of 16 February 2009. It claimed that the first-instance court had not observed the principle of adversarial proceedings and of equality of arms, as it had not had the opportunity to challenge the amount paid by the applicant company in lawyer’s fees, which in its opinion were too high.

10. By a final judgment of 12 August 2009 the Timiş County Court dismissed the appeal as unfounded. While holding that the lawyer’s fees corresponded to his input in the case, the court reiterated that the judge was entitled to increase or to reduce a lawyer’s fees, according the specific criteria set out by Article 274 of the CCP (see paragraph 15 below). The court thus concluded that the judgment given by the Timişoara District Court was lawful and well-founded; it further awarded the applicant company the amount of 7,596 RON in legal costs in respect of the appeal proceedings.

11. The T.F.I. lodged with the Timiş County Court an application for the judgment of 12 August 2009 to be set aside (contestaţie în anulare – see paragraph 14 below) on the grounds that the County Court had not examined all the arguments that it had raised in its appeal on points of law; the T.F.I. referred in particular to the fact that before the Timişoara District Court they were not given the possibility to bring their arguments concerning the amount requested by the applicant company and then awarded in legal costs and expenses by the first-instance court.

12. In a final judgment of 19 February 2010 the Timiş County Court, sitting in a different formation from that of 12 August 2009, allowed the request: it set aside the judgment of 12 August 2009 (see paragraph 10 above) and allowed the appeal lodged by the T.F.I. against the judgment of 16 February 2009 (see paragraph 8 above), which it partly amended. The County Court held that the appellate court had not examined the arguments raised by the defendant in their appeal on points of law in relation to the manner in which the first instance court applied Article 274 § 3 of the CCP (see paragraph 15 below); in particular, the first instance court had not allowed the parties to bring their arguments concerning the amount of the legal costs requested by the applicant company. Such an omission was sufficient, in the County Court’s view, to justify the quashing of the previous judgments.

13. The County Court then re-examined the amount paid by the applicant company in lawyer’s fees and considered that in relation to the lawyer’s input in the case, it was justified to reduce that amount from RON 9700 to RON 700. It also considered that the stamp duty and trial tax in the amount of 193 RON were not to be granted to the applicant company, in so far as this amount could be requested separately from the fiscal authorities, based on the Law no. 146/1997 on stamp duty, as a consequence of the fact that the challenge to the enforcement had been allowed.

II. RELEVANT DOMESTIC LAW

14. Article 318 of the CCP, as in force at the material time, defined a “material error” as one of the grounds for having a final decision quashed by means of an application to set aside. In so far as relevant, it read as follows:

1. “Decisions rendered by a court of last instance may also be challenged by means of an application to set aside if a decision has been based on a material error or if that court, in dismissing or partly granting the appeal, faultily omitted to assess any of the reasons for appeal...”

15. Articles 274-275 of the CCP, as in force at the material time, provided in their relevant parts:

Article 274

“...

3. A judge is entitled to increase or to reduce a lawyer’s fees whenever he or she finds it established that they are unreasonably low or high, in relation to the case’s worth or to the lawyer’s input in the case.”

Article 275

“A defendant who at the first hearing (prima zi de înfăţişare) acquiesced to the claims of the plaintiff cannot be bound to pay the legal costs and expenses incurred by the latter, unless he or she was previously notified about the respective claims.”

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION

16. The applicant company complained that its right to a fair trial was violated as a result of the quashing by means of an application to set aside the judgment of 12 August 2009 (by which the fiscal authority was ordered to pay all the legal costs it had incurred in the enforcement proceedings). It invoked Article 6 § 1 of the Convention, which reads in its relevant parts as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

A. Admissibility

17. The Government claimed that the application was incompatible rationae personae with the provisions of the Convention in so far as it was not lodged by the applicant company, but by a third party, R.M.Ş., who did not bring any proof that she acted on behalf of the company.

18. The Court notes, however, that the application form bears the applicant company’s stamp, as well as a signature belonging to R.M.Ş., in her capacity as administrator of the applicant company, as proved by the documents appended to the letter of 25 October 2017 sent by the applicant company to the Court. Moreover, in its reply to the Government’s observations, the applicant company, represented by Mr P. Sălăjan, namely the same lawyer as the one who had represented it in the domestic proceedings, argued that the application form had been validly signed and stamped and that it confirmed its intention to pursue the proceedings before the Court. In these circumstances, the Court considers that the Government’s preliminary objection must be dismissed, in so far as the applicant company has validly lodged its application before it.

19. The Court further notes that the application is not manifestly
ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

20. The applicant company claimed that the quashing of the final judgment of 12 August 2009 was done in breach of the legal certainty principle.

21. The Government contested that argument, arguing that the quashing was justified, given the circumstances of the case, and compliant with the domestic legal provisions (namely with Article 318 of the CCP).

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 declares, in its relevant part, that the rule of law is 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. Legal certainty presupposes respect for the principle of res judicata (ibid., § 62) – that is to say the principle of the finality of judgments. This principle emphasises the fact that no party is entitled to seek a review of a final and binding judgment merely for the purpose of obtaining a rehearing and a fresh determination of the case. Higher courts’ power of review should be exercised to correct judicial errors and miscarriages of justice, but not to carry out a fresh examination. A review should not be treated as an appeal in disguise and the mere possibility of two views on the subject is not a ground for re-examination. Departures from that principle are justified only when made necessary by circumstances of a substantial and compelling character (see for instance Ryabykh v. Russia, no. 52854/99, § 52, ECHR 2003-IX).

24. However, the requirements of legal certainty are not absolute. The Court itself recommends sometimes the re-opening of proceedings as the most appropriate reparatory measure when the domestic proceedings have not satisfied the Article 6 requirements (see, for instance, Moreira Ferreira v. Portugal (no. 2) [GC], no. 19867/12, § 48, ECHR 2017 (extracts) and Mitrea v. Romania, no. 26105/03, § 25, 29 July 2008). In any case, the power to conduct an extraordinary review should be exercised by the authorities so as to strike, to the maximum extent possible, a fair balance between the interests at stake (see, mutatis mutandis, Nikitin v. Russia, no. 50178/99, § 57, ECHR 2004-VIII).

25. Turning to the facts of the instant case, the Court notes that the final judgment of 12 August 2009 found in favour of the applicant company, the court dismissing as ill-founded, albeit in a concise manner, the arguments raised by the T.F.I. in relation to the amount of the legal costs and expenses claimed by the applicant company and to the manner in which they were assessed by the first-instance court (see paragraph 10 above). However, the same court, sitting in a different composition, allowed the defendant’s application to set this judgment aside, on the ground that the court of last instance had not appropriately and exhaustively examined the matter complained about by in the appeal request (see paragraph 12 above).

26. Despite the Government’s claim to the contrary, the Court considers that this situation is a typical case of there being different views of the courts on a factual matter, namely on the manner in which the lawyer’s input in the case is assessed by the judge and consequently, on the amount to be granted as legal costs and expenses. According to the Court’s case-law (see paragraph 23 above), such a difference of views does not justify the quashing of a final and binding decision (see, mutatis, mutandis, Mitrea, cited above, § 28).

27. Lastly, the Court considers that it has not been shown that the miscarriage of justice or judicial error allegedly committed by the court in the first set of proceedings in the present case were such as to justify the quashing of the final and binding judgment.

28. The foregoing considerations are sufficient to enable the Court to conclude that, by allowing the final judgment of 12 August 2009 to be quashed, the authorities failed to strike a fair balance between the interests at stake and thus infringed the applicant company’s right to a fair hearing.

29. There has accordingly been a violation of Article 6 § 1 of the Convention as a consequence of the fact that the legal certainty principle was not respected.

II. APPLICATION OF ARTICLE 41 OF THE CONVENTION

30. 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. Damage

31. The applicant company claimed 10,000 euros (EUR) in respect of pecuniary damage, referring to the legal costs and expenses incurred before the domestic courts and to which it was entitled according to the judgment of 12 August 2009; it further claimed EUR 5,000 in respect of non‑pecuniary damage.

32. The Government stated that the claims in respect of pecuniary damage were general and unsubstantiated. They furthermore argued that the amount claimed in respect of non-pecuniary damage was excessive, in view of the fact that no damage was sustained by the applicant company.

33. The Court accepts that the applicant company must have sustained some pecuniary and non-pecuniary damage as a result of the quashing of final domestic judgment in its favour. However, its claims in this respect appear to be excessive. Having regard to all the evidence in its possession and ruling on an equitable basis, as required by Article 41 of the Convention, the Court decides to award the applicant company a total of EUR 5,600 to cover all heads of damage.

B. Costs and expenses

34. The applicant company did not claim any separate amount for the costs and expenses incurred before the domestic courts other than those requested in respect of pecuniary damage. Furthermore, no claim was submitted in respect of the costs and expenses incurred before the Court.

35. Accordingly, the Court considers that there is no call to award it any sum on that account.

C. Default interest

36. 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

(a) that the respondent State is to pay the applicant company, within three months, EUR 5,600 (five thousand six hundred euros) in respect of pecuniary and non-pecuniary damage, to be converted into the currency of the respondent State at the rate applicable at the date of settlement;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period, plus three percentage points;

4. Dismisses the remainder of the applicant company’s claim for just satisfaction.

Done in English, and notified in writing on 6 February 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Andrea TamiettiPaulo Pinto de Albuquerque
Deputy RegistrarPresident

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