THIRD SECTION
Application no. 72493/10
DRAFT - OVA a.s.
against Slovakia
lodged on 29 November 2010
STATEMENT OF FACTS
1. The applicant, DRAFT - OVA a.s., is a private joint-stock company, which was established under the laws of the Czech Republic in 1993, and has its registered office in Opava (the Czech Republic). It is represented before the Court by Advokátska kancelária JUDr. Radomír Bžán, a law firm with its registered office in Bratislava (Slovakia).
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. Background
2. The present application concerns claims against a Slovak gas company (“the defendant”) dating back to 1998 when the defendant was still a State-owned enterprise and when its director and statutory representative was Mr J.D. It would later turn out that, at his time, Mr J.D. signed a number of bills of exchange (zmenka) in the name of the defendant for large amounts of money.
3. These bills have always been contested by the defendant. Nevertheless, they have been negotiated among many parties and have given rise to a deal of litigation, including the proceedings in the present case. They have equally attracted extensive media attention.
4. Meanwhile, in 2001, the defendant had been transformed into a joint stock company and then underwent privatisation by sale of 49% of its stock to private investors.
5. The contract on privatisation of the defendant contains a clause pursuant to which the State agreed to indemnify the investors for any loss they might incur on account of the bills of exchange signed by Mr J.D.
6. At present, 51% of the defendant’s stock is held by the State, while the remaining 49% is held by a private party.
2. Action
7. On 23 December 2005 the applicant company lodged a petition with the Bratislava V District Court (Okresný súd). It relied on a bill of exchange for the payment of the equivalent of some 11,350,000 euros (EUR) signed by Mr J.D. in the name of the defendant on 29 September 1998 with indicated date of issue 1 October 1998. The applicant company sought a judicial order for the defendant to pay this amount with interest and some additional associated amounts.
8. On 17 February 2006, in summary proceedings, the District Court issued a payment order (zmenkový platobný rozkaz) for the amounts claimed. Following the defendant’s protest (námietky) and appeal (odvolanie), the order was upheld in ordinary proceedings by, respectively, the District Court on 21 May 2007 and the Bratislava Regional Court (Krajský súd) 28 April 2009.
9. Both the District Court and the Regional Court held hearings at which legal representatives of the parties and two witnesses where heard and documentary evidence was examined as adduced by the parties.
10. No ordinary appeal lay against the appeal court’s judgment and, following the service of its copy on the parties, the matter became resolved with the force of a final and binding decision (právoplatnosť), on 8 June 2009.
3. Extraordinary review
11. On 5 June 2006 the defendant lodged a petition with the Office of the Prosecutor General requesting the latter to exercise his discretionary power to challenge the above-mentioned judgments by way of an extraordinary appeal on points of law (mimoriadne dovolanie – “extraordinary appeal”).
12. The Prosecutor General decided to accede to the request and, on 10 June 2006, he challenged the contested judgments in the Supreme Court (Najvyšší súd).
The Prosecutor General relied on Article 243h § 3 of the Code of Civil Procedure (Law no. 99/1963 Coll., as amended – “the CCP”) (see paragraph 34 below), which permits that reasons for an extraordinary appeal be submitted within 60 days of the introduction of the appeal if there is the risk of considerable economic damage or other irreparable consequence.
In that respect, the Prosecutor General argued that the contested judgments were directly enforceable and that the volume of the case file was extensive. The reasons for appealing would therefore be submitted later.
13. At the same time, the Prosecutor General requested that the enforceability of the contested judgments be suspended. Pursuant to Article 234ha of the CCP (see paragraph 35 below), by virtue of this request, the enforceability was immediately and automatically suspended, pending the Supreme Court’s decision to dismiss the request or, in the absence of such a decision, pending the outcome of the proceedings before the Supreme Court on the extraordinary appeal.
In support of his request, the Prosecutor General submitted that the defendant, with proprietary participation of the State, had been ordered to pay an important amount of money. If that amount were to be paid and if the Supreme Court were to allow the extraordinary appeal, this would give rise to a claim for repayment of unjustified enrichment in an equally significant amount. Such a claim would not be secured by any means and its satisfaction would be uncertain and risky.
14. In the absence of a decision on the part of the Supreme Court to dismiss the Prosecutor General’s request, the enforceability of the payment order in the applicant company’s favour remained suspended until the resolution of the Prosecutor General’s extraordinary appeal on its merits (see below).
15. Meanwhile, on 23 July 2009, the Prosecutor General had filed the reasons for his appeal and, on 4 September 2009, the applicant company had filed its observations in reply.
16. On 12 May 2012 the Supreme Court allowed the appeal, quashed the contested judgments and remitted the matter to the District Court for a new determination.
17. The Supreme Court’s judgment was served on the applicant company’s lawyer on 7 July 2010. Thereafter and until the present day, the proceedings have been pending at first instance.
4. Final domestic decision
18. On 6 September 2010 the applicant company challenged the Supreme Court’s judgment in the Constitutional Court (Ústavný súd) by way of a complaint under Article 127 of the Constitution (Constitutional Law no. 460/1992 Coll., as amended).
The applicant company relied inter alia on Articles 6 § 1 of the Convention and 1 of Protocol No. 1, invoking its right to a fair trial, in particular access to a court and equality of arms, and protection of property, as well as the principles of legal certainty and rule of law.
It was argued, at the systemic level, that procedural equality of the parties had been upset to the applicant company’s disadvantage already by the mere existence of the proceedings on the extraordinary appeal. In that respect, it was submitted that the dispute over the bill of exchange was of a commercial and as such private-law nature. Any room for interference by the State with judicial proceedings and final and binding decisions in such a dispute was therefore particularly narrow. The position in the present case was aggravated by the fact that the Prosecutor General’s extraordinary appeal favoured the defendant, which was an entity with a majority interest of the State.
In addition, the applicant company also contested the application of the existing rules in its specific case, since the Prosecutor General had interfered by extraordinary means with a final and binding judgment in its favour. The applicant company pointed out the particular circumstances of the case, including the fact that the two lower levels of jurisdiction had determined the matter unanimously, that they had already dealt with the arguments then reiterated by the Prosecutor General, and that the re assessment of the case had involved not only questions of law, but also questions of fact. In conclusion, the interference with the applicant company’s final and binding judgment had been without any acceptable justification.
Furthermore, the applicant company reminded that the Government of the Slovak Republic had previously publically declared that what had been termed as the “[Mr J.D.]’s bills of exchange” would never be honoured. In view of that declaration as well as the Government’s contractual obligation to indemnify the investors in the defendant for any losses that they might incur on account of the bills of exchange signed by Mr J.D (see paragraph 5 above), the extraordinary appeal did not serve any greater good as envisaged by the applicable statute but had rather been serving the Government’s political and economic interests. As the Supreme Court had not clearly distanced itself from these considerations, it could not be regarded as independent and impartial.
Lastly, as the quashed judgments had been final and binding, they had constituted possessions and their quashing an interference with those possessions, in violation of Article 1 of Protocol No. 1.
19. On 11 November 2010 the applicant company added further reasons to their constitutional complaint, relying on the Report on the Independence of the Judicial System by the Venice Commission adopted at its 82nd plenary session on 12 and 13 March 2010, in particular as to revision of decisions of judges outside the appeals procedures (see paragraphs 39 and 40 below).
In addition, the applicant company pointed out the circumstances of the adoption of the amendment (Law no. 484/2008 Coll.) to the CCP allowing for extraordinary appeals to be lodged with the reasons to be added later and for such appeals to have automatic suspensive effect. In particular, this amendment had been adopted with retroactive effect and with the aim of reversing the outcome of a specific albeit unrelated dispute.
20. On 19 January 2012 the Constitutional Court declared the complaint inadmissible as being manifestly ill‑founded. It observed that the statutory framework for examination of individual complaints did not allow it to examine the compliance of statutes with the Constitution and international instruments as such. It could therefore only review the application of the existing statutory rules in the applicant company’s individual case. It observed that the statutory provisions on extraordinary appeals were an integral part of the legal system of Slovakia and that there was a presumption of their constitutionality. It further observed that the Prosecutor General had no power to lodge such an appeal of his or her own motion, but could only do so upon a petition of those concerned. In the present case, the Prosecutor General’s extraordinary appeal had been prompted by a petition by the defendant.
As to the substance, the Constitutional Court observed that it was no court of further appeal against decisions of the ordinary courts. It found the reasoning of the Supreme Court congruous and convincing and found no constitutionally relevant unfairness, arbitrariness or irregularity in the proceedings.
Furthermore, the Constitutional Court draw a distinction between the Prosecutor General, who had lodged the extraordinary appeal, and the Supreme Court, which had decided on it, finding no grounds to doubt the Supreme Court’s independence and impartiality.
As to the applicant company’s property claim, the Constitutional Court reiterated its established case-law, pursuant to 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. However, no such procedural issue had been established.
The decision was served on the applicant company’s lawyer on 16 February 2012.
5. Another similar case by the same applicant company
21. In another case the same applicant company sued the same defendant for payment under another bill of exchange, also issued by Mr J.D. on behalf of the defendant on 1 October 1998. That bill was for the same amount as in the present case and the relevant circumstances were similar.
22. Upon the applicant company’s action, a payment order was first issued, on 6 March 2006, but then quashed, on 21 May 2007, following the defendant’s protest. The latter decision was then upheld, on 29 January 2008, following the applicant company’s appeal.
23. The applicant company subsequently twice petitioned the Prosecutor General to challenge the judgments quashing the payment order and dismissing its appeal by way of an extraordinary appeal. Among other things, it referred to the Prosecutor General’s extraordinary appeal of 10 June 2006 (see paragraphs 12 et seq. above) and submitted that the judgments mentioned in the precedent paragraphs actually contained the same structural and technical flaws, save for the outcome, which this time was to the applicant company’s disadvantage.
24. The applicant company’s repeated petition was ultimately dismissed, of which the applicant company was informed in a letter of the Prosecutor General dated 5 October 2010.
B. Relevant domestic law and practice
1. Code of Civil Procedure
(a) Various provisions
25. Under its Article 1, the CCP lays down the procedures to be applied by the courts and to be followed by the parties in civil proceedings, with a view to ensuring fair and just protection of the rights and legitimate interests of the parties, and promoting compliance with the statutory law, fulfilment of duties and respect for the rights of fellow citizens.
26. In accordance with Article 101 § 1, the parties to the proceedings are liable to contribute to the purpose of the proceedings, in particular by giving truthful and complete description of all relevant facts, adducing evidence, and abiding by the instructions of the court.
27. Pursuant to Article 120 § 1, the parties to the proceedings are liable to adduce evidence to uphold their claims.
28. Under Article 159 § 3, as soon as a matter has been resolved by force of a final and binding decision or a judgment, it may not give rise to new proceedings.
(b) Extraordinary appeals
29. Extraordinary appeals are regulated by the provisions of the CCP’s Articles 243e et seq.
30. The Prosecutor General has the power to challenge a decision of a court by means of an extraordinary appeal. He or she may do so upon a petition of a party to the proceedings or another person concerned or injured by the decision, provided that the Prosecutor General concludes that the final and binding decision violated the law; provided that the protection of the rights and legitimate interests of individuals, legal entities, or the State so requires; provided that that protection cannot be achieved by other means; and provided that the matter at hand is not excluded from review (Articles 243e § 1 and 243f § 2).
31. An extraordinary appeal may only be aimed at a ruling in a decision, which has been contested by the party to the proceedings or the person concerned or injured by that decision (Article 243e § 2). Unless a statute provides otherwise, the Prosecutor General is bound by the scope of the petition for an extraordinary appeal (Article 243e §§ 3 and 4).
32. Further conditions of admissibility of an extraordinary appeal are listed in Article 243f § 1. They comprise (a) major procedural flaws within the meaning of Article 237 (in that respect see, for example, Ringier Axel Springer Slovakia, v. Slovakia, no. 41262/05, § 62, 26 July 2011), (b) other errors of procedure resulting in an erroneous decision on the merits, and (c) wrongful assessment of points of law.
33. An extraordinary appeal is to be lodged with the cassation court within one year of the contested judicial decision’s becoming final and binding (Article 243g).
34. If the Prosecutor General concludes, upon a petition of a party to the proceedings or another person concerned or injured by the impugned decision, that there is the risk of considerable economic damage or other serious irreparable consequence, the extraordinary appeal may be filed even without reasons. The reasons then must be supplied within 60 days of the lodging of the extraordinary appeal with the cassation court, failing which the proceedings are to be discontinued (Article 243h §§ 3 and 4).
35. If the extraordinary appeal on points of law is accompanied by a request that that the enforceability of the contested decision be suspended, its enforceability is to be suspended at the moment when the extraordinary appeal is lodged with the court of cassation (Article 243ha § 1).
The duration of the effect of such a suspension is regulated by Article 243ha § 2, pursuant to which that effect ceases (a) when the request is dismissed or (b) with the decision on the extraordinary appeal, but unless extended by the court of cassation no later than one year from the lodging of the extraordinary appeal with the court of cassation.
36. A copy of an extraordinary appeal is to be transmitted to the parties to the proceedings for observations and so is, in addition to the Prosecutor General, the decision on it (Article 243i § 1 and Article 243j).
2. The Constitutional Court’s practice concerning extraordinary appeals
37. In a decision of 29 October 2003 in an unrelated case no. IV. ÚS 197/03, the Constitutional Court held, inter alia, that the Prosecutor General in proceedings before the cassation court in his or her extraordinary appeal has no standing of a party to the proceedings as such, but rather a standing sui generis, similar to that of the parties. In such proceedings, the Prosecutor General does not have any subjective interest of his or her own. The protection from unlawful final and binding decisions, pursued in those proceedings, rather serves general interest.
38. In a decision of 3 June 2008, in another unrelated case no. IV. ÚS 180/08, the Constitutional Court observed, among other things, that individuals and legal entities having submitted a petition to the Prosecutor General for lodging an extraordinary appeal had no legal claim to have such an appeal lodged and that, conversely, the Prosecutor General was under no legal duty to accommodate the petition. It was within the Prosecutor General’s entire discretion to decide whether or not to lodge an extraordinary appeal.
C. Relevant European texts
The Venice Commission’s Report on the Independence of the Judicial System
39. The report was adopted by the European Commission for Democracy through Law (Venice Commission) at its 82nd Plenary Session (12-13 March 2010).
40. In its section III (9), entitled “Final character of judicial decisions”, the report refers to Principle I(2)(a)(i) of Recommendation No. R (94) 12 of the Committee of Ministers of the Council of Europe on the Independence, Efficiency and Role of Judges, which provides that:
“decisions of judges should not be the subject of any revision outside the appeals procedures as provided for by law”.
The relevant part of the report continues that:
“It should be understood that this principle does not preclude the re-opening of procedures in exceptional cases on the basis of new facts or on other grounds as provided for by law.
66. While the [Consultative Council of European Judges] concludes in its Opinion No. 1 (at 65), on the basis of the replies to its questionnaire, that this principle seems to be generally observed, the experience of the Venice Commission and the case law of the [Court] indicate that the supervisory powers of the Prokuratura in post-Soviet states often extend to being able to protest judicial decisions no longer subject to an appeal.
67. The Venice Commission underlines the principle that judicial decisions should not be subject to any revision outside the appeals process, in particular not through a protest of the prosecutor or any other state body outside the time limit for an appeal.”
COMPLAINTS
41. The applicant company complains under Article 6 § 1 of the Convention about a violation of its right to a fair hearing by an independent and impartial tribunal. In that respect, it advances substantially the same arguments as before the Constitutional Court. In addition, it points out that in the other case concerning a similar bill of exchange issued on behalf of the same defendant by Mr J.D., the Prosecutor General has refused to exercise his discretionary power, upon the applicant company’s petition, to challenge by way of an extraordinary appeal the ordinary courts’ judgment dismissing the applicant company’s action.
42. Similarly, on the same grounds as before the Constitutional Court, the applicant company alleges a violation of its rights under Article 1 of Protocol No. 1.
QUESTIONS TO THE PARTIES
1. Has the applicant company complied with the six-month time-limit laid down in Article 35 § 1 of the Convention?
2. Having regard to the fact that the enforceability of a final and binding judgment in its favour has been suspended and that that judgment has eventually been quashed by the Supreme Court following an extraordinary appeal on points of law by the Prosecutor General, prompted by a petition by the defendant, did the applicant company have a fair hearing in the determination of its civil rights and obligations, in accordance with Article 6 § 1 of the Convention? In particular, but not only, were its rights of access to a court and the principles of legal certainty and equality of arms respected?
3. Has there been an interference with the applicant company’s peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1, as a result of the suspending of the enforceability of the final and binding judgment in its favour and the subsequent quashing of that judgment by the Supreme Court?
If so, was that interference justified in accordance with that provision?
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