Information Note on the Court’s case-law No. 110
July 2008
Družstevní Záložna Pria and Others v. the Czech Republic - 72034/01
Judgment 31.7.2008 [Section V]
Article 1 of Protocol No. 1
Article 1 para. 2 of Protocol No. 1
Control of the use of property
Denial of access to business documents and accounts in the control of a State-appointed receiver for purposes of challenging the receivership order: violation
Article 6
Civil proceedings
Article 6-1
Impartial tribunal
Independent tribunal
Absence of right to appeal against a receivership order to a judicial body with full jurisdiction: violation
Facts: The applicant, a credit union, was placed in receivership (nucená správa) by the Office for the Supervision of Credit Unions (OSCU) for allegedly engaging in activities outside its remit without authorisation. Following an administrative appeal by the applicant, the Ministry of Finance upheld that order. The High Court dismissed an application by the applicant for judicial review after finding that the receivership order was in accordance with the legislation then in force and that the OSCU had not exceeded its discretionary power. Ultimately, following various applications and appeals, the applicant was declared insolvent and a trustee was appointed.
In its application to the European Court, the applicant complained that its property rights had been interfered with, that its supervisory board had been denied access by the receiver to business and accountancy documents necessary to challenge the receivership order and that it had been unable to contest the receivership order before an independent and impartial tribunal with full jurisdiction.
Law: Article 1 of Protocol No. 1 – Any interference with the peaceful enjoyment of possessions had to be accompanied by procedural guarantees affording the individual or entity concerned a reasonable opportunity of effectively challenging the impugned measures. Under the law in force at the material time the receiver was not obliged to grant access to the applicant’s business and accountancy documents and had refused access to the supervisory board. The financial situation was a decisive factor in any decision to impose receivership and played a central role in any subsequent review of that decision. It was therefore indispensable for any entity intending to contest a decision to place it in receivership to have access to all of its documents and other materials which might assist an appeal. Business and accountancy documents fell within that category. While the right to access was not absolute, any limitation had to avoid impairing the very essence of that right. This was particularly true where the decision whether to grant access to the documents rested with a receiver employed by a regulatory authority, as otherwise the executive branch of the State could frustrate any challenge to the receivership order by denying access to indispensable documents. None of these requirements had been met in the applicant’s case, so that it was deprived of the requisite procedural guarantees. While the Court accepted that particularly at a time of crisis there could be a paramount need for the State to act in order to avoid irreparable harm, the threat in the applicant’s case had been substantially reduced once the State was in full control of the business, so there had been no reason to deny it access to the business documents or to contest access before the courts. The interference with the applicant’s possessions was accordingly not attended by sufficient guarantees against arbitrariness and so not lawful.
Conclusion: violation (unanimously).
Article 6 § 1 – The audit of the applicant’s economic standing had been carried out by the OSCU and the applicant’s objections heard by an OSCU employee. The Ministry of Finance had declined to review the audit as it had been taken in accordance with the legislation and the facts as assessed by the OSCU were not reviewable by any other administrative authority. The OSCU was managed by a director appointed and removed from office by the Minister of Finance, who also exercised the power to approve in detail the OSCU’s status, remit and policy. Hence, it was an authority subordinated to and dependent on the Ministry, which formed part of the executive branch, and could not be deemed an independent and impartial tribunal.
As regards the judicial-review proceedings, until the end of 2002 the Czech administrative courts did not have full jurisdiction to review administrative acts, their scrutiny being limited to issues of legality. It was apparent from the reasoning of the High Court that, owing to its limited jurisdiction, it had abstained from examining whether the applicant’s situation did in fact justify receivership. Accordingly, instead of ruling on the proportionality of that measure, it had confined itself to verifying whether the OSCU had acted within the bounds of its discretionary powers. In so doing, it had assumed, without verifying, the accuracy of the OSCU’s assessment of the applicant’s economic standing and so had not exercised full judicial review.
Conclusion: violation (unanimously).
Article 41 – not ready for decision.
© Council of Europe/European Court of Human Rights
This summary by the Registry does not bind the Court.
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