FOURTH SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 8947/05
by Petar Kraev GERDZHIKOV and Château Vallée Des Roses EOOD
against Bulgaria
The European Court of Human Rights (Fourth Section), sitting on 13 September 2011 as a Chamber composed of:
Nicolas Bratza, President,
Päivi Hirvelä,
George Nicolaou,
Ledi Bianku,
Zdravka Kalaydjieva,
Nebojša Vučinić,
Vincent A. de Gaetano, judges,
and Lawrence Early, Section Registrar,
Having regard to the above application lodged on 28 February 2005,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,
Having deliberated, decides as follows:
THE FACTS
1. The first applicant, Mr Petar Kraev Gerdzhikov is a Bulgarian national who was born in 1969 and lives in Karlovo. He is the managing director of the second applicant, Château Vallée Des Roses EOOD (“the applicant company”), a company whose registered office is in Karlovo, Bulgaria. The applicants are represented before the Court by Mr M. Ekimdzhiev and Mrs K. Boncheva, lawyers practising in Plovdiv.
A. The circumstances of the case
2. The facts of the case, as submitted by the applicants, may be summarised as follows.
1. Background to the case
3. In decision no. 24 of 25 January 2000 the Council of Ministers granted the applicant company a concession to exploit part of a mineral water source near the village of Pesnopoy, which was state property, and authorised the Minister of the Environment and Water (“the Minister”) to sign the concession contract on behalf of the State, which was done on 18 February 2000.
4. Meanwhile, in decision no. 644/2000 the Council of Ministers granted another concession for a different part of the same mineral water source to the company Hisar-96 OOD. This decision was appealed against by another participant in the concession tender procedure, as a result of which, in a final judgment of 15 March 2002, the Supreme Court of Cassation quashed it on the ground that, owing to its chemical properties, the mineral water from the source was unfit to serve the purposes of the future concession contract and that it could therefore not be fulfilled.
5. Subsequently, as the properties of the water in the applicant company’s concession were the same, it brought an action to have decision no. 24 of the Council of Ministers declared null and void. The action was granted in a final judgment of the Supreme Administrative Court of 10 February 2004.
2. The civil proceedings initiated by the applicant company
6. Following the judgment of 15 March 2002, on 10 April 2002 the applicant company brought an action against the Ministry of the Environment and Water seeking to have the concession contract of 18 February 2000 declared null and void. It further claimed the expenses it had already incurred in connection with the fulfilment of the contract, including costs for equipment for exploiting the source, expenses for preserving and guarding the source, fees for taking part in the concession tender and marketing costs. In these proceedings the applicant company was legally represented.
7. At a court hearing of 7 June 2002 the applicant company substituted the Minister as the defendant to its action, without specifying in what capacity the Minister was acting. At the same hearing the Sofia City Court discontinued the proceedings as it found that the Minister could not be sued in her capacity as an administrative body.
8. The applicant company appealed, arguing that the Minister was a party to the concession contract and that therefore she could be sued.
9. In a decision of 7 October 2002 the Sofia Court of Appeal found that the party to the concession contract was the State, represented by the Minister. Therefore, the Minister could be sued. It remitted the case to the Sofia City Court to continue the proceedings by examining the merits of the action.
10. In a judgment of 17 February 2003 the Sofia City Court rejected the applicant company’s action on the grounds that the Minister, as a State body, could not be sued. It found that the Minister was merely a representative of the State in the concession contract and not a party to it. The applicant company, however, had not directed its action against the Minister as a representative of the State.
11. The applicant company appealed, stating, inter alia, that the Minister was a party to the concession contract, and represented the State interest in connection with the rights and obligations under the contract.
12. In a judgment of 18 June 2003 the Sofia Court of Appeal quashed the lower court’s judgment, declared the concession contract null and void and granted part of the compensation claim made by the applicant company. Although it mentioned that the State was party to the concession contract, it ordered the Minister to pay the awarded compensation.
13. It held that the State, represented by the Minister, was the party to the concession contract and that therefore the Minister did have capacity to take part in the proceedings to have the contract declared null and void.
14. The Minister appealed, arguing that she did not have such capacity as she was not a party to the concession contract but only represented the State in signing it.
15. The applicant company also appealed. It is not entirely clear from its submissions who it considered to be the proper defendant in the proceedings – on the one hand it argued that the Minister was party to the concession contract and on the other hand contended that the Minister was the proper defendant in the proceedings in her capacity as representative of the State.
16. In a final judgment of 30 September 2004 the Supreme Court of Cassation quashed the judgment of the Court of Appeal and discontinued the proceedings. It found that the Court of Appeal should not have examined the merits of the claim as it had not been directed against the proper defendant. The court held that the State was the concession-granting authority and party to the concession contract because concessions could be granted only in respect of objects belonging to the State. The court also found that the rules on representation under the Concessions Act were lex specialis and overrode those on representation under the Code of Civil Procedure (“the CCP”), and that therefore the State was represented by the Minister of the Environment and Water and not by the ministers under Article 18 §§ 3 and 4 of the CCP (see paragraph 24 below). This, however, did not mean that the Minister was a party to the concession contract. The Minister could be sued in proceedings related to concession contracts only in her capacity as representative of the State. As regards the case at hand, the court considered that neither in its initial statement of claim, nor throughout the proceedings did the applicant company specify that its action was directed against the Minister as a representative of the State.
17. The applicant company appealed before the extended panel of the Supreme Court of Cassation, which, in a decision of 21 December 2004, declared the appeal inadmissible as lodged against a final judgment which was not subject to further appeal.
B. Relevant domestic law
1. The Concessions Act 1995
18. The Concessions Act 1995 provided that a concession was a special right to use and exploit objects owned exclusively by the State (section 2). In section 6 it provided that the Council of Ministers adopted decisions to grant concessions. Pursuant to section 7(2) of the same Act, in such decisions the Council of Ministers appointed the minister who would organise the concession tender procedure. Section 18(2) of the same Act provided that the Council of Ministers was to adopt a decision in which it determined the concession holder. In this decision the Council of Ministers also had to authorise the minister appointed under section 7 to sign the concession contract on behalf of the State.
19. Section 12(1) of the Regulations for the Implementation of the Concessions Act, as amended on 15 March 2002, provided that with the decision under section 7(2) of the Concessions Act the Council of Ministers was to appoint the minister who would organise the concession tender procedure, sign the concession contract, organise the implementation of the contract and represent the granting authority in matters connected with the implementation of the contract, apart from those concerning the contract’s termination. Section 46(3) of the Regulations provided that in the event that the concession holder failed to fulfil his obligations under the contract, the Council of Ministers could authorise the minister appointed under section 7 of the Concessions Act to terminate the contract.
20. Under section 21(3) of the Concessions Act, upon termination of the concession contract the concession holder was entitled to reimbursement of expenses incurred under that contract.
21. The new Concessions Act, in force from 1 July 2006, which is more detailed than the previous Act, contains similar provisions in respect of the signing, control of the implementation, and termination of concession contracts. An amendment to this Act of 30 May 2008 introduced section 95e, which provides that in actions concerning the implementation and the termination of concession contracts the State is represented by the minister authorised to sign the concession contract and to represent the granting authority in matters connected with the contract’s implementation.
2. The Obligations and Contracts Act
22. Section 26(2) of the Obligations and Contracts Act provided that if the subject-matter of a contract was unfit to serve its purpose (“невъзможен предмет”) it would be null and void. Pursuant to section 34 of the same Act, when the contract was declared null and void each of the parties was under the obligation to return everything it had received under the contract.
3. The Code of Civil Procedure of 1952
23. Article 117 of the CCP provided that while proceedings were pending before the first-instance court, the plaintiff could join a new defendant or could substitute the initial defendant with a new defendant.
24. Under Article 18 §§ 3 and 4 of the CCP, the State was represented by the Minister of Finance in court proceedings, and by the Minister of Regional Development and Public Works in court proceedings in which State property was concerned.
25. On 2 May 2006 Article 18 of the CCP was amended to include a new paragraph 5 clarifying that, in actions concerning the implementation and termination of concession contracts, the State is represented by the minister authorised to sign the concession contract and to represent the granting authority in matters connected with the contract’s implementation.
COMPLAINTS
26. The applicants complained under Article 6 § 1 of the Convention that the proceedings had been unfair and that they had been denied access to court as the domestic courts had rejected their action without examining its merits. They contended that the res judicata effect of the Sofia City Court judgment of 17 February 2003 as upheld by the Supreme Court of Cassation had prevented the applicant company from bringing a new action for declaring the concession contract null and void.
27. The applicants complained under Article 1 of Protocol No. 1 that as a result of the proceedings their rights to peaceful enjoyment of their possessions had been infringed and, in particular, that they had not been able to recover the expenses incurred in connection with the concession contract.
28. The applicants complained under Article 14 of the Convention in conjunction with Article 1 of Protocol No. 1 that by denying them effective access to court and thus depriving them of the compensation they sought, the domestic courts had favoured the State over them.
29. The applicants complained under Article 13 of the Convention in conjunction with Articles 6 § 1 and 14 of the Convention and Article 1 of Protocol No. 1 that they did not have at their disposal effective remedies for the alleged violations under the above provisions.
THE LAW
A. The complaints of the first applicant
30. The Court reiterates that in order to be considered a victim, an applicant must be directly affected by the act or omission in issue (see Agrotexim and Others v. Greece, 24 October 1995, § 59, Series A no. 330‑A).
31. It notes that the first applicant, Mr Petar Kraev Gerdzhikov, complained both in a private capacity and as managing director of the applicant company, Château Vallée Des Roses EOOD, which is a sole-ownership limited liability company and has a distinct legal personality under Bulgarian law. However, it was only the applicant company and its property that was allegedly affected by the impugned events. It was only the company which participated as a party to the domestic proceedings in connection with the concession contract. In addition, the applicant company has submitted its complaints directly to the Court and has legal standing to act independently in the present proceedings.
32. Thus, the Court considers that the first applicant, Mr Petar Kraev Gerdzhikov, cannot claim to have been directly affected by the alleged violations in issue and that he does not obtain the status of victim by the mere fact of being managing director of the applicant company.
33. It follows that the complaints in respect of Mr Petar Kraev Gerdzhikov are incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.
B. The complaints of the applicant company
1. Complaint under Article 6 § 1
34. The applicant company complained that by finding that the Minister did not have capacity to take part in the proceedings and by rejecting its action without examining its merits the domestic courts had deprived the applicant company of effective access to court and of a fair trial, thus favouring the State. It relied on Articles 6 § 1, 13 and 14 of the Convention. The Court considers that this complaint falls to be examined only under Article 6 § 1, which, in so far as relevant, reads as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
a. The parties’ submissions
35. The Government argued that the applicant company had been given the opportunity to have its case heard by courts at three levels of jurisdiction. The outcome of the proceedings and, in particular, the dismissal of its action against the Minister had been caused by the applicant company’s own failure to bring an action against the proper defendant. They contended that the Minister was not a party to the concession contract but only represented the State in signing it. Therefore, she had no capacity to take part in the proceedings in issue. This was confirmed by the fact that separate authorisation by the Council of Ministers was necessary for the termination of a concession contract (see paragraph 18 above).
36. The Government further submitted that the concession contract was of a combined administrative and civil nature. The party to this contract was the State. However, in all procedures related to the concession, the State was represented by the Minister. Therefore, the Minister, in her capacity as a State body, could not take part in actions concerning the concession contract. The applicant company should have brought its action against the Minister as a representative of the State and not against the Minister as a State body. In its statement of claim and before the first-instance court the applicant company did not clarify the proper defendant in the proceedings as it did not specify the Minister’s capacity. Furthermore, by virtue of the judgment declaring the Council of Ministers’ decision to grant the concession to the applicant company null and void, the concession contract was ex lege rescinded and therefore the applicant company had had effective access to court and the proceedings in issue had no purpose.
37. The applicant company argued that its deprivation of effective access to court had been arbitrary, disproportionate and caused by the lack of clarity of the domestic law. Thus, under Article 18 of the CCP the State could be represented by the Minister of Finance or the Minister of Regional Development and Public Works, while under the Concessions Act the State could be represented by the Minister authorised under section 7 of that Act. Furthermore, it is not clear whether in situations such as the present the competent Minister under the Concessions Act would represent the State or the Council of Ministers, which was the body competent to take the decision granting a concession.
38. The applicant company further argued that at the hearing of 7 June 2002 and in its subsequent appeals it had clarified that the action was directed against the Minister as a representative of the State but that the domestic courts had disregarded this clarification. It also considered that before scheduling the first hearing in the case, the judge rapporteur should have advised the applicant company to direct its action against the proper defendant. Furthermore, directing the action against the Minister was the most logical course of action, which was confirmed by the introduction in 2006 of the new paragraph 5 in Article 18 of the CCP. According to the applicant company this provision was not new but just confirmed a practice already established by the domestic courts.
39. The applicant company contended that the res judicata effect of the judgment of 17 February 2003 and the principle of legal certainty barred it from introducing a new action against the Minister as a representative of the State or against another State body. In any event, a new action against the Minister would have required substantial financial resources and would not have had reasonable prospects of success. Besides, the applicant company had already used one remedy, namely the action in the proceedings at hand, and therefore was not required to pursue other alternative remedies.
b. The Court’s assessment
40. The Court reiterates that Article 6 § 1 of the Convention secures to everyone the right to have any claim relating to his civil rights and obligations brought before a court or tribunal; in this way it embodies the “right to court”, of which the right of access constitutes one aspect (see Golder v. the United Kingdom, 21 February 1975, §§ 28-36, Series A no. 18, and Osman v. the United Kingdom, 28 October 1998, § 147, Reports 1998‑VIII).
41. While it is clear that in the instant case the applicant company was not prevented from commencing the proceedings, that does not suffice because the right of access to court includes not only the right to institute proceedings but also the right to obtain a determination of the dispute by a court (see Kutić v. Croatia, no. 48778/99, § 25, ECHR 2002-II; Lungoci v. Romania, no. 62710/00, § 35, 26 January 2006; Yanakiev v. Bulgaria, no. 40476/98, § 68, 10 August 2006; and Velikovi and Others v. Bulgaria, nos. 43278/98 et al., § 258, 15 March 2007).
42. The question thus arises whether the national courts in fact determined the dispute. It this connection, the Court reiterates that the mere fact that a legal action was held to be inadmissible does not mean that the applicant was denied access to court, provided that the dispute which he submitted for adjudication was the subject of a genuine examination (see Velikovi and Others, cited above, § 260; Yanakiev, cited above, § 69; and, mutatis mutandis, Obermeier v. Austria, 28 June 1990, § 68, Series A no. 179). However, even if it is accepted that the domestic courts did not carry out a genuine examination of the claim, this complaint is manifestly ill-founded for the reasons below.
43. The parties disagree as to whether the applicant company clearly indicated that the action was directed at the Minister as a representative of the State.
44. The Court notes that as early as the first hearing in the case the applicant company’s attention was drawn to the issue of the proper defendant and it was invited to clarify this point. At that hearing the applicant company abandoned its action against the Ministry of the Environment and Water and directed it against the Minister. Contrary to its contentions before the Court, however, the applicant company failed to specify that the action was directed against the State, represented by the Minister. Its further submissions and appeals before the domestic courts were also unclear and dubious on this point. Obviously, all domestic courts which dealt with the case, including the one that found in the applicant company’s favour, found that the applicant company had directed its action against the Minister as a State body and not in her capacity as representative of the State. All these courts held that the party to the contract was the State, thus indicating that it was the proper defendant in the proceedings. This situation cannot have remained unclear for the applicant company, especially considering that it was legally represented in the proceedings. Nevertheless, it continued to argue that the party to the contract was the Minister. Under these circumstances, the Court is unable to conclude that the domestic courts and in particular the Sofia City Court interpreted the applicant company’s submissions in an arbitrary or unreasonable way.
45. Furthermore, the Court observes that under the domestic legislation at the material time a plaintiff could join or substitute a defendant while the proceedings were pending before the first-instance court. It does not appear that the applicant redirected its action against the State represented by the Minister or joined the State as a defendant, although such course of action was open to it, seems logical in the circumstances and would have neither imposed a financial burden, nor otherwise complicated the proceedings.
46. Lastly, the applicant company has not put forward arguments or other evidence, such as domestic court judgments, showing diverse practice on the issue of the proper defendant in proceedings concerning concession contracts, capable of persuading the Court that the situation which obtained in the present case was a result of insufficiently clear legislation or contradictory domestic court practice (see, a contrario, Plechanow v. Poland, no. 22279/04, §§ 105-112, 7 July 2009 and Sierpiński v. Poland, no. 38016/07, §§ 77-81, 3 November 2009).
47. In view of these considerations, and having regard to the fact that although the issue was raised at the very beginning of the proceedings the applicant company failed to clarify it and to direct its action against the State, as it could have, the Court considers that the applicant company’s right of access to court was not restricted in a disproportionate manner. In addition, after the dismissal of the action in the proceedings in issue, it was still open to the applicant company to obtain an examination of its claim by initiating a new action against the State represented by the Minister. However, it failed to do so.
48. In so far as the applicant company argues that it was not able bring a new action because of the res judicata effect of the judgments in the proceedings in issue, the Court is not convinced by the argument that the judgments finding that the Minister as a State body was not a proper defendant would bar it from bringing a new action against the proper defendant. In any event, this argument is speculative, as the applicant company did not even try to initiate new proceedings (see, mutatis mutandis, and, a contrario, Kostadin Mihaylov v. Bulgaria, no. 17868/07, §§ 13-22, 27 March 2008). As to the argument that a new action would lead to the incurring of costs, the Court does not consider this fact to be an insurmountable obstacle to the applicant’s access to court.
49. In view of the above, the Court does not find that the authorities deprived the applicant company of access to court for the determination of its claim or that the proceedings were otherwise tainted by arbitrariness or unfairness.
50. It follows that the complaint under Article 6 § 1 is manifestly ill-founded and must be dismissed in accordance with Article 35 §§ 3 and 4 of the Convention.
2. Complaints under Article 1 of Protocol No. 1 and Article 13 of the Convention
51. The applicant company complained under Article 1 of Protocol No. 1 that the termination of the proceedings violated its right to peaceful enjoyment of possessions. It also complained under Article 13 of the Convention of a lack of effective remedies in that respect.
52. Article 1 of Protocol No. 1, in so far as relevant, reads:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions...”
Article 13 reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
53. The Government argued, inter alia, that there had been no violation of Article 1 of Protocol No. 1 in the present case and that the ban on the exploitation of the mineral source was in accordance with the Convention principles. The applicant company had been familiar with the properties of the water before signing the concession contract. Furthermore, it had failed to prove that it had made improvements subject to reimbursement under section 21 of the Concessions Act.
54. The applicant company argued, inter alia, that it had a legitimate expectation to be able to exploit the concession for a number of years or to receive compensation in accordance with section 21 of the Concessions Act.
In signing the concession contract and paying the necessary expenses it had acted in good faith and could not have expected to receive a concession that could not be exploited.
55. Assuming that the applicant company had a legitimate expectation to receive compensation which constituted a “possession” within the meaning of Article 1 of Protocol No. 1 and in view of the conclusion that the domestic courts’ refusal to examine the applicant company’s claim was due to the latter’s own procedural behaviour, the Court considers that the applicant company has failed to exhaust all domestic remedies available to it because it did not bring its action against the proper defendant in accordance with the requirements of the domestic legislation.
56. It follows that the complaint under Article 1 of Protocol No. 1 must be rejected under Article 35 §§ 1 and 4 of the Convention. It also follows that the applicant company’s complaint under Article 13 must be rejected as manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Lawrence EarlyNicolas Bratza
RegistrarPresident
Full & Egal Universal Law Academy