FOURTH SECTION
PARTIAL DECISION
AS TO THE ADMISSIBILITY OF
Application no. 351/02
by Juha HÄMÄLÄINEN and Others
against Finland
The European Court of Human Rights (Fourth Section), sitting on 26 October 2004 as a Chamber composed of:
SirNicolas Bratza, President,
MrM. Pellonpää,
MrL. Garlicki,
MrJ. Borrego Borrego,
MrsE. Fura-Sandström,
MsL. Mijović,
MrD. Spielmann, judges,
and Mr M. O'Boyle, Section Registrar,
Having regard to the above application lodged on 12 December 2001,
Having deliberated, decides as follows:
THE FACTS
The applicants, listed in the Annex at nos. 1-7, are all Finnish nationals. The applicant listed at no. 8 is the Finnish estate of a late Mr Erkki Tuomela. The applicants are represented before the Court by the first applicant, Mr Juha Hämäläinen, director of environmental protection in Joensuu.
The circumstances of the case
The facts of the case, as submitted by the applicants and as they appear from the documents, may be summarised as follows.
On 31 December 1993 the Finnish Savings Bank – SSP Oy (which later became the Property Management Corporation Arsenal (Omaisuudenhoitoyhtiö Arsenal-SSP Oy, Egendomsförvaltningsbolaget Arsenal –SSP Ab; “Arsenal-SSP” hereinafter) instituted civil proceedings against 24 defendants, including the eight applicants. Arsenal-SSP sought damages amounting to 75,400,000 Finnish Marks (FIM; corresponding to 12,681,370 euros (EUR)) plus 16 per cent interest as from 31 January 1994 for allegedly granting credit negligently in 1988-1991 and for subsequent credit losses allegedly caused by the defendants in their capacity as members of the board, managing director or other delegates in the management of the Savings Bank of Northern Carelia (which had in 1992 merged into the Finnish Savings Bank – SSP Oy, later replaced by the Arsenal-SSP). The applicants were members of the Board of the Savings Bank of Northern Carelia.
On 25 February 1994 the plaintiff supplemented its application for a summons.
On 12 July 1995 the Joensuu District Court (käräjäoikeus, tingsrätten) dismissed parts of the defendants' procedural defence claims in its separate decision.
In their written submissions to the District Court the applicants requested the court to declare the action inadmissible or to dismiss the claims on the grounds of alleged defects in the application for a summons and on the grounds that, due to the merger, the plaintiff did not have standing to lodge the action. It was contended, in any case, that the former Finnish Savings Bank had not transferred its claims to the Arsenal-SSP in the merger and had not issued a valid decision to institute the proceedings for damages.
The defendants also requested the dismissal of the claims as the Savings Bank of Northern Carelia had granted them a discharge from liability concerning the years 1988-1993. They maintained that the provisions of the old Savings Bank Act (säästöpankkilaki, sparbankslag; 541/69) of 1969 covered the years 1988-1989 and were interpreted in such a way that the discharge from liability prevented the board of trustees (isännistö, principalerna) from lodging subsequent claims for damages. As regards the period of time from 1990 they maintained that according to section 131, subsection 2 of the new Savings Bank Act (Act no. 1270/90) of 1990, the discharge from liability prevented the board of trustees' subsequent claims for damages provided that the board had been presented in the balance sheet, audit report or otherwise with accurate and sufficient information about the contested decisions and measures. They maintained that the board of trustees had been presented with adequate and sufficient information and that even the Finnish Savings Bank had, after the merger, granted a discharge from liability.
The applicants maintained that a special limitation period (section 133 of the Savings Bank Act of 1990) of three years for instituting damage actions had expired and that the said provision also applied retroactively to the period covered by the old Savings Bank Act. Thus, the action should be dismissed insofar as it concerned years 1988-1989.
The applicants also contested all allegations of neglect and breach of guidelines. Further, they contested any alleged causal relationship between the actions of the Board and the damages caused to the Arsenal-SSP, maintaining that extraneous reasons such as the exceptionally severe economic depression during 1987-1991 and the two occasions of devaluation of the Finnish Mark had caused the damages. The plaintiff contested the defendants' requests on all points.
On 15 February 1996 the District Court delivered its judgment. It dismissed the applicants' grounds for declaring the case inadmissible. It held that the Savings Bank Act of 1969 did not regulate the legal consequences of the discharge from liability by the board of trustees and found that the purported discharge did not prevent the institution of proceedings. As regards the Finnish Savings Bank's purported discharge of the applicants from liability after the merger, the District Court found (on p. 279 of its judgment) that this did not prevent the action, either. The court held, inter alia:
“it had not been proven that the general meeting had been presented in the balance sheet or in the audit report such information as would prevent it from later instituting the action for damages... [t]he general meeting has thus not been presented with adequate and sufficient information as required by the law.”
The District Court found, inter alia, that the Board of the Savings Bank of Northern Carelia had acted negligently as loans had been granted without adequate security (turvaava vakuus) and without ascertaining the clients' solvency and to an extent which was not proportionate to the bank's own capital resources. It further held that the Savings Bank of Northern Carelia had overvalued securities and that these actions had caused the bank damage.
In its judgment of 15 February 1996 the District Court accepted the plaintiff's claims. It however adjusted the applicants' per capita liability to 10 per cent of the actual damages (pp. 378-379 of the District Court's judgement), thus amounting to FIM 229,199.56 at the lowest and FIM 247,220.39 at the highest (from EUR 38,548 to 41,579). It ordered the applicants to jointly and separately reimburse the plaintiff's legal expenses of FIM 1,800,000 (EUR 302,738).
All parties appealed to the Court of Appeal (hovioikeus, hovrätten) of Eastern Finland.
On 19 December 1996 the Court of Appeal issued a decision and an interlocutory judgment concerning the District Court's decision of 12 July 1995 and its judgment of 15 February 1996. It upheld the District Court's findings about the procedural defence claims.
On 26 February 1998 the Court of Appeal, after a previous preparatory hearing and an oral hearing, issued its judgment by votes 2-1. It dismissed the plaintiff's appeal and discharged the applicants from all damages claims, and ordered the plaintiff to reimburse their legal expenses in the District Court and the Court of Appeal.
On 9 February 1999 the Supreme Court (korkein oikeus, högsta domstolen) granted the plaintiff leave to appeal. On 30 March 1999 applicants 1, 2 and 4 (as numbered in the annex) requested an oral hearing. On 20 April 1999, in their joint observations in reply to the plaintiff's appeal the applicants did not request an oral hearing – they however requested an opportunity to identify their witnesses should the Supreme Court decide to hold an oral hearing, and identified 28 witnesses at this point. The Supreme Court invited the parties' further observations twice, i.e. on 4 April 2000 and 15 June 2000. On 2 October 2000 it held a preparatory hearing. On 22-23 November 2000 the Supreme Court held an oral hearing which was limited so as to concern five only of the nine contested credit-matters. In the oral hearing the testimony of six witnesses and some of the parties was heard.
On 19 June 2001 the Supreme Court issued its judgment reverting the Court of Appeal's judgment. It accepted four claims against the applicants and held that they had caused the plaintiff damages amounting FIM 22,300,000 – 25,700,000 (EUR 3,750,590 – 4,322,430). It held the applicants jointly and separately liable for the damages, however adjusting the liabilities to the sums of FIM 2,470,000 (EUR 415,424; for the applicants 1-2, 4-6 and 8), FIM 2,370,000 (EUR 398,605 for the applicant 3) and FIM 2,230,000 (EUR 375,059 for the applicant 7). It quashed the Court of Appeal's judgment as regards the legal expenses and ordered each of the applicants to reimburse the plaintiff's legal expenses in the District Court FIM 38,095.24 (EUR 6,407) and, jointly and separately with other defendants, in the Supreme Court by FIM 50,000 (EUR 8,409) plus interest. Amongst others, the applicant and the plaintiff were ordered to bear their own legal expenses in the Court of Appeal.
According to the applicants, on 12 September 2001 the Government Guarantee Fund (valtion vakuusrahasto, statens säkerhetsfond) instructed the Arsenal-SSP that it could limit the enforcement proceedings against the defendants so that their liability could be restricted to a sum not exceeding per capita liability for the damages and legal expenses.
COMPLAINTS
1. The applicants complain under Articles 6 and 13 of the Convention that the length of the civil proceedings was excessive as they lasted over eight years;
2. They also complain under Article 6 § 3 (d) of the Convention that the burden of proof (to show that the board of trustees had had accurate and sufficient information when granting the discharge from liability) was wrongly placed on them, i.e. on the defendants;
3. They complain under Article 6 § 3 (d) of the Convention that they were not allowed to hear the members of the board of trustees (isännistö, principalerna) of the Savings Bank of Northern Carelia as witnesses and that the Supreme Court failed to hear several witnesses and examined the case only partially;
4. They complain about the domestic courts' finding that their discharge from liability was not valid and maintain that the judgments were not adequately reasoned in those regards;
5. They complain under Article 14 of the Convention about unequal treatment by the Government Guarantee Fund, in particular in comparison with another settlement case of a former bank director and party leader S.
THE LAW
1. The applicants complain under Articles 6 and 13 of the Convention about the length of the civil proceedings, which started on 31 December 1993 and ended on 19 June 2001. Article 6, insofar as relevant, reads as follows:
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time ...”
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.”
The Court considers that it cannot, on the basis of the case file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 2 (b) of the Rules of Court, to give notice of this part of the application to the respondent Government.
2. The applicants complain that the burden of proof was allegedly wrongly placed on them in the civil proceedings. The Court has examined this complaint under Article 6 of the Convention (see above).
With regard to the judicial decision of which the applicants complain, the Court recalls that, in accordance with Article 19 of the Convention, its task is to ensure the observance of the obligations undertaken by the Parties in the Convention. In particular, it is not competent to deal with an application alleging that errors of law or fact have been committed by domestic courts, except where it considers that such errors might have involved a possible violation of any of the rights and freedoms set out in the Convention (Schenk v. Switzerland, judgment of 12 July 1988, Series A no. 140, p. 25, § 45).
While Article 6 of the Convention guarantees the right to a fair trial, it does not lay down any rules on the placement of the burden of proof in civil matters, which is therefore primarily a matter for regulation under national law. The examination of the case-file does not disclose any appearance of a violation of a fair trial in these respects. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
3. The applicants complain under Article 6 § 3 (d) of the Convention that they were not allowed to hear the members of the board of trustees of the Savings Bank of Northern Carelia as witnesses and that the Supreme Court failed to hear several witnesses and examined the case only partially. The Court has examined this complaint under Article 6 §§ 1 and 3 (d) of the Convention, which reads as follows:
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing ...
...
Everyone charged with a criminal offence has the following minimum rights:
...
(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;”
The Court recalls that the requirements inherent in the concept of “fair hearing” are not necessarily the same in cases concerning the determination of civil rights and obligations as they are in cases concerning the determination of a criminal charge. This is borne out by the absence of detailed provisions such as paragraphs 2 and 3 of Article 6 applying to cases of the former category. Thus, although these provisions have a certain relevance outside the strict confines of criminal law (see, mutatis mutandis, Albert and Le Compte v. Belgium, judgment of 10 February 1983, Series A no. 58, p. 20, § 39), the Contracting States have greater latitude when dealing with civil cases concerning civil rights and obligations than they have when dealing with criminal cases.
Nevertheless, certain principles concerning the notion of a “fair hearing” in cases concerning civil rights and obligations emerge from the Court's case-law. Most significantly for the present case, it is clear that the requirement of “equality of arms”, in the sense of a “fair balance” between the parties, applies in principle to such cases as well as to criminal cases (see the Feldbrugge v. the Netherlands judgment of 26 May 1986, Series A no. 99, p. 17, § 44).
As regards litigation involving opposing private interests, “equality of arms” implies that each party must be afforded a reasonable opportunity to present his case – including his evidence – under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent. It is left to the national authorities to ensure in each individual case that the requirements of a “fair hearing” are met (see Dombo Beheer B.V. v. the Netherlands, judgment of 27 October 1993, Series A no. 274, §§ 32-33).
Turning to the present application, as regards the alleged inability to hear the trustees as witnesses, the Court observes that the minutes of the District Court's preparatory and principal hearings indicate that numerous witnesses proposed by the plaintiff and, inter alia, the applicants, were heard and that they relied on several items of written evidence which included minutes of the meetings of the board of trustees of the Savings Bank of Northern Carelia. The applicants did not however propose that the trustees be heard as witnesses in the Court of Appeal. It follows that this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
As regards the applicants' complaints about the Supreme Court's refusal hear certain witnesses and the limited scope of its proceedings, an examination of the case-file does not indicate any appearance of a violation of a fair trial in light of the principles outlined above. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
4. The applicants complain about the domestic courts' finding that their discharge from liability was not valid and that the judgments were not adequately reasoned in those regards.
Insofar as regards the domestic courts' conclusions drawn from the interpretation of the judicial meaning of the discharge from liability the Court refers to its findings above (complaint no. 2) and notes that that interpretation and application of domestic law is primarily a matter for the assessment of the national courts. The examination of the case-file does not disclose any appearance of a violation of a fair trial in these respects or as regards the reasoning of the judgment. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
5. The applicants complain under Article 14 of the Convention (prohibition of discrimination in enjoyment of Convention rights) about unequal treatment by the Government Guarantee Fund, in particular in comparison with another settlement case.
Leaving aside the question of whether the actions of the Government Guarantee Fund may be regarded as attributable to the State, the Court notes that the applicants have not shown that they have had recourse to any domestic remedies in these respects and, in any case, that they have not substantiated this complaint. It follows that this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
For these reasons, the Court unanimously
Decides to adjourn the examination of the applicants' complaint concerning the length of the civil proceedings;
Declares the remainder of the application inadmissible.
Michael O'BoyleNicolas Bratza
RegistrarPresident
ANNEX
The applicants are:
1.Mr Juha Hämäläinen, born in 1945 and resident in Joensuu;
2.Mr Viljo Lehikoinen, born in 1931 and resident in Joensuu;
3.Mr Matti Hämäläinen, born in 1928 and resident in Lieksa;
4.Mr Pentti Kolehmainen, born in 1926 and resident in Kontiolahti;
5.Mr Kalevi Peltola, born in 1939 and resident in Juuka;
6.Mr Sulo Puhakka, born in 1928 and resident in Ilomantsi;
7.Mr Paavo Tolvanen, born in 1941 and resident in Kitee; and
8.the estate of late Mr Erkki Tuomela, born in 1927.
Full & Egal Universal Law Academy