HODINA v. THE CZECH REPUBLIC

FIFTH SECTION

DECISION

Application no. 18381/23
Aleš HODINA
against the Czech Republic

The European Court of Human Rights (Fifth Section), sitting on 3 July 2025 as a Committee composed of:

 Andreas Zünd, President,
 Kateřina Šimáčková,
 Mykola Gnatovskyy, judges,
and Martina Keller, Deputy Section Registrar,

Having regard to:

the application (no. 18381/23) against the Czech Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 28 April 2023 by a Czech national, Mr Aleš Hodina, who was born in 1972 and lives in Starý Plzenec (“the applicant”) and was represented by Mr A. Továrek, a lawyer practising in Brno;

Having deliberated, decides as follows:

SUBJECT MATTER OF THE CASE

1.  The case concerns the alleged unfairness of insolvency proceedings against company M., as a result of which the applicant lost 49 % of the company shares. The applicant invokes Articles 6 § 1 and 13 of the Convention and Article 1 of the Protocol no. 1.

2.  On 24 September 2019 the Prague Municipal Court initiated insolvency proceedings against company M. On 3 February 2020 the company requested that the court allow its reorganisation, enclosing a reorganisation plan adopted by the majority of its creditors. According to the plan, company M.’s basic capital was to be decreased to zero, and all its shares were to be extinguished without compensation. All new shares were to be assigned to the main insolvency creditor, that is company N. Company M. also proposed an expert to assess the value of its estate.

3.  On 6 February 2020 the applicant submitted his objection against company M.’s proposals. He complained that he had not been invited to vote on the reorganisation plan despite being the company’s creditor by virtue of his shares. He further argued that the reorganisation plan should be rejected as pursuing a wrongful purpose (nepoctivý záměr). He attached his signed vote refusing the plan.

4.  On 10 February 2020 the court confirmed company M.’s insolvency, allowed its reorganisation, and appointed the expert proposed by the company.

5.  On 12 February 2020 the applicant reiterated to the Municipal Court his objections against the reorganisation. He alleged that the intention of the reorganisation plan was to conceal the majority shareholders’ debts with regard to company M. and to facilitate his unlawful “squeeze-out”.

6.  On 10 March 2020 the applicant filed an objection alleging a lack of impartiality on the part of the expert. He relied on the historically close institutional and factual ties between the expert and company N., the main insolvency creditor.

7.  On 20 April 2020 the expert report was published, assessing the value of the estate as approximately 165 million Czech crowns (CZK). The report also concluded that the proposed reorganisation would bring a higher satisfaction of creditors than a declaration of bankruptcy.

8.  On 6 May 2020, during an oral hearing held by the Municipal Court at which the applicant was present, the assembly of creditors adopted the expert report and the reorganisation plan by a majority vote. The applicant was not allowed to vote or pose questions to the expert, as the law grants shareholders a vote that carries zero value.

9.  On 14 May 2020 the Municipal Court decided to establish the value of the estate as being approximately CZK 165 million as stated in the expert report.

10.  On 8 June 2020, without holding a hearing, the Municipal Court approved the reorganisation plan which had been adopted by the assembly of creditors. It found no grounds for which the law would allow it to disapprove such a plan; namely it found that it was in accordance with the law and did not follow a wrongful purpose.

11.  On 23 June 2020 the applicant filed an appeal to the Prague High Court. On 12 August 2020 he supplemented his appeal with an alternative expert report that concluded that the value of company M.’s estate was substantially higher than assessed in the initial report.

12.  On 2 September 2020, without holding an oral hearing, the High Court confirmed the Municipal Court decision. It concluded that the applicant’s vote with a zero value against the reorganisation plan was submitted in writing and the reorganisation plan was in any case adopted by a majority of creditors. It further confirmed that as a shareholder, the applicant did not have the right to vote on the expert report, and the Municipal Court thus correctly did not allow his questions and objections towards the expert. Furthermore, a different expert report assessing the company’s estate to a higher value would not have had an impact on the applicant’s situation, given the proposed reorganisation solution. His objection of the expert’s bias thus could only have been considered within the assessment of the reorganisation’s plan’s possible wrongful purpose, which was found to be missing.

13.  On 31 October 2022 the Supreme Court rejected the applicant’s appeal on points of law. It endorsed the High Court’s position regarding the lack of any wrongful purpose, considering most of the context-related information submitted by the applicant in writing irrelevant. It clarified that assessing a potential wrongful purpose requires an examination of the specific reorganisation plan vis-à-vis the expected creditors’ satisfaction. While contextual information may be considered, the courts must primarily examine the content of the plan, which clearly pursued the highest possible satisfaction of the creditors in the present case. It also approved the High Court’s decision regarding the applicant’s exclusion from voting on the expert report. In any event, it found that the arguments put forth by the applicant in writing did not indicate the expert’s partiality. Furthermore, it confirmed that the law did not require the courts to hold a hearing at this stage of the proceeding.

14.  On 2 February 2023 the applicant filed a constitutional appeal, arguing that he had been deprived of his property without compensation and had not had an effective remedy against that interference. He further alleged a violation of his right to a fair trial as he had not benefited from a hearing at any level and had not been afforded a fair chance to argue his case.

15.  On 7 March 2023 the Constitutional Court dismissed his appeal as manifestly ill-founded (decision no. II. ÚS 338/23). It found that the courts had properly reasoned their decisions, and the lack of an oral hearing was justified by the specific nature and aim of insolvency proceedings.

THE COURT’S ASSESSMENT

16.  Relying on Article 6 § 1 of the Convention, the applicant mainly complained that despite his repeated requests, the courts had refused him an oral hearing. He further alleged that he had been deprived of his right to effectively argue his case and did not benefit from an adversarial proceeding.

17.  The Court’s established case law indicates that the fairness of civil proceedings is not compromised by a failure to hold an oral hearing under the following conditions:

a) there are no issues of credibility or contested facts, and the courts may fairly decide on the basis of the case file;

b) the case raises a legal issue of a limited scope or complexity; or

c) it concerns highly technical issues (Ramos Nunes de Carvalho e Sá v. Portugal [GC], nos. 55391/13 and 2 others, § 190, 6 November 2018).

18.  The Court notes at the outset that the present case relates to the second part of insolvency proceedings, where the insolvency of the debtor had been established, and the courts were to assess the profitability of the proposed solution for creditors. This distinguishes the present case from Exel v. the Czech Republic (no. 48962/99, § 55-59, 5 July 2005) where the Court considered that depriving the applicant of an oral hearing at the outset of the proceedings, where his insolvency was to be proven, had violated his right to a fair trial.

19.  In the case at hand, the insolvency courts were called to approve the reorganisation plan already adopted by the assembly of creditors during an oral hearing (see paragraph 8 above). Their examination could only focus on the lawfulness and the potential wrongful purpose of the plan (see paragraph 13 above). Within this scope of assessment, the applicant raised two key objections: the wrongful purpose of the reorganisation plan, and the lack of impartiality of the expert called by the insolvency court. The Court must examine whether the applicant was afforded a fair trial in these circumstances, considering that there was an oral hearing before the Prague Municipal Court during which the applicant was not allowed to ask questions or vote.

20.  Regarding the applicant’s first objection, the Court notes the domestic courts’ consonant explanation that a lack of a wrongful purpose refers to the debtor’s genuine attempt to satisfy the majority of its creditors demonstrated by the reorganisation plan. The Supreme Court decision in the applicant’s case specified that that such assessment implies foremost an examination of the reorganisation plan vis-à-vis the expected creditors’ satisfaction (see paragraph 13 above). Under these circumstances, the Court does not see a reason to depart from the domestic courts’ conclusion that an oral hearing was not necessary to examine the applicant’s objection.

21.  As concerns the applicant’s second objection, the domestic courts consonantly held that shareholders do not have the right to vote on the expert report because they are not in a position of creditors with a financial claim towards the company. In this sense, the courts also concluded that even if a different expert report assessed the company at a higher value, it would have no impact on the applicant’s situation. The Court is prepared to accept that in such a case, the opportunity to argue the expert’s bias during an oral hearing would have no bearing on the applicant’s rights.

22.  It follows from the foregoing that in the particular circumstances of the case and within the limited scope of the objections the applicant was allowed to raise within the proceedings, the case did not raise relevant issues of credibility or contested facts, or a complex legal question (see, mutatis mutandis, Broz v. the Czech Republic (dec.), no. 11216/22, 13 March 2025, § 19). Furthermore, the Court observes that the applicant was able to raise his objections in extensive written submissions and the courts duly examined them on the basis of the case file.

23.  The Court is thus satisfied that, in as far as the case concerned identifying a solution to insolvency, rather than establishing insolvency itself, and the courts were able to consider the applicant’s objections on the basis of the case file and written submissions, the failure to hold an oral hearing did not contravene the requirements of 6 § 1 of the Convention (see, mutatis mutandis, Varela Assalino v. Portugal (dec.), no. 64336/01, 25 April 2002).

24.  The applicant further alleged that he had been unable to effectively raise his objections against the reorganisation plan. Having examined the case file, the Court considers that the applicant was effectively able to present his arguments in written submissions, and his objections were dealt with in duly reasoned court decisions. The Court does not find any arbitrariness or manifest unreasonableness in the domestic courts’ conclusions.

25.  The applicant’s last objection under Article 6 § 1 of the Convention pertained to the principle of adversariality. He alleged that the High Court had changed the legal assessment concerning the shareholders’ right to vote during the assembly of creditors, depriving him of an opportunity to effectively argue his case. However, it appears that the High Court changed the legal position to the applicant’s benefit; his vote against the reorganisation plan was eventually reflected in the assessment. Nevertheless, it could not have changed the outcome (see paragraph 12 above). The change of legal assessment by the second-instance court thus did not compromise the adversariality of the proceeding.

26.  The above considerations are sufficient to enable the court to conclude that the overall fairness of proceedings as required by Article 6 § 1 was ensured. It follows that the complaint is manifestly ill-founded and must be rejected under Article 35 §§ 3 (a) and 4 of the Convention.

27.  As to the other complaints raised by the applicants under Article 13 of the Convention and Article 1 of Protocol no. 1, the Court considers that, in the light of all the material in its possession and in so far as the matters complained of are within its competence, these complaints either do not meet the admissibility criteria set out in Articles 34 and 35 of the Convention or do not disclose any appearance of a violation of the rights and freedoms enshrined in the Convention or the Protocols thereto.

28.  It follows that the application must be rejected in accordance with Article 35 § 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 11 September 2025.

 Martina Keller Andreas Zünd
 Deputy Registrar President