Communicated on 26 May 2016
SECOND SECTION
Application no. 66994/14
HRVATSKI GOLF SAVEZ
against Croatia
lodged on 3 October 2014
STATEMENT OF FACTS
The applicant, Hrvatski golf savez (Croatian Golf Federation, hereafter “the applicant association”), is an association which used to be incorporated and registered as such under Croatian law, with its seat in Zagreb. It is represented before the Court by its president, Mr D. Klisović.
A. The circumstances of the case
The facts of the case, as submitted by the applicant association, may be summarised as follows.
The applicant association was established on 23 June 1992 and was recorded as a legal entity in the register of associations in Croatia as a federation of associations (savez udruga). It is a national sports association (federation) the members of which are various golf clubs in Croatia. Its main activities were organising golf competitions at the national level, managing the national golf teams, participating in the work of international golf organisations and promoting golf in Croatia.
1. Bankruptcy proceedings
Following a motion by the applicant association’s largest creditor, Mr D. Klisović, by a decision of 23 January 2009 the Zagreb Commercial Court (Trgovački sud u Zagrebu, hereafter “the bankruptcy court”) opened bankruptcy proceedings against the association and appointed a bankruptcy administrator. That decision was forwarded on 30 January 2009 to the relevant department of the local authority, the General Administration Office of the City of Zagreb (Grad Zagreb, Gradski ured za opću upravu), which is in charge of the register of associations.
At a hearing held on 26 March 2009 before the bankruptcy court all the creditors decided that rather than liquidating its assets (by sale) and distributing the proceeds among themselves, the applicant association should continue to operate. They also decided to appoint a board of creditors (odbor vjerovnika).
By a decision of 26 January 2010 the board of creditors instructed the bankruptcy administrator to prepare a reorganisation plan (bankruptcy plan, stečajni plan) with a view to restructuring the applicant association and enabling it to continue its activities.
At a hearing held on 28 June 2010 all the creditors unanimously approved the reorganisation plan, which was also approved at the same hearing by the bankruptcy court. The court decision approving the plan became final on the same day because all the creditors waived their right of appeal.
The plan stipulated, inter alia, that the association’s administrative board consisted of three members and specifically listed the names of three creditors as the board members, among whom was Mr Klisović as its president. The plan also envisaged that all creditors’ claims, together with accrued interest, were to be paid off by the end of 2023, whereupon the administrative board had to organise elections with a view to electing new members of the board.
By a decision of 29 June 2010 the bankruptcy court closed the bankruptcy proceedings. The decision specified that by its adoption the powers of the bankruptcy administrator and the board of creditors had been terminated and that the association’s power to manage its own affairs and assets had been restored. It also stated that the authority in charge of the register of associations was to be notified of the decision, and that the decision should be published in the Official Gazette.
2. Administrative proceedings
In the meantime, after the above-mentioned bankruptcy court notification of 30 January 2009, the relevant department of the local authority instituted administrative proceedings of its own motion. By a decision of 26 February 2009 it established that the applicant association had been dissolved on the grounds of bankruptcy, pursuant to section 28(1) subparagraph 4 of the Associations Act.
By a decision of 4 May 2010 the Ministry of Administration (Ministarstvo uprave) dismissed an appeal by the applicant association against that decision.
By a judgment of 30 October 2013 the Administrative Court dismissed an action for judicial review brought by the applicant association. The relevant part of that judgment reads as follows:
“Given that section 28(1) subparagraph 4 of the Associations Act provides that an association shall be dissolved in the event of bankruptcy, [and that bankruptcy proceedings were] in the present case opened by the Commercial Court’s decision of 23 January 2009, the administrative authority was bound to find that the association had been dissolved.”
On 13 January 2014 the applicant association lodged a constitutional complaint against the lower-instance decisions relying, inter alia, on its freedom of association, guaranteed by Article 43 of the Croatian Constitution.
By a decision of 20 March 2014, the Constitutional Court (Ustavni sud Republike Hrvatske), sitting as a panel composed of judges M.A., D.Š. and M.Š., declared the applicant association’s constitutional complaint inadmissible, holding that the case did not raise a constitutional issue. The Constitutional Court served its decision on the applicant association on 5 April 2014.
In the meantime, by a decision of 30 January 2014 the relevant department of the local authority removed the applicant association from the register of associations.
3. Other relevant facts
The applicant association submits that it did not stop its activities during the above proceedings and that before it was removed from the register of associations it had organised team and individual golf championships in Croatia in 2009, 2010, 2011 and 2012. It also organised the national team’s participation in the World Team Championship of 2010 and 2012, and took part in conferences of the International Golf Federation in 2012 and of the European Golf Association in 2009, 2010, 2011 and 2012.
The applicant association also submits that on 29 April 2011 it instituted enforcement proceedings to collect unpaid membership fees from one of its members, a golf club whose president was the husband of Judge D.Š., who sat in the Constitutional Court panel that decided on the association’s constitutional complaint in the administrative proceedings. According to the applicant association, the enforcement proceedings, in which a writ of execution had been issued on 29 April 2011 and had become final on 17 May 2011, had been pending at the time the Constitutional Court delivered its decision of 20 March 2014, and were still pending when the association lodged its application with the Court.
B. Relevant domestic law
1. The Constitution
The relevant Articles of the Croatian Constitution (Ustav Republike Hrvatske, Official Gazette no. 56/90 with subsequent amendments) read as follows:
Article 16
“(1) Rights and freedoms may be restricted only by law in order to protect the rights and freedoms of others, the legal order, public morals or health.
(2) Every restriction of rights and freedoms should be proportional to the nature of the necessity for the restriction in each individual case.”
Article 43
“Everyone shall be guaranteed the right to associate freely for the protection of their interests or promotion of social, economic, political, national, cultural and other convictions or goals. For this purpose, anyone may freely form trade unions and other associations, join them or leave them, in accordance with the law.
The right to associate freely is limited by the prohibition of any violent threat to the democratic constitutional order and the independence, unity, and territorial integrity of the Republic of Croatia.”
2. Associations Act
The relevant provision of the Associations Act (Zakon o udrugama, Official Gazette no. 11/02), which was in force between 1 January 2002 and 30 September 2014, reads as follows:
VI. DISSOLUTION OF AN ASSOCIATION
Grounds for dissolution of an association
Section 28(1)
(1) Grounds for dissolution of an association are:
1. a decision by the competent [governing] body of the association to dissolve the association,
2. the cessation of activities of the association,
3. a final court decision banning the association,
4. bankruptcy.”
3. Bankruptcy Act
The relevant provisions of the Bankruptcy Act (Stečajni zakon, Official Gazette, no. 44/96 with subsequent amendments), which was in force between 1 January 1997 and 31 August 2015, provided as follows:
CHAPTER I.
GENERAL PROVISIONS
Objectives of bankruptcy proceedings
Section 2
“(1) The bankruptcy proceedings are carried out with a view to jointly satisfying [the claims of] the bankruptcy debtor’s creditors through the liquidation [sale] of its assets and the distribution of the proceeds among the creditors.
(2) During the bankruptcy proceedings a reorganisation plan ... may be [adopted and the restructuring] carried out with a view to regulating the legal status of the [bankruptcy] debtor and its relationship to its creditors, and, in particular, with a view to preserving its business.”
CHAPTER VI.
REORGANISATION
1. PREPARATION OF THE REORGANISATION PLAN
Principal provision
Section 213
“(1) Following the opening of the bankruptcy proceedings a reorganisation plan may be prepared in which it is permitted to deviate from the statutory provisions on the liquidation and distribution of the bankruptcy estate.
(2) The reorganisation plan may [provide for]:
- leaving the debtor all or part of its assets with a view to preserving its business,
...”
COMPLAINTS
1. The applicant association complains under Article 11 of the Convention that the decision of the administrative authorities to dissolve it was in breach of its freedom of association.
2. The applicant association also complains under Article 6 § 1 of the Convention of the lack of impartiality of the Constitutional Court, having regard to the inclusion of Judge D.Š. on the panel which decided on its constitutional complaint.
QUESTIONS TO THE PARTIES
1. Was the decision of the administrative authorities to dissolve the applicant association on the grounds of bankruptcy in breach of its freedom of association, contrary to Article 11 of the Convention?
2. Having regard to the involvement of Judge D.Š., was the Constitutional Court when it decided on the applicant association’s constitutional complaint impartial, as required by Article 6 § 1 of the Convention?
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