KOVAČEVIĆ AND OTHERS v. CROATIA

FIRST SECTION

DECISION

Application no. 45903/08
Jelena KOVAČEVIĆ against Croatia
and 2 other applications
(see list appended)

The European Court of Human Rights (First Section), sitting on 8 July 2014 as a Chamber composed of:

Isabelle Berro-Lefèvre, President,
Elisabeth Steiner,
Khanlar Hajiyev,
Linos-Alexandre Sicilianos,
Erik Møse,
Ksenija Turković,
Dmitry Dedov, judges,
and Søren Nielsen, Section Registrar,

Having regard to the above applications lodged on 3 September 2008 and 12 July and 19 October 2010 respectively,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

The Government of Bosnia and Herzegovina, having been informed of their right to intervene (Article 36 § 1 of the Convention and Rule 44 § 1 (a) of the Rules of Court), did not avail themselves of this right,

Having deliberated, decides as follows:

THE FACTS

1. The applicants, Ms Jelena Kovačević (“the first applicant”), Mr Safet Salković (“the second applicant”) and Ms Ivanka Karlovčan (“the third applicant”) were born on 27 October 1936, 27 April 1936 and 25 February 1937. They live in Varaždin, Tuzla (Bosnia and Herzegovina) and Zagreb respectively. The second applicant is a national of Bosnia and Herzegovina and the other two applicants are Croatian nationals. The first applicant was represented before the Court by Mr G. Vučetić and the second and the third applicant by Mr V. Đurović, advocates practising in Varaždin and Zagreb respectively.

2. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. Stažnik.

A. The circumstances of the case

3. The facts of the case, as submitted by the parties, may be summarised as follows.

1. Background to the applicants’ cases

4. The applicants are pensioners. Until September 1993 their pensions were regularly adjusted in line with the increase in wages in accordance with section 30 of the Act on principal rights arising from pension and disability insurance (Zakon o osnovnim pravima iz mirovinskog i invalidskog osiguranja, Official Gazette of the Socialist Federal Republic of Yugoslavia 23/82, 77/82, 75/85, 8/87, 65/87, 76/88, 74/88, 74/89, 87/89, 44/90 and 87/90 and Official Gazette of the Republic of Croatia no. 53/91 – “the Basic Pension and Disability Insurance Act”) and section 121 of the Pension and Disability Insurance Act (Zakon o mirovinskom i invalidskom osiguranju, Official Gazette nos. 26/83, 5/86, 42/87, 34/89, 57/89, 40/90, 9/91, 26/93, 96/93, 44/94 and 59/96).

5. In the period between 1 October 1993 and January 1995 the Croatian Government adopted a series of successive decrees whereby it limited the funds available for payment of pensions. This measure was part of the Government’s strategy to curb inflation and stabilise the economy. Since the funds available were insufficient to enable pensions to be adjusted in line with the increase in wages, the level of pensions paid in that period was lower than required by law.

6. On 19 February 1997 the Act on adjustment of pensions and other benefits arising from pension and disability insurance and on administering pension and disability insurance funds (Zakon o usklađivanju mirovina i drugih novčanih primanja iz mirovinskog i invalidskog osiguranja, te upravljanju fondovima mirovinskog i invalidskog osiguranja, Official Gazette no. 20/97 – “the Pension Adjustment Act”) entered into force. It provided that in the period between 1 February 1995 and 31 December 1996 pensions should have been adjusted in line with the increase in wages (section 1), and that pensioners were to be compensated for their resultant loss within eighteen months from the Act’s entry into force by way of an increase in their pensions (section 2). The Act also abrogated section 30 of the Basic Pension and Disability Insurance Act and section 121 of the Pension and Disability Insurance Act (see paragraph 4 above) and provided that from 1 January 1997 pensions were to be adjusted in line with the increase in the cost of living (section 3).

7. By a decision of 12 May 1998 the Constitutional Court (Ustavni sud Republike Hrvatske) invalidated almost the entire Pension Adjustment Act, including sections 1-3, as unconstitutional. It also held that the State had an outstanding statutory obligation to pensioners to pay them pensions adjusted in line with the increase in wages as of September 1993. This obligation became known as “the debt to pensioners” (dug umirovljenicima, hereafter “the pension debt”).

8. As a result of the Constitutional Court’s decision, 427,809 requests were lodged with the Croatian Pension Fund’s regional offices by pensioners seeking (retrospective) adjustment of their pensions in accordance with the Constitutional Court’s decision, that is, in line with the increase in wages. In addition, pensioners brought 1,775 civil actions for payment of compensation for the pension debt in civil courts.

9. On 6 August 1998 the Act on the transfer of funds from the State budget to the pension and disability insurance funds and on the adjustment of pensions (Zakon o prenošenju sredstava državnog proračuna fondovima mirovinskog i invalidskog osiguranja te usklađivanju mirovina, Official Gazette no. 102/98 – “the Transfer Act”) entered into force. It provided that in the period between 1998 and 2002 the State would transfer HRK 7,524,856,731 to the Croatian Pension Fund with a view to increasing all pensions. The increase was paid in the form of a monthly pension supplement (dodatak uz mirovinu) of 100 Croatian kunas (HRK) plus 6% of the pension paid in June 1998. The supplement was paid from 6 August 1998 until 31 December 2002, after which it was permanently incorporated and became an integral part of a person’s pension. The legal basis for the supplement was provided by subordinate legislation passed on the basis of the Transfer Act, namely, the Ordinance on the method and time-limits of the payment of the pension supplement (Pravilnik o načinu i rokovima isplate dodatka uz mirovinu, Official Gazette no. 136/98). The Transfer Act also provided that pensions were to be adjusted at the rate calculated by adding up the rate of the increase in the cost of living and the rate of the increase in wages and then dividing them by half (hereafter “the Swiss formula”). Thereby it in fact derogated from section 30 of the Basic Pension and Disability Insurance Act and section 121 of the Pension and Disability Insurance Act, according to which pensions were to be adjusted in line with the increase in wages (see paragraph 4 above). On 23 December 1998 the Constitutional Court rejected four petitions for (abstract) constitutional review and thus refused to institute proceedings to review the constitutionality of the Transfer Act.

10. On 1 January 1999 the Pension Insurance Act (Zakon o mirovinskom osiguranju, Official Gazette nos. 102/98, 127/00, 59/01, 109/01, 147/02, 117/03, 30/04, 177/04, 92/05, 43/07, 79/07, 35/08, 40/10, 121/10, 130/10, 139/10, 61/11, 114/11, 76/12, 112/13) entered into force. It expressly abrogated the Basic Pension and Disability Insurance Act and the Pension and Disability Insurance Act (see paragraph 4 above) and provided that pensions were to be adjusted according to the Swiss formula.

11. On 1 January 2001 the Act on the increase of pensions to eliminate differences in levels of pensions earned in different periods (Zakon o povećanju mirovina radi otklanjanja razlika u razini mirovina ostvarenih u različitim razdobljima, Official Gazette no. 127/00 – “the Pensions Increase Act”) entered into force with a view to levelling out pensions, because pensions earned before 31 December 1994 were disproportionately lower than those earned after that date. As set out in its section 1, the Act regulated the method of increasing pensions with a view to eliminating differences in levels of pensions earned in different periods and implemented the Constitutional Court’s decision of 12 May 1998 in accordance with the State’s economic capacities. The Act increased pensions earned before 31 December 1998 by anything between 5% to 20% depending on the year of retirement. The increase was paid between 1 January 2001 and 31 July 2004. On 19 December 2001 the Constitutional Court rejected a number of petitions for (abstract) constitutional review and thus refused to institute proceedings to review the constitutionality of the Pensions Increase Act.

12. On 5 August 2004 the Act on the implementation of the Constitutional Court’s decision of 12 May 1998 (see paragraphs 51-53 below, hereafter “the Implementation Act”) entered into force. It provided that those pensioners (hereafter “eligible pensioners”) whose pensions had, in the period between 1 September 1993 and 31 December 1998 (hereafter “the relevant period”), not been adjusted in line with the increase in wages had a right to compensation (for the pension debt) which corresponded to the difference between the pension they had been entitled to receive and the pension actually paid to them in that period, reduced by the pension supplement paid under the Transfer Act and the pension increase received under the Pensions Increase Act. In addition, eligible pensioners were also entitled to interest on the total amount of compensation at a rate of 19.9752% calculated from the date of the Act’s entry into force. While the amount of compensation was to be determined (calculated) by the Croatian Pension Fund, the compensation itself was to be obtained through a special fund (“the Pensioners’ Fund”) that was to be established on the basis of subsequent legislation.

13. On 29 July 2005 the Pensioners’ Fund Act (see paragraphs 54-62 below) entered into force. The Act provided that each eligible pensioner had a right to a share in the Fund depending on the amount of compensation to which they were entitled. The Act gave each of them a choice between payment of half of the compensation in four semi-annual instalments over a period of two years (2006-2007) (Model A), or payment of full compensation in six annual instalments over a period of eight years (2006-2013) with a two-year delay (Model B). In the end, around 74% of eligible pensioners opted for Model A whereas 26% chose Model B. The Pensioners’ Fund is operated and managed by a private investment company, HPB-Invest, which is also charged with calculating the interest due on the amount of compensation determined in advance by the Croatian Pension Fund under the Implementation Act in respect of each eligible pensioner.

14. According to a report by the Croatian Pension Fund of 31 December 2010, the total amount of compensation for the pension debt that was to be paid through the Pensioners’ Fund was HRK 12,912,219,047.17 plus an additional HRK 2.579.243.782.89 in accrued interest. The report also suggests that 464,025 eligible pensioners were entitled to compensation whereas 257,865 were not, because the total amount of their pensions received in the relevant period together with the pension supplement paid under the Transfer Act and the pension increase paid under the Pensions Increase Act exceeded the total amount of pension they were entitled to receive in that period.

15. On 15 February 2011 the Constitutional Court rejected thirty-nine petitions for (abstract) constitutional review and thus refused to institute proceedings to review the constitutionality of five provisions of the Implementation Act. Likewise, on 4 October 2011 it rejected eleven petitions for (abstract) constitutional review and thus refused to institute proceedings to review the constitutionality of eight provisions of the Pensioners’ Fund Act (see paragraph 76 below).

2. The proceedings in the first applicant’s case

16. The first applicant has been receiving a survivor’s pension (obiteljska mirovina) since 9 May 1996, following the death of her husband.

17. By a notice of 27 November 2005 HPB-Invest informed the first applicant that the amount of compensation for the pension debt owed to her equalled zero Croatian kunas (HRK); in other words, she was not entitled to any compensation. In particular, the calculation contained in the information notice indicated that in the relevant period the first applicant had received, together with the disbursements paid under the Transfer Act and the Pensions Increase Act (see paragraphs 9 and 11-12 above), pension payments in the total amount of HRK 72,238.38, whereas she was entitled to receive HRK 45,538.44.

18. On 14 December 2005 the first applicant requested the Varaždin Regional Office of the Croatian Pension Fund (Hrvatski zavod za mirovinsko osiguranje – Područna služba u Varaždinu) to verify whether the amount of compensation referred to in the HPB-Invest’s information notice had been correctly calculated.

19. By a letter of 16 January 2006 the Regional Office replied that it had verified the calculation and established that the amount had been calculated correctly.

20. On 9 October 2007 the first applicant requested the Regional Office to re-calculate the amount of compensation in accordance with the criteria set forth in the Constitutional Court’s decision of 12 May 1998 (see paragraph 7 above).

21. By a letter of 12 October 2007 the Regional Office, after explaining the method of calculation to the first applicant, reiterated that the amount of compensation in her case had, in its view, been accurately calculated.

22. On 25 October 2007 the first applicant brought an action for judicial review in the Administrative Court (Upravni sud Republike Hrvatske) contesting the Regional Office’s letter of 12 October 2007. She argued that the Regional Office had refused to re-calculate the amount of compensation in her case in accordance with the Constitutional Court’s decision of 12 May 1998.

23. By a decision of 13 December 2007 the Administrative Court declared the first applicant’s action inadmissible, finding that the contested letter of 12 October 2007 did not constitute an “administrative act”, within the meaning of section 6(2) of the Administrative Disputes Act (see paragraph 66 below), against which administrative-dispute (judicial review) proceedings could be instituted. The relevant part of that decision reads as follows:

“Section 4 paragraph 1 of [the Implementation Act] provides that the difference between the pension to which a person was entitled and the pension actually received in the period between 1 September 1993 and 31 December 1998 shall be determined [that is, calculated] for each pensioner separately by the Croatian Pension Fund of its own motion and within a year (without issuing a special decision in administrative proceedings).

...

Section 6(1) of the Administrative Disputes Act provides that administrative-dispute proceedings may be initiated only against an administrative act. According to section 8 of that Act, administrative-dispute proceedings may also be initiated [for failure to respond] when the competent [administrative] authority has not adopted the relevant administrative act [that is, a formal decision] following an application or an appeal by a party ...

Given that [the plaintiff in the present case] by her action contests an act that is not an administrative act and that [the case] concerns a matter in which the relevant administrative act is not being issued ... it was decided as indicated in the operative provisions.”

24. On 7 April 2008 the first applicant lodged a constitutional complaint with the Constitutional Court. She relied on Article 14 paragraph 2 (equality before the law) of the Croatian Constitution (see paragraph 50 below).

25. By a decision of 29 May 2008 the Constitutional Court declared the first applicant’s constitutional complaint inadmissible as lodged outside the statutory time-limit of thirty days. The Constitutional Court’s decision was served on the first applicant on 26 June 2008.

3. The proceedings in the second applicant’s case

26. The second applicant has been receiving a disability pension (invalidska mirovina) since 10 June 1986.

27. By a notice of 26 November 2005 HPB-Invest informed the second applicant that the amount of compensation for the pension debt owed to him equalled zero HRK, that is, that he was not entitled to any compensation. In particular, the calculation detailed in the information notice indicated that in the relevant period the second applicant had received, together with the disbursements paid under the Transfer Act and the Pensions Increase Act (see paragraphs 9 and 11-12 above), pension payments in the total amount of HRK 101,291.64, whereas he had been entitled to HRK 98,728.45. However, from the calculation it is evident that the sum of the amounts the second applicant was entitled to receive was not HRK 98,728.45, but HRK 222,378.70. The relevant part of HPB-Invest’s information notice reads as follows:

TOTAL PER YEAR

YEAR

PAID

ENTITLED

1993

0.00

9,659.94

1994

0.00

25,387.97

1995

0.00

38,580.28

1996

32,330.46

42,308.48

1997

0.00

50,022.06

1998

27,440.14

56,419.97

PENSION SUPPLEMENT

HRK 100 AND 6%

16,554.30

INCREASE TO ELIMINATE THE DIFFERENCES

1 JANUARY 2001

24,966.74

TOTAL

101,291.64

98,728.45

AMOUNT OF COMPENSATION

(Entitled – Paid)

0.00

28. On 9 January 2006 the second applicant requested both the Zagreb Regional Office of the Croatian Pension Fund (Hrvatski zavod za mirovinsko osiguranje – Područna služba u Zagrebu) and HPB-Invest to correct the manifest error in calculation contained in the information notice of 26 November 2005 and pay him HRK 121,087.06, that is, the difference between the amount received and the amount he had actually been entitled to. On 19 January 2006 the applicant submitted the same request to the Central Office of the Croatian Pension Fund (Hrvatski zavod za mirovinsko osiguranje – Središnja služba).

29. By a letter of 20 January 2006 the Central Office replied that it had verified the calculation contained in HPB-Invest’s information notice of 26 November 2005 and established that it was correct.

30. In his motion of 6 February 2006 the second applicant asked the Zagreb Regional Office to issue a formal decision on the merits of his request of 9 January 2006, pursuant to the Administrative Procedure Act. He added that if the Central Office’s letter of 20 January 2006 was to be considered a decision on his request, then his motion should be considered as an appeal against that decision.

31. By a decision of 28 February 2006 the Zagreb Regional Office declared the second applicant’s motion inadmissible for lack of jurisdiction. The relevant part of that decision reads as follows:

“Section 1 paragraph 2 of [the Implementation Act] provides that compensation is to be obtained through a special fund. Given that, pursuant to the said Act, the ... compensation is not to be obtained through the Croatian Pension Fund but through the Pensioners’ Fund, this authority does not have jurisdiction to decide on the request submitted.”

32. On 28 March 2006 the second applicant appealed against that decision.

33. By a decision of 24 April 2006 the Central Office of the Croatian Pension Fund dismissed the second applicant’s appeal and upheld the first-instance decision, repeating the reasons given therein.

34. On 23 May 2006 the second applicant brought an action for judicial review in the Administrative Court contesting the second-instance decision.

35. By a judgment of 8 July 2009 the Administrative Court dismissed the second applicant’s action, endorsing the reasons given by the Fund. The relevant part of that judgment reads as follows:

“The courts finds that the defendant authority [i.e. the Croatian Pension Fund] acted correctly when it dismissed the plaintiff’s appeal against the decision of the first-instance authority and that it correctly held that the Croatian Pension Fund and its [regional] offices were not competent to determine the amount of compensation [payable for the pension debt], which is exclusively within the power of the Pensioners’ Fund, pursuant to the Pensioners’ Fund Act”

36. On 5 October 2009 the second applicant lodged a constitutional complaint with the Constitutional Court. He relied on Article 18 (the right to appeal), Article 19 paragraph 2 (the guarantee of judicial review of decisions of administrative and other public authorities) and Article 29 paragraph 1 (the right to a fair hearing) of the Croatian Constitution (see paragraph 50 below) as well as on Article 13 of the Convention. In his constitutional complaint the second applicant wrote, inter alia, the following:

“By the contested judgment of 8 July 2009 the Administrative Court dismissed the complainant’s action brought against the decision of the Croatian Pension Fund – Central Office of 24 April 2006 dismissing the complainant’s appeal against the decision of [its] Zagreb Regional Office of 28 February 2006.

...

By so doing the Administrative Court failed to fulfil its constitutional role to review the lawfulness of administrative acts and thus breached the complainant’s right to judicial review of the lawfulness of administrative acts guaranteed by Article 19 paragraph 2 of the Constitution.

In addition, the complainant’s constitutional right to appeal guaranteed by Article 18 of the Constitution was also breached. In particular, throughout the entire administrative proceedings neither [the Croatian Pension Fund] nor the Administrative Court addressed the complainant’s arguments relating to the incorrect calculation of compensation, raised in his appeal and in his action, but only declined the jurisdiction expressly conferred on them by [the Implementation Act].

After having received [the information notice containing] the calculation with which he disagrees, the complainant asked [the Croatian Pension Fund] to issue a [formal] decision so that he could avail himself of the legal remedies guaranteed by the Constitution. However, [the Croatian Pension Fund] refused to issue such a decision, even though section 3(1) [the Implementation Act] expressly and unequivocally provides that the Croatian Pension Fund shall determine [i.e. calculate] the difference between the pension to which each pensioner was entitled to and the pension actually paid.

Such conduct [on the part of the domestic authorities] ... is not and cannot be lawful nor in accordance with the Constitution in any civilised country.

That would mean, for example, that someone whose pension was calculated incorrectly would never be able to contest that. Naturally, that [conclusion] cannot be sustained as every party has the right to ask the Croatian Pension Fund to issue a [formal] decision each time the pension is revised (for example, each time the pension is increased) in order to be able to verify that [new] calculation and, if dissatisfied with it, resort to legal remedies (appeal, action).

The conduct of [the domestic authorities in the present case] is also contrary to Article 13 of the [Convention] ... and in breach of the constitutional right to a fair hearing under Article 29 paragraph 1 of the Constitution ...”

37. By a decision of 3 December 2009 the Constitutional Court declared the second applicant’s constitutional complaint inadmissible. It found that even though in his constitutional complaint the second applicant had relied on the relevant Articles of the Constitution, he had not substantiated his complaint by any constitutional-law arguments but had merely repeated the arguments raised in the proceedings before the Administrative Court. Therefore, the Constitutional Court was unable to examine the merits of his constitutional complaint. The Constitutional Court’s decision was served on the second applicant’s representative on 11 January 2010.

4. The proceedings in the third applicant’s case

38. The third applicant received an early retirement pension (prijevremena starosna mirovina) and then a retirement pension (starosna mirovina) from 1 May 1987 until 30 July 2004, whereupon, following the death of her husband, she received a survivor’s pension.

39. In April 2007 HPB-Invest informed the third applicant that the amount of compensation for the pension debt owed to her equalled zero HRK, that is, that she was not entitled to any compensation. In particular, the calculation detailed in the information notice indicated that in the relevant period the third applicant had received, together with the disbursements paid under the Transfer Act and the Pensions Increase Act (see paragraphs 9 and 11-12 above), pension payments in the total amount of HRK 133,848.36, whereas she had been entitled to receive HRK 92,586.58.

40. On 30 April 2007 the third applicant asked the Zagreb Regional Office of the Croatian Pension Fund to re-calculate the amount of compensation in accordance with the criteria set forth in the Constitutional Court’s decision of 12 May 1998 (see paragraph 7 above). She argued that the amount of pension she had been entitled to receive was HRK 168,837.00, and not HRK 92,586.58 as indicated in HPB-Invest’s information notice.

41. By a letter of 17 May 2007 the Zagreb Regional Office replied that it had verified the calculation contained in HPB-Invest’s information notice and established that it was correct.

42. In her motion of 12 June 2007 the third applicant asked the Zagreb Regional Office to issue a formal decision on the merits of her request of 30 April 2007, pursuant to the Administrative Procedure Act. She added that, if the Regional Office’s letter of 20 January 2006 was to be considered a decision on her request, then her motion should be considered as an appeal against that decision.

43. By a decision of 27 June 2007 the Zagreb Regional Office declared the third applicant’s motion inadmissible for lack of jurisdiction. The relevant part of that decision reads as follows:

“Section 1 paragraph 2 of [the Implementation Act] provides that compensation is to be obtained through a special fund. Given that, pursuant to the said Act, the ... compensation is not to be obtained through the Croatian Pension Fund but through the Pensioners’ Fund, this authority does not have jurisdiction to decide on the request submitted.”

44. On 17 July 2007 the third applicant appealed against that decision.

45. By a decision of 22 October 2007 the Central Office of the Croatian Pension Fund dismissed the third applicant’s appeal and upheld the decision of the Regional Office, repeating the reasons given therein.

46. On 4 December 2007 the third applicant brought an action for judicial review in the Administrative Court contesting the second-instance decision.

47. By a judgment of 27 March 2008 the Administrative Court dismissed the third applicant’s action, endorsing the reasons given by the Fund. The relevant part of that judgment reads as follows:

“Given that compensation [for the pension debt] is not to be obtained through the defendant authority [the Croatian Pension Fund], the first-instance authority [the Regional Office] ... correctly declared the motion [of 12 June 2007] inadmissible for lack of jurisdiction and the second-instance authority [the Central Office] correctly dismissed the plaintiff’s appeal against that decision.”

48. On 2 July 2008 the third applicant lodged a constitutional complaint with the Constitutional Court. She relied on Article 18 (the right to appeal), Article 19 paragraph 2 (the guarantee of judicial review of decisions of administrative and other public authorities) and Article 29 paragraph 1 (the right to a fair hearing) of the Croatian Constitution (see paragraph 50 below) and Article 13 of the Convention. In her constitutional complaint the third applicant wrote, inter alia, the following:

“By the contested judgment of 27 March 2008 the Administrative Court dismissed the complainant’s action brought against the decision of the Croatian Pension Fund Central Office of 22 October 2007 dismissing the complainant’s appeal against the decision of [its] Zagreb Regional Office of 2 June 2007.

...

By so doing the Administrative Court failed to fulfil its constitutional role to review the lawfulness of administrative acts and thus breached the complainant’s right to judicial review of the lawfulness of administrative acts guaranteed by Article 19 paragraph 2 of the Constitution.

In addition, the complainant’s constitutional right to appeal guaranteed by Article 18 of the Constitution was also breached. In particular, throughout the entire administrative proceedings neither [the Croatian Pension Fund] nor the Administrative Court addressed the complainant’s arguments relating to the incorrect calculation of compensation raised in her appeal.

[The Croatian Pension Fund] declined jurisdiction to decide on rights arising from pension insurance (even though it is the only authority in Croatia competent to decide on such rights) and the Administrative Court endorsed that without any legitimate reason. ...

After having received the calculation with which she disagrees, the complainant asked [the Croatian Pension Fund] to issue a [formal] decision so that she could avail herself of legal remedies guaranteed by the Constitution. However, [the Croatian Pension Fund] refused to issue such a decision, which is not and cannot be lawful nor in accordance with the Constitution in any civilised country. That is also contrary to Article 13 of the [Convention] ...

The above-described conduct [on the part of the domestic authorities] is also in breach of the constitutional right to a fair hearing under Article 29 paragraph 1 of the Constitution ...”

49. By a decision of 25 March 2010 the Constitutional Court declared the third applicant’s constitutional complaint inadmissible. It found that even though in her constitutional complaint the third applicant had relied on the relevant Articles of the Constitution, she had not substantiated her complaint by any constitutional-law arguments but had merely repeated the arguments raised in the proceedings before the Administrative Court. Therefore, the Constitutional Court was unable to examine the merits of her constitutional complaint. The Constitutional Court’s decision was served on the third applicant on 29 April 2010.

B. Relevant domestic law and practice

1. The Constitution

50. The relevant Articles of the Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette nos. 56/1990, 135/1997, 8/1998 (consolidated text), 113/2000, 124/2000 (consolidated text), 28/2001 and 41/2001 (consolidated text), 55/2001 (corrigendum), 76/10 and 85/10 read as follows:

Article 14

“Everyone in the Republic of Croatia shall enjoy rights and freedoms regardless of their race, colour, sex, language, religion, political or other beliefs, national or social origin, property, birth, education, social status or other characteristics.

All shall be equal before the law.”

Article 16

“(1) Rights and freedoms may be restricted only by law in order to protect the rights and freedoms of others, legal order, public morals or health.

(2) Every restriction of the rights and freedoms should be proportional to the nature of the necessity for the restriction in each individual case.”

Article 18

“The right to appeal against decisions adopted in the first-instance proceedings before a court or other competent authority shall be guaranteed.

The right of appeal may exceptionally be excluded in cases provided by law if other legal protection is ensured.”

Article 19

1. Decisions of the state administration and other public authorities shall be based on law.

2. Judicial review of the lawfulness of decisions given by administrative or other public authorities shall be guaranteed.”

Article 29 § 1

“In the determination of his rights and obligations or of any criminal charge against him, everyone is entitled to a fair hearing within a reasonable time by an independent and impartial court established by law.”

Article 48

“1. The right of ownership shall be guaranteed.

2. Ownership implies duties. Owners and users of property shall contribute to the general welfare.”

2. Relevant legislation

(a) The Act on the Implementation of the Constitutional Court’s Decision of 12 May 1998

51. The relevant provisions of the Act on the implementation of the Constitutional Court’s decision of 12 May 1998 (Zakon o provođenju odluke Ustavnog suda od 12. svibnja 1998, Official Gazette of the Republic of Croatia nos. 105/04 and 19/07 – “the Implementation Act”), which entered into force on 5 August 2004, provide as follows.

52. Sections 1 and 2 provide that pensioners whose pensions had not been adjusted in the period between 1 September 1993 and 31 December 1998 in line with the increase in wages have a right to compensation. Compensation is to be obtained through a special fund that is to be established by special legislation.

53. Section 3 provides that, with a view to compensating pensioners, the Croatian Pension Fund shall determine (calculate) the difference between the amount of retirement pension, early retirement pension, disability pension or survivor’s pension to which each pensioner was entitled in the relevant period, and the pension actually paid in that period. Disbursements paid under the Transfer Act and the Pensions Increase Act must be included in the calculation (see paragraphs 9 and 11 above).

(b) The Pensioners’ Fund Act

(i) Relevant provisions

54. The relevant provisions of the Pensioners’ Fund Act (Zakon o umirovljeničkom fondu, Official Gazette of the Republic of Croatia nos. 93/05, 41/07 and 90/11), which entered into force on 29 July 2005, provide as follows.

55. Section 2 provides that the founder of the Pensioners’ Fund is, on behalf of the State, the Government of Croatia.

56. Section 3 provides that the members of the Pensioners’ Fund are (eligible) pensioners referred to in section 2 of the Implementation Act (see paragraph 52 above).

57. Section 18(1) provides that the calculation of the difference (that is, the calculation of the amount of the pension debt in respect of each pensioner) referred to in section 3 of the Implementation Act (see paragraph 53 above) is the basis for membership of the Pensioners’ Fund.

58. Section 18(4) provides that HPB-Invest, that is, the private investment company that operates and manages the Pensioners’ Fund, must inform pensioners (by way of an “information notice”) of their membership of the Fund and the amount of compensation they are entitled to within ninety days of the establishment of the Fund.

59. Section 18(9) – as amended by 2007 Amendments to the Pensioners’ Fund Act (Zakon o izmjenama i dopunama Zakona o umirovljeničkom fondu, Official Gazette of the Republic of Croatia no. 41/07), which entered into force on 21 April 2007 – provides that a member of the Fund may lodge a complaint (prigovor) with HPB-Invest against the information notice referred to in paragraph 4 of the same section (see the preceding paragraph) within fifteen days from the day he or she received it.

60. Section 41(1) provides that pensioners who have already been compensated on the basis of final and enforceable court decisions are not entitled to compensation from the Pensioners’ Fund.

61. Section 41(2) provides that pensioners involved in pending administrative proceedings or administrative-dispute proceedings (judicial review before the Administrative Court), shall obtain compensation pursuant to the Pensioners’ Fund Act.

62. Section 42(1) provides that pensioners who brought civil actions for compensation may become members of the Pensioners’ Fund and obtain compensation pursuant to the Pensioners’ Fund Act if they withdraw their actions.

(ii) Instruction of the Administrative Board of the Pensioners’ Fund of 30 November 2005

63. The relevant part of the Instruction (Uputa) of the Pensioners’ Fund’s Administrative Board of 30 November 2005, which was, according to the Government, published on the web page of the Croatian Party of Pensioners on 1 December 2005, reads as follows:

“II. PROVIDING INFORMATION AND LODGING COMPLAINTS ABOUT THE CALCULATION OF COMPENSATION

1. Pensioners may obtain clarifications concerning the calculation of compensation [payable to them] exclusively from the employees of the Croatian Pension Fund on the premises of [its] regional offices ...

2. Pensioners who have received an information notice on membership [of the Fund] and the amount of compensation [payable to them] and who consider that the compensation has been incorrectly calculated may submit a request for re-calculation of the compensation.

3. Pensioners who have not received an information notice on the calculation of compensation but consider that they are entitled to ... compensation may submit a request for calculation of the amount of compensation [payable to them].

...

5. If a pensioner wishes to have the calculation verified he or she may make such a request at a regional office of the Croatian Pension Fund, at the counters specially designated for that purpose, or lodge a written complaint (prigovor) with HPB-Invest.

...

8. The Croatian Pension Fund shall communicate all its replies to complaints to HPB-Invest, which shall notify all pensioners who lodged complaints of new calculations.

9. Costs related to requests for calculation or re-calculation of compensation shall be borne by the Croatian Pension Fund only in respect of those pensioners whose compensation was incorrectly calculated by the Croatian Pension Fund.

10. Another complaint may not be lodged if an earlier one was refused but court proceedings may be instituted [instead].

11. The Croatian Pension Fund has forwarded to HPB-Invest information on [civil] proceedings previously instituted against the Croatian Pension Fund by pensioners in [civil] actions. The Croatian Pension Fund shall obtain information on the remaining actions, on the basis of which civil proceedings have not yet been instituted, and forward it to HPB-Invest. The Croatian Pension Fund and HPB-Invest shall ensure that obtaining compensation on two grounds, that is, in [both] civil proceedings and through the Pensioners’ Fund, is avoided. All pensioners who have brought [civil] actions shall be encouraged through the media to reconsider their position ... and to consider withdrawing their actions.”

(c) Administrative Disputes Act of 1977

64. The Administrative Disputes Act (Zakon o upravnim sporovima, Official Gazette of the Socialist Federal Republic of Yugoslavia no. 4/1977, and Official Gazette of the Republic of Croatia nos. 53/91, 9/92 and 77/92), which was in force between 1 July 1977 and 31 December 2011, in its relevant part, provides as follows:

65. Section 6(1) provided that administrative-dispute (judicial review) proceedings could be initiated only against an administrative act.

66. Section 6(2) defined an administrative act as an act whereby a State organ, in the exercise of public authority, decided on a right or obligation of an individual or organisation in an administrative matter.

67. Section 23 provided that administrative-dispute (judicial review) proceedings were instituted by the bringing of an action.

68. Section 30 provided that the Administrative Court had to declare an action inadmissible if, inter alia, the contested decision did not constitute an administrative act within the meaning of section 6 of that Act (see paragraph 66 above).

(d) The Obligations Act of 1978

69. The Obligations Act (Zakon o obveznim odnosima, Official Gazette of the Socialist Federal Republic of Yugoslavia nos. 29/1978, 39/1985 and 57/1989, and Official Gazette of the Republic of Croatia nos. 53/91, 73/91, 111/93, 3/94, 7/96, 91/96, 112/99 and 88/01 – hereafter: “the 1978 Obligations Act”), which was in force between 1 October 1978 and 31 December 2005, was the legislation governing contracts and torts. Its relevant provisions read as follows:

Damage

Section 155

“Damage is diminution of one’s property (actual damage) or prevention of its increase (lost profits) ...”

Liability of a legal entity for damage inflicted by its organ

Section 172(1)

“A legal entity shall be liable for damage caused by its organ to a third person in the exercise, or in relation with the exercise of its functions [duties].”

(e) The Obligations Act of 2006

70. The text of sections 1046 and 1062(1) of the Obligations Act (Zakon o obveznim odnosima, Official Gazette, nos. 35/2005 and 41/2008 – “the 2006 Obligations Act”), which entered into force on 1 January 2006, is nearly identical to the text of sections 155 and 172(1) of the former 1978 Obligations Act.

3. Relevant practice

(a) The Administrative Court’s case-law

71. In the period between the adoption of the Constitutional Court’s decision of 12 May 1998 (see paragraph 7 above) and the entry into force of the Implementation Act on 5 August 2004 (see paragraph 12 above) 427,809 requests were filed with the Croatian Pension Fund’s regional offices by those seeking (retrospective) adjustment of their pensions in accordance with that decision, that is, in line with the increase in wages (see paragraph 8 above). The Croatian Pension Fund either: (a) did not decide on those requests, thus forcing the pensioners to lodge appeals and actions for failure to respond (žalba zbog šutnje administracije, tužba zbog šutnje administracije), or (b) issued formal decisions whereby it dismissed such requests on their merits explaining that in the period between 1 September 1993 and 31 December 1998 no relevant subordinate legislation was adopted enabling it to calculate the level of pensions in line with the increase in wages. On 18 December 2001 the Administrative Court adopted the following practice direction (zaključak) which was followed in its subsequent judgments (for example, in cases no. Us-M-788/1993 of 28 December 2001 and no. Us-M-3200/1998 of 15 May 2002):

“On the appeals lodged in the [administrative] proceedings for adjustment of pensions following the adoption of the Constitutional Court’s decision of 12 May 1998 the competent authority [i.e. the Croatian Pension Fund] shall decide by applying the legislation in force after the adoption of that decision, which means that pensions should be adjusted [only] from 1 January 1997 until 30 June 1998 pursuant to section 30 of the [Basic Pension and Disability Insurance Act] ... but having regard also to the provisions of [the Pension Increase Act].”

72. In decision no. Us-4756/2006 of 6 June 2006 the Administrative Court held that the calculation of the amount of the pension debt by the Croatian Pension Fund in respect of each eligible pensioner was not an “administrative act” within the meaning of section 6 of the Administrative Disputes Act (see paragraph 66 above). It thus declared the plaintiff’s action for judicial review brought against such calculation inadmissible. The relevant part of that decision reads as follows:

“Section 4 paragraph 1 of [the Implementation Act] provides that the difference between the pension to which a person was entitled and the pension actually received in the period between 1 September 1993 and 31 December 1998 shall be established [that is, calculated] for each pensioner separately by the Croatian Pension Fund of its own motion and within a year (without issuing a special decision in administrative proceedings).

...

Section 6(1) of the Administrative Disputes Act provides that administrative dispute proceedings may be initiated only against an administrative act. Under section 8 of that Act, administrative dispute proceedings may also be initiated [for failure to respond, that is] when the competent [administrative] authority has not adopted the relevant administrative act [that is, a decision] at the request of or on an appeal by a party ...

Given that [the plaintiff in the present case] by her action contests an act that is not an administrative act and that [the case] concerns a matter in [respect of] which an administrative act [would not, in any case] be issued ... it was decided as indicated in the operative provisions.”

73. In decision no. Us-3529/2006 of 6 July 2006 the Administrative Court held that HPB-Invest was not a public authority and that therefore the information notice on the amount of compensation owed to pensioners issued by that company was not an administrative act within the meaning of section 6 of the Administrative Disputes Act (see paragraph 66 above).

(b) The Constitutional Court’s case-law

74. In decision no. U-III-4245/2007 of 20 February 2008 the Constitutional Court dismissed a constitutional complaint lodged against a judgment of the Administrative Court dismissing an action brought against decisions of the Croatian Pension Fund declaring a pensioner’s request for calculation of the amount of compensation inadmissible for lack of jurisdiction.

75. In decision no. U-III-3814/2006 of 6 May 2009 the Constitutional Court dismissed a constitutional complaint lodged against a decision of the Administrative Court declaring inadmissible an action brought by a pensioner against a notice from HPB-Invest informing her that she was not entitled to any compensation. Even though in her constitutional complaint the complainant relied on Article 14 paragraph 2 (equality before the law), Article 18 (the right to appeal), Article 19 (the guarantee of judicial review of decisions of administrative and other public authorities) and Article 48 (the right of ownership), the Constitutional Court examined her case not only under those Articles, but also under Article 29 paragraph 1 of the Constitution (see paragraph 50 above) as it found that from her submissions it followed that she was also complaining of a violation of her constitutional right of access to court. The relevant part of the Constitutional Court’s decision reads as follows:

“In substance [the complainant] argues that it is unacceptable that the right ... to compensation under the Implementation Act is not determined in administrative proceedings, that parties only receive an information notice without an instruction on legal remedies available, that the Administrative Court does not examine cases concerning compensation on their merits but declares actions inadmissible on the ground that they do not concern an administrative act and that HPB-Invest is not a State or public authority which can decide in administrative matters.

...

From the submissions and arguments the complainant has adduced in [support of] her constitutional complaint it follows that, by expressly complaining of a violation of her right to appeal guaranteed by Article 18 of the Constitution and in view of the fact that her administrative action was declared inadmissible, the complainant is also complaining of a violation of the right of access to court guaranteed by Article 29 paragraph 1 of the Constitution.

...

Procedural guarantees enshrined in Article 29 of the Constitution, in particular the right of access to court, are elements of the “right to a court”. Those guarantees secure the right of everyone to bring any claim relating to their rights or obligations before a court and [the right] to have that claim decided.

The right to a court is not an absolute right. Rather, it is subject to regulation by the competent State authorities, and as such, is subject to certain limitations which do not impair the very essence of the right and its legitimate aim, or which do not upset the relationship of proportionality between the means employed to restrict it and the aim sought to be achieved.

...

The present case concerns a constitutionally acceptable restriction of the right of access to court due to the legal nature of the document (it is not an administrative act), the complainant contested before the Administrative Court. Besides, pursuant to the Implementation Act the calculation of the amount of compensation (or denial of compensation) is not an administrative matter within the meaning of section 6(2) of the Administrative Disputes Act in which an administrative or other public authority would decide on one’s rights or obligations. [Rather,] it concerns direct execution, proprio motu, of the Implementation Act, which determines which categories of pensioners, depending on the type of pensions [they receive], are entitled to compensation, as well as how [that compensation] should be calculated. That Act does not lay down an obligation to conduct administrative proceedings and render an administrative act [i.e. a formal decision] which would confer on citizens the rights it sets out. Therefore, the document [in question] (the information notice) on the calculation of compensation (or the non-existence of the right to compensation) is of a declaratory nature only.

Since the obligation to conduct administrative proceedings and issue an administrative act [i.e. a formal decision] is not prescribed (in any event, HPB-Invest would not be entitled to conduct such proceedings or issue an administrative act as it is evidently not an administrative or other public authority but a commercial company) there is no constitutive act [i.e. a formal decision] which would entail the right to appeal, within the meaning of Article 18 of the Constitution, whereas the right of access to court is limited only [to the extent that] the jurisdiction of the Administrative Court, which is prescribed by law, excludes ... non-administrative matters. That means that the right of access to court, or [the possibility] to resort to another legal avenue of redress or to other remedies is not excluded.

The Constitutional Court therefore finds that the complainant’s constitutional rights guaranteed by Article 18 and Article 29 paragraph 1 of the [Croatian] Constitution were not violated by the contested decision.”

76. By decision no. U-I-84/2006 of 4 October 2011 (published in the Official Gazette 119/11 of 21 October 2011) the Constitutional Court rejected eleven petitions for (abstract) constitutional review and thus refused to institute proceedings to review the constitutionality of eight provisions of the Pensioners’ Fund Act, including sections 41 and 42 (see paragraphs 60-62 above). The relevant part of that decision reads as follows:

“The calculation of the amount of compensation contained in an information notice [from HPB-Invest], may be contested by way of a complaint (prigovor) to [HPB-Invest] within fifteen days of the receipt of the notice (section 18 paragraph 9 of the Pensioners’ Fund Act) whereupon the possibility of judicial protection is also open. The commercial company [i.e. HPB-Invest] which operates and manages the [Pensioners’] Fund within the meaning of section 5 of the Pensioners’ Fund Act has standing to be sued in [such] judicial proceedings.

...

As regards the petitioners’ argument that section 42(1) of the Pensioners’ Fund Act [is incompatible with the Constitution] because ‘the exercise of the right to be paid compensation is contingent on withdrawal of [any civil] action [which may have been brought], which restricts the right to judicial protection’ ... the Constitutional Court, having regard to the unquestionable power of the legislator to prescribe conditions for acquiring the right to membership of the [Pensioners’] Fund, as well as to the fact that the impugned restriction does not prevent the addressees of [the Implementation Act] [to exercise] the right to judicial protection in a way that would impair the essence of that right but ‘allows them to choose the way’ [in which they] ... exercise the right to be paid compensation, finds that the prescribed restriction is proportional to the aim sought to be achieved by the restriction.”

(c) The Supreme Court’s case-law

77. By decision no. Gr1- 500/05 of 17 October 2005 the Supreme Court ruled that an ordinary (civil) court had jurisdiction in a case where the plaintiff sought payment of the pension debt, and thereby resolved a conflict of jurisdiction between that ordinary court and the Administrative Court.

78. In judgments nos. Rev-x 974/11 of 14 February 2012 and Rev-x 430/10 of 20 March 2012 the Supreme Court dismissed appeals on points of law (revizija) and upheld the lower courts’ judgments dismissing actions brought against the Croatian Pension Fund after the entry into force of the Implementation Act and the Pensioners’ Fund Act whereby the plaintiffs sought payment of (compensation for) the pension debt owed to them. In particular, the Supreme Court held that after these two legislative acts had come into force on 5 August 2004 and 29 July 2005 respectively such compensation claims had to be adjudicated solely on the basis of that legislation. Since under those two legislative enactments compensation for the pension debt could be obtained either as payment of half of the compensation due over a period of two years or as delayed payment of the entire amount of compensation due over a period of eight years, awarding full and immediate compensation to those pensioners who had brought civil actions to that end would place them in a privileged position compared to other pensioners who had not brought such actions and thus had to obtain compensation through the Pensioners’ Fund. The relevant part of those judgments reads as follows:

“The substantive-law issue raised by the plaintiff in his appeal on points of law is whether the plaintiff is entitled to be paid the difference in pension in accordance with the Constitutional Court’s decision of 12 May 1998 or [whether he may exercise] the right to be paid [that difference] only through the Pensioners’ Fund.

...

The lower-instance courts dismissed the plaintiff’s claim by holding that the provisions of the Pensioners’ Fund Act applied only to those pensioners who had withdrawn their [civil] actions, which the plaintiff had not done, and therefore he had not acquired the right to compensation pursuant to that Act and [the Implementation Act] ...

It is beyond dispute that the plaintiff falls within the category of pensioners who were by section 2(1) of [the Implementation Act] granted the right to compensation due to the partial adjustment of [their] pensions in the period between 1 September 1993 and 31 December 1998.

...

... the Pensioners’ Fund Act ... regulates the method of compensation of pensioners referred to in section 2(1-3) of [the Implementation Act] and thereby fully implements the [Constitutional Court’s] decision [of 12 May 1998].

The right to compensation under the [Pensioners’ Fund] Act belongs only to those pensioners who are the members of the Fund.

Pursuant to section 42(1) of the Pensioners’ Fund Act pensioners referred to in section 2 of [the Implementation Act] who have brought civil actions for compensation may become members of the Fund and obtain compensation pursuant to that Act if they withdraw their actions.

These [civil] proceedings in which the plaintiff seeks compensation ... were instituted after the entry into force of [the Implementation Act] and the Pensioners’ Fund Act. Given that the plaintiff ... had not, in accordance with the said provision, withdrawn his action [he] did not become a member of the Fund nor [did he] acquire the right to compensation under the Pensioners’ Fund Act.

The plaintiff seeks payment of the full amount of compensation, whereas the Pensioners’ Fund Act provides that compensation must be obtained by acquiring and disposing of the shares in the Fund in accordance with the prescribed standards and criteria, so that under section 24(1) sub-paragraph 2 of the Pensioners’ Fund Act the right to the entire amount of compensation due belongs [only] to those members who opted for the right to acquire and dispose of the shares over a period of eight years with a two-year delay where the amount of compensation is paid in six annual instalments.

After the entry into force of [the Implementation Act] and the Pensioners’ Fund Act the pensioners’ claims for compensation for non-adjustment of [their] pensions in the period between 1 September 1993 and 31 December 1998 must be decided exclusively on the basis of these legislative acts, which were adopted with a view to removing the effects of unconstitutional pension insurance legislation which had been invalidated by the Constitutional Court.

Those legislative acts enabled pensioners who had brought civil actions for compensation to obtain it in the same way and under the same conditions as other pensioners who had not brought civil actions. The plaintiff was therefore not put in a disadvantaged position vis-à-vis those [other] pensioners.

By refusing compensation [paid] in accordance with the Pensioners’ Fund Act and maintaining his claim for a single payment of the full amount of the difference in pension owed to him, the plaintiff seeks to obtain compensation under conditions that are more favourable than those applied to pensioners who exercise that right as members of the [Pensioners’] Fund. Therefore, to allow the plaintiff’s claim would place him in a more favourable position than those [other] pensioners and thereby breach the constitutional guarantee of equality enshrined in Article 3 of the [Croatian] Constitution.

The plaintiff’s claim is unfounded even if adjudicated on the basis of the legislation in force before the adoption of [the Implementation Act] and the Pensioners’ Fund Act because a [civil] court is not entitled to decide on rights arising from pension insurance as a preliminary issue.

The defendant [i.e. the Croatian Pension Fund] as the competent authority had rendered final decisions in the administrative proceedings on the amount of pension payable to ... the plaintiff and paid the pension on the basis of those decisions. The lawfulness of those decisions could have been examined in administrative proceedings.

Therefore, the legal basis for determining the ... amount of pension to be paid to the plaintiff, are the defendant’s final decisions on the basis of which the pension was paid ... The court is not entitled to assess the lawfulness of the defendant’s decisions nor to establish that the plaintiff was entitled to a higher pension than the one paid on the basis of [those] final decisions.

The existence of that right is determined in administrative proceedings by a constitutive decision. [However,] a decision that could have represented a legal title rendering the claim for payment of the difference in pension sought by the plaintiff well-founded was not rendered in the present case.

In view of the above the second-instance court, in dismissing the plaintiff’s claim, correctly applied the [relevant] substantive law. Therefore, the plaintiff’s appeal on points of law has to be dismissed ...”

79. In judgment no. Rev-x 533/11 of 28 August 2012 the Supreme Court held that the same reasoning applied to those cases where an action for payment of (compensation for) the pension debt had been brought before the entry into force of the Implementation Act and the Pensioners’ Fund Act.

(d) The practice of ordinary courts

80. By judgment no. P-219/99 of 5 June 2001 the Vukovar Municipal Court ordered the Croatian Pension Fund as the defendant to pay the plaintiff (a pensioner) the pension debt. The exact amount of the pension debt owed to the plaintiff the court ordered the defendant to pay was calculated on the basis of an opinion prepared by a financial expert.

81. By judgment no. Gž-1266/08 of 1 June 2007 the Split County Court reversed a first-instance judgment dismissing an action brought by two pensioners as plaintiffs and ordered the Croatian Pension Fund as the defendant to pay them the pension debt. It held that because the plaintiffs had not withdrawn their action in accordance with section 42(1) of the Pensioners’ Fund Act (see paragraph 62 above), they had chosen to obtain compensation for the pension debt not through the Pensioners’ Fund but in civil proceedings.

82. By judgment no. Gžo-276/10 of 9 August 2010 the Split County Court quashed a first-instance judgment and remitted the case where the first-instance court had dismissed an action for payment of compensation brought by a pensioner as the plaintiff against the Croatian Pension Fund for its failure to satisfy its statutory obligation under section 3 of the Implementation Act (see paragraph 53 above) and determine the amount of compensation owed to him. The plaintiff had brought his action because he had not received HPB-Invest’s information notice within the statutory time-limit, and the Croatian Pension Fund, in reply to his request for calculation of the compensation owed to him, had informed him that he was not eligible for compensation because he had been receiving a pension on account of his status as a former political prisoner. The Fund did so even though it had previously granted him a disability pension.

83. By judgment no. P-514/06 of 2 February 2009 the Kutina Municipal Court dismissed an action for payment of the pension debt brought by a pensioner as the plaintiff against the State as the defendant. The plaintiff brought her action after she had been informed via HPB-Invest’s information notice that she was not entitled to any compensation through the Pensioners’ Fund, and after the Croatian Pension Fund, in reply to her request for re-calculation of the compensation owed to her, had informed her that the compensation had been correctly calculated. The court did not accept the State’s argument that it did not have jurisdiction in the matter. It held that it had jurisdiction precisely because the Croatian Pension Fund had not issued a formal decision (an administrative act) on the plaintiff’s request for re-calculation, thus depriving her of the possibility to seek judicial review before the Administrative Court. The court eventually dismissed the plaintiff’s claim because it held that she should have sued the Croatian Pension Fund instead of the State, and because she had refused to advance the fees of the financial expert the court had been prepared to call upon to verify the Fund’s calculation of compensation.

84. By judgment no. Gž-772/10 of 10 February 2011 the Sisak County Court upheld a first-instance judgment dismissing an action brought by a pensioner as the plaintiff against the State as the defendant for payment of compensation for the pension debt. The court held that the State had standing to be sued because the Pensioners’ Fund Act provided that Pensioners’ Fund had been established by the Government of Croatia on behalf of the State (see paragraph 55 above). The court dismissed the plaintiff’s claim because a financial expert confirmed that the Croatian Pension Fund’s calculation, according to which the plaintiff was not entitled to compensation, was correct.

85. By judgment no. P-1931/08 of 2 November 2010 the Zagreb Municipal Civil Court dismissed an action brought by a pensioner as the plaintiff against the Croatian Pension Fund and HPB-Invest as defendants whereby she sought: (a) declaration that she had become a member of the Pensioners’ Fund and acquired a certain number of shares in it corresponding to the pension debt owed to her, and (b) payment of compensation in accordance with Model B provided for by the Pensioners’ Fund Act. The plaintiff brought her action because she considered that the amount of compensation indicated in HPB-Invest’s information notice was too low. She did so only after the Croatian Pension Fund, in reply to her request for re-calculation of the compensation, had informed her that the compensation had been correctly calculated. The plaintiff specifically asked the court to establish the correct amount of compensation owed to her under the Implementation Act and the Pensioners’ Fund Act. The court dismissed her action because it held that it was not authorised to verify the accuracy of the Croatian Pension Fund’s calculation of the compensation. The court held, in particular:

“This court considers that it has no power to establish whether the amount of compensation for the pension debt ... has been determined correctly. That is so because there is not a single legislative act in force which would entitle it to examine whether the amount of compensation determined by the first defendant [i.e. the Croatian Pension Fund] is correct and accurate, or to determine the amount of compensation and order it to be paid.

Namely, even though the case file does not contain any decision by the first or the second defendant adopted on the basis of [the Implementation Act] or the Pensioners’ Fund Act in the form of an administrative act, from [their provisions] it is evident that authorities other than this court are competent to decide on compensation and its amount. Therefore, the plaintiff should have requested those authorities to determine [her right to compensation] and its amount either in administrative proceedings or in administrative-dispute [i.e. judicial review] proceedings [before the Administrative Court] especially because the right to compensation for the pension [debt] owed to [her] is a right arising from pension insurance.

...

Given that from the aforementioned legislation it is evident that the first defendant [i.e. the Croatian Pension Fund] is competent to decide on the rights arising from the pension insurance and that [the Implementation Act] confers on it also [the power] to determine the amount of compensation payable for the pension debt, the plaintiff in the civil proceedings may claim payment of only the amount of the pension debt which was determined by the competent authority. That being so, the plaintiff should have obtained, either from the first defendant or by instituting administrative-dispute [judicial review] proceedings [before the Administrative Court], a decision on the amount of compensation owed to her for the pension debt ... That is so because to obtain a court judgment ordering payment, the plaintiff must first have a title for it, and it is precisely a decision by the first defendant [i.e. the Croatian Pension Fund] which she does not have ...”

COMPLAINTS

86. The applicants complained under various Articles of the Convention that they had been unable to contest, under the domestic law, the calculation of the amount of compensation they were due for the “pension debt” (see paragraph 7 above).

THE LAW

A. Joinder of the applications

87. Given that the three applications at hand concern similar facts and complaints and raise identical issues under the Convention, the Court decides to join them, pursuant to Rule 42 § 1 of the Rules of the Court.

B. Alleged violation of Article 6 § 1 of the Convention

88. The applicants complained that they had been unable to contest, before the domestic courts, the calculation of the compensation for the loss incurred as the result of the State’s failure to fulfil its statutory obligation to adjust their pensions in line with the increase in wages in the period between 1 September 1993 and 31 December 1998. The first applicant relied on Article 14 of the Convention and on Article 1 of Protocol No. 1 and Article 1 of Protocol No. 12 thereto, whereas the second and the third applicant relied on Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 thereto.

89. The Government contested that argument.

90. The Court, being master of the characterisation to be given in law to the facts of the case, considers, having regard to its case-law (see, for example, Kostadin Mihaylov v. Bulgaria, no. 17868/07, §§ 33-54, 27 March 2008, and Yanakiev v. Bulgaria, no. 40476/98, §§ 47-84, 10 August 2006) that the applicants’ complaints fall to be examined under Article 6 § 1 of the Convention as access-to-court complaints. The relevant part of that Article reads as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

91. The Government disputed the admissibility of the applications on three grounds. They argued that the applicants had failed to exhaust domestic remedies, that they had not suffered a significant disadvantage and that, in any event, their applications were manifestly ill-founded.

1. The arguments of the parties

(a) The Government

92. The Government submitted that the applications were inadmissible because the applicants had not suffered a significant disadvantage within the meaning of Article 35 § 3 (b) of the Convention. They explained that in respect of the applicants the pension debt had not only been paid in full but that the applicants had actually received more than they had been entitled to. The total amount of pension they had received in the relevant period, together with the disbursements paid under the Transfer Act and the Pension Increase Act (see paragraphs 9 and 11-12 above), had exceeded the debt owed to each of them by HRK 26,699.94 (the first applicant), HRK 2,563.19 (the second applicant) and HRK 41,261.78 (the third applicant) respectively. Thus, in the Government’s view, the applicants had not in fact suffered any disadvantage.

93. The Government further submitted that each applicant could have brought a civil action for compensation in ordinary (civil) courts. However, they had not done so and had thus failed to exhaust domestic remedies. For the same reason their applications were manifestly ill-founded as they had access to court but had not availed themselves of that right. In addition, the first applicant had not properly exhausted domestic remedies also because in her constitutional complaint she had not complained of a violation of the right of access to court (see paragraph 24 above).

94. The Government explained that the right to compensation for the pension debt was not a right arising from pension insurance but a pecuniary right (imovinsko pravo) the determination of which came under the jurisdiction of the civil courts. They submitted the case-law of the domestic courts cited in paragraphs 77 and 80-85 above and relied on some of those cases to support their arguments. In particular, from the cases cited in paragraphs 77, 80 and 83-84 above it was, in their view, evident that civil courts had been accepting jurisdiction in cases where plaintiffs sought payment of (compensation for) the pension debt and that those courts had been deciding on the merits of such civil actions. Moreover, from those cases it also followed that in civil proceedings instituted by such actions the civil courts had been obtaining opinions from financial experts and determining the amounts of compensation payable for the pension debt. They had also been allowing such actions if they had considered them well founded.

95. The Government emphasised that civil proceedings for compensation could have even been brought in addition to, and concurrently with, the administrative proceedings the applicants had instituted, as those two types of proceedings were independent from each other. However, instead of bringing civil actions, the applicants had chosen to pursue their claims for payment of (compensation for) the pension debt in administrative proceedings before the Croatian Pension Fund and, subsequently, by bringing actions for judicial review before the Administrative Court. The applicants had done so even though at the moment when they had instituted judicial review (administrative-dispute) proceedings before the Administrative Court it had been clear from the case-law of that court (see paragraphs 72-73 above) and from the Constitutional Court’s case-law (see paragraphs 74-76 above) that the issue of compensation for the pension debt was not an administrative matter, that is, an issue falling within the jurisdiction of the Croatian Pension Fund or any other administrative or public authority, which would warrant the institution and conduct of administrative proceedings and the adoption of a formal decision (that is, an administrative act).

96. In the Government’s view, the applicants should have known that a civil action had been the proper avenue of redress because they had certainly been aware that following the adoption of the Constitutional Court’s decision of 12 May 1998 the Croatian Party of Pensioners and various pensioners’ associations had launched a public campaign inviting pensioners to institute civil proceedings for payment of (compensation for) the pension debt, which had resulted in more than 1,500 such actions being brought in civil courts (see paragraph 8 above). That was especially true for the second applicant who had been, unlike the other two applicants, represented by a qualified representative (an advocate) in the administrative proceedings complained of. What is more, the possibility of bringing a civil action had also been evident from points 10-11 of the Instruction adopted on 30 November 2005 by the administrative board of the Pensioners’ Fund, which indicated that judicial proceedings could be instituted if a complaint lodged against the calculation of the amount of compensation payable for the pension debt had not resulted in a favourable outcome for the pensioner (see paragraph 63 above). That instruction had been published on the Croatian Party of Pensioners’ internet site on 1 December 2005, that is before any of the applicants had contacted the Croatian Pension Fund concerning the issue of calculation of compensation for the pension debt (see paragraphs 18, 28 and 40 above).

(b) The applicants

97. The first applicant did not submit observations in reply to those of the Government.

98. As regards the alleged lack of significant disadvantage, the first applicant in her claim for just satisfaction submitted that she had received around HRK 60,000 less in pension payments than she should have received in the relevant period. The second applicant emphasised that from HPB-Invest’s information notice of 26 November 2005 it was evident that the sum of the pension instalments he had been entitled to receive in the relevant period was HRK 222,378.70 rather than HRK 98,728.45 (see paragraph 27 above), the erroneous figure quoted in that notice. Given that according to the same notice he had received HRK 101,291.64 in that period, it followed that the State still owed him HRK 101,291.64 of his pension. Thus, it could not be argued that he had not suffered a significant disadvantage. The third applicant did not comment on this issue.

99. As regards the alleged failure to exhaust domestic remedies, the second and the third applicant submitted that a civil action in ordinary courts could not be considered an effective remedy. In that connection they submitted that some of the decisions of the civil courts on which the Government relied in support of their arguments were irrelevant as they either dated from the period before the entry into force of the Implementation Act and the Pensioners’ Fund Act (the Vukovar County Court’s judgment of 5 June 2001, see paragraph 80 above), or concerned actions brought before that date (for example, the Supreme Court’s decision of 17 October 2005, see paragraph 77 above). The remaining case-law the Government submitted only went to show that the case-law of the civil courts on the issue of payment of (compensation for) the pension debt had been inconsistent, which had resulted in overall confusion and a lack of legal certainty.

100. In that connection, the second and the third applicant focused on the Zagreb Municipal Civil Court’s judgment of 2 November 2010 whereby that court had dismissed an action by a pensioner who had been dissatisfied with the amount of compensation he was entitled to for the pension debt as calculated by the Croatian Pension Fund (see paragraph 85 above). That judgment was, in their view, contrary to the Government’s arguments and supported their claim raised in the domestic proceedings that the right to compensation for the pension debt was a right arising from pension insurance which therefore had to be determined by a formal decision adopted in administrative proceedings before the Croatian Pension Fund (see paragraphs 36 and 48 above). In particular, those applicants pointed out that in that case the Zagreb Municipal Civil Court had dismissed the action because it had held that: (a) it had not had the power to verify the accuracy of the Fund’s calculation, (b) the right to compensation for the pension debt was a right arising from pension insurance, the determination of which fell to the Croatian Pension Fund, and (c) a plaintiff in civil proceedings could obtain a judgment ordering payment of (compensation for) the pension debt only on the basis of the a decision by the Fund issued in administrative proceedings determining the amount of that compensation (see paragraph 85 above).

101. The second and the third applicant therefore argued that, contrary to the Government’s view, they had chosen the proper avenue of redress by insisting that their requests for (re-calculation of) compensation for the pension debt be examined in administrative proceedings, and that a civil action brought without a formal decision of the Croatian Pension Fund on the amount of that compensation would have certainly been dismissed. Since the Croatian Pension Fund declined jurisdiction in their cases and refused to issue a formal decision on their requests (see paragraphs 31, 33, 43 and 45 above), and given that the Administrative Court and the Constitutional Court did not sanction such practice (see paragraphs 35, 37, 47 and 49 above), the second and the third applicant contended that they had been deprived of the possibility to verify the Fund’s calculation before a judicial authority. In their view that had amounted to denial of access to court.

2. The Court’s assessment

102. The Court does not find it necessary to examine all the inadmissibility objections raised by the Government because it considers that the present applications are in any event inadmissible for the following reasons.

103. It was not disputed between the parties that in judicial review (administrative-dispute) proceedings before the Administrative Court the applicants were unable to obtain a judicial determination of their right to compensation for the pension debt as that court did not touch upon the substance of the applicants’ claim and the main thrust of their arguments, namely, that in their cases the Croatian Pension Fund miscalculated the compensation they were owed for the pension debt and that the State in fact still owed them substantial sums of money. The Court, having regard to decisions and reasoning of the Administrative Court and the Constitutional Court in the applicants’ cases (see paragraphs 23, 35, 37, 47 and 49 above), as well as to the case-law of those courts (see paragraphs 72-76 above), sees no reason to hold otherwise.

104. Therefore, the only issue to be examined by the Court is whether the applicants could have, as argued by the Government (see paragraphs 93-96 above), brought actions for compensation in the civil courts and in that way exercised their right of access to court.

105. In this connection the Court first notes that under the case-law of the Constitutional Court those wishing to contest calculations of the compensation for the pension debt have access to court though not before the Administrative Court (see paragraphs 75-76 above). It further refers to the Instruction of the Pensioners’ Fund’s administrative board of 30 November 2005, which suggests that judicial proceedings can be instituted if a complaint lodged by a pensioner against the calculation of compensation for the pension debt was not resolved in favour of the complainant (see point 10 of the Instruction, quoted in paragraph 63 above). The Court also notes that section 172(1) of the 1978 Obligations Act and section 1062(1) of the 2006 Obligations Act have provided for tort liability of legal entities to third persons for the acts of their organs (see paragraph 69-70 above) and that both the Croatian Pension Fund (as the authority responsible for calculation of the principal amount of the pension debt, see paragraphs 13 and 53 above) and HPB-Invest (as the authority responsible for calculation of interest due on the principal amount, see paragraph 13 above) are legal entities. Furthermore, for the Court it seems evident that, if the Croatian Pension Fund indeed miscalculated the amount of the pension debt owed to the applicants, as they claimed, that would have constituted a wrongful act capable of causing them damage within the meaning of section of 155 of the 1978 Obligations Act and section 1046 of the 2006 Obligations Act (see paragraphs 69-70 above).

106. It is true that there is some uncertainty in the case-law of the first- and second-instance civil courts as to the type of a civil action to be used and the relief to be sought (such as, for example, an immediate payment of full amount of (compensation for) the pension debt or an order to be assigned a certain number of shares in the Pensioners’ Fund), as regards the entity against which those actions should be directed (the Croatian Pension Fund, HPB-Invest or the State itself), as well as regarding the scope of review of calculations of compensation for the pension debt (see paragraphs 80-85 above). However, the Court notes that none of those cases concern civil actions based on the tort liability of legal entities for the damage inflicted by their organs (see paragraphs 69-70 above).

107. In this connection the Court refers to its constant-case-law according to which the existence of mere doubts as to the prospects of success of a particular remedy which is not obviously futile is not a valid reason for failing to exhaust that avenue of redress (see, for example, Vučković and Others v. Serbia [GC], no. 17153/11, §§ 74 and 84, 25 March 2014). While this case-law was initially developed in the context of exhaustion of domestic remedies, the Court considers that it applies mutatis mutandis when examining whether the applicants had access to court in the circumstances such as those prevailing in the present case, it being understood that the mere fact that an action has very limited prospects of success is not equivalent to depriving the plaintiff of the right of access to a court (see, for example, Savez crkava “Riječ života” and Others v. Croatia, no. 7798/08, § 121, 9 December 2010). Rather, what is important in such circumstances is whether the dispute submitted for adjudication would be subject to a genuine examination (see Kostadin Mihaylov, cited above, § 39).

108. In the present case, for the reasons stated above (see paragraphs 105-106), it cannot be said that, had the applicants brought the civil actions in question, those actions would have had no chance of success. More importantly, it cannot be argued that civil courts would have no power to touch upon the substance of the dispute and review calculations of compensation for the pension debt performed by the Croatian Pension Fund, or that they would not be able, if appropriate, to award them compensation. Any doubt as regards which entity had the standing to be sued (see paragraph 106 above) could have been dispelled by suing alternatively, in a single action, all potential defendants.

109. Against this background the Court cannot accept the applicants’ argument that they were unable to contest the calculations of compensation for the pension debt owed to them before a judicial authority capable of examining the substance of their argument that those calculations were incorrect.

110. It follows that these applications are inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.

For these reasons, the Court unanimously

Decides to join the applications;

Declares the applications inadmissible.

Søren NielsenIsabelle Berro-Lefèvre
RegistrarPresident

APPENDIX

 45903/08KOVAČEVIĆ v. Croatia41578/10SALKOVIĆ v. Croatia70196/10KARLOVČAN v. Croatia

 

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