FIFTH SECTION
DECISION
Application no. 33071/10
Matthias Friedrich KURTH
against Germany
The European Court of Human Rights (Fifth Section), sitting on 22 January 2013 as a Committee composed of:
Ganna Yudkivska, President,
Angelika Nußberger,
André Potocki, judges,
and Stephen Phillips, Deputy Section Registrar,
Having regard to the above application lodged on 10 June 2010,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having regard to the decisions in the cases of Taron v. Germany (dec.) no. 53126/07, 29 May 2012, Garcia Cancio v. Germany (dec.) no. 19488/09, 29 May 2012,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Mr Matthias Friedrich Kurth, is a German national who was born in 1959 and lives in Kreuztal. He is represented before the Court by Mr C. Kotz, a lawyer practising in Kreuztal.
A. The circumstances of the case
1. Proceedings at issue
2. The facts of the case, as submitted by the parties, may be summarised as follows.
3. In 1997 the applicant and his wife acquired 19 items of real estate for 6,8 million Deutschmarks (DEM - 3,47 million euros (EUR)), financed almost entirely through the Berliner Bank AG which received a lien on the property as security.
4. Since the financing of the project failed, the Berliner Bank AG filed a petition for bankruptcy against the applicant with the Siegen District Court on 12 November 1998. The court rejected the application for formal reasons. On appeal the Siegen Regional Court quashed the decision and remitted the case. The district court then commissioned an expert report on the financial state of the applicant.
5. On 7 April 1999 the district court opened bankruptcy proceedings and appointed a liquidator.
6. On 20 June 2001 and on 19 December 2007 the applicant complained to the Siegen District Court about the inactivity of the liquidator. On 3 January 2008 the court informed the applicant by letter that it saw no reason for supervisory measures against the liquidator.
7. On 14 August 2008 the liquidator informed the court that the real estate had been sold. However, a final clearance of payments with the main creditors was still outstanding. The liquidator expected the proceedings to be finished by the end of the year.
8. On 26 May 2009 the liquidator informed the District Court that a final settlement of accounts could be expected within three months.
9. On 16 April 2011 the Siegen District Court finally closed the bankruptcy proceedings.
2. Subsequent developments
10. On 7 December 2011 the Government informed the Court that in response to the pilot judgment Rumpf v. Germany (no. 46344/06, 2 September 2010) an Act against Excessive Court Proceedings and Criminal Investigations (Gesetz über den Rechtsschutz bei überlangen Gerichtsverfahren und strafrechtlichen Ermittlungsverfahren) had been published in the Federal Law Gazette and had entered into force on 3 December 2011.
11. In December 2011 the Court informed the applicant in the present case of the enactment of the new domestic remedy and drew his attention to the transitional provisions of that Act. Referring to the case of Brusco v. Italy ((dec.), no. 69789/01, ECHR 2001‑IX) the Court invited the applicant to inform the Court whether he intended to make use of the new remedy within the time-limit set by the transitional provision of that Act.
12. The applicant informed the Court in response that he did not intend to make use of the new remedy as it would not allow him to claim pecuniary damages for the wrongful decisions of the liquidator. Furthermore, he could not afford yet another law suit in Germany.
B. Relevant domestic law
1. The Bankruptcy Act
13. On 1 January 1999 the Insolvency Act (Insolvenzordnung) replaced the Bankruptcy Act (Konkursordnung). The latter is still applicable to petitions for bankruptcy filed before 1 January 1999 as was the case here.
a. The Law
14. According to section 6 of the Bankruptcy Act the bankrupt lost his power of disposal over his estate with the decision of the competent bankruptcy court that declared the bankruptcy proceedings open. From that moment onwards until the closing of bankruptcy proceedings a court‑appointed liquidator administered the bankrupt’s estate independently from the bankrupt who only formally remained the owner of the estate. Section 83 of the Bankruptcy Act stipulated that the liquidator was subject only to the supervision of the bankruptcy court. Section 82 of the Bankruptcy Act stipulated that the liquidator was liable for damages to all participants in the proceedings in case of negligent breach of professional duties.
Other civil rights of the bankrupt were not affected by the bankruptcy proceedings. New property acquired by the bankrupt after the opening decision of the bankruptcy court remained in his sole administration and was unaffected by the bankruptcy proceedings. This “new” property was also privileged in regard to forced execution of debts stemming from before the opening of bankruptcy proceedings. With the closing of bankruptcy proceedings this privilege of the “new” property ended.
b. Relevant Domestic Court Decision
15. On 28 July 1992 the Federal Constitutional Court decided in a chamber formation that the procedural rights of the bankrupt that stem from his constitutional right to property cease with the decision of the bankruptcy court to open the bankruptcy proceedings. The Federal Constitutional Court interpreted the purpose of the Bankruptcy Act as being to exclude the debtor as far as possible from any administrative decision over his estate once the proceedings have been declared open. The constitutional rights of the debtor were guaranteed solely by his position in the opening proceedings. Once the bankruptcy proceedings were declared open the bankrupt had no standing in legal proceedings against decisions of the liquidator. Only the bankruptcy court safeguarded the interests of the bankrupt via its control function over the liquidator.
2. Act against Excessive Court Proceedings and Criminal Investigations
16. For the general features of the Act and its interim provision see in detail Taron v. Germany (cited above) and Garcia Cancio v. Germany (cited above).
17. Article 1 of the aforementioned Act amended the Courts Act (Gerichtsverfassungsgesetz) and introduced a new remedy against excessive court proceedings in a new section 198. Section 198 § 6 of the Court Constitutional Act stipulates the meaning of “court proceedings” and “participant” as follows:
“1. Court proceedings shall mean every set of proceedings from their introduction until their conclusion with final and binding force, including proceedings for granting provisional court relief and for granting legal aid; with the exception of insolvency proceedings once they have been opened; where insolvency proceedings have been opened the filing for a decision (das Herbeiführen einer Entscheidung) shall be considered as court proceedings;
2. A participant in proceedings shall mean any party to, and any participant in, a set of court proceedings with the exception of entities of constitutional rank, of public administration entities and of other public agencies, so far as the latter are not participating in a set of proceedings in the exercise of a right of self-governance.”
COMPLAINTS
18. The applicant complained under Article 6 and 13 of the Convention that the length of the bankruptcy proceedings was excessive. He also argued in this context that he had no remedy at his disposal to have the expediency of the liquidator’s work reviewed.
THE LAW
A. Alleged violation of Article 6 § 1 of the Convention on account of the length of the bankruptcy proceedings
19. The applicant complained about the length of the bankruptcy proceedings under Article 6 § 1 of the Convention. This provision provides as follows:
“In the determination of his civil rights and obligations everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal ...”
20. The Government did not contest the applicant’s assumption that the bankruptcy proceedings at issue fell under the ambit of Article 6 § 1.
21. Therefore, the Court assumes in the applicant’s favour that Article 6 § 1 of the Convention is applicable for the complaint of the length of the bankruptcy proceedings.
22. The Court held in Taron (cited above §§ 40 et seq.) – a case that involved an applicant who like the present applicant did not intend to make use of the new domestic remedy – that
“40. (...), the Court accepts that the Remedy Act was enacted to address the issue of excessive length of domestic proceedings in an effective and meaningful manner, taking account of the Convention requirements. (...)
42. Finally, the Court does not lose sight of the fact that the new remedy only became available after the introduction of the present application and that only exceptional circumstances may compel the applicant to avail himself of such a remedy (see § 36 above). (...)
43. (...) the Court considers it appropriate and justified in the circumstances of the present case to require the applicant to use the new domestic remedy introduced by the Remedy Act. Firstly, as it observed in Kudła v. Poland [GC], no. 30210/96, § 152, ECHR 2000‑XI, the right to a hearing within a reasonable time would be less effective if there was no opportunity to submit Convention claims to a national authority first. Once a domestic compensatory remedy has been introduced, it becomes particularly important for such complaints to be considered in the first place and without delay by the national authorities, which are better placed and equipped to establish the relevant facts and to calculate monetary compensation (see mutatis mutandis, Demopoulos and Others (dec.) [GC], cited above, § 69). Secondly, the Court attaches particular importance to the fact that the applicant is entitled to bring his claims to the domestic courts under the transitional provision of the Remedy Act which reflects the intention of the German legislator to grant redress at the domestic level to those people who had already applied to the Court before the entry into force of the Remedy Act (compare Brusco, cited above). It reiterates that its task, as defined by Article 19 of the Convention, would neither be best achieved by taking such cases to judgment in the place of domestic courts, nor by considering them in parallel with the domestic proceedings (...). In addition, the Court finds it not excessive to refer the applicant to the domestic courts, as the Remedy Act provides only for proceedings in two instances.
44. For reasons of fairness and effectiveness the Court sees no necessity for treating pending cases with this Court differently and to require only applicants of cases lodged after the pilot judgment (Rumpf, cited above) to make use of the new remedy. After the judgment in Sürmeli v. Germany ([GC], no. 75529/01, ECHR 2006‑VII on 8 June 2006) it had become clear that the existing legal provisions in Germany were insufficient to expedite proceedings and to compensate for protracted proceedings. Since then the German legislator has worked on various ways to comply with the requirements of the Convention which finally resulted in the above mentioned Remedy Act.
45. However, the Court’s position may be subject to review in the future depending, in particular, on the domestic courts’ capacity to establish consistent case-law under the Remedy Act in line with the Convention requirements (see Korenjak, cited above, § 73). Furthermore, the burden of proof as to the effectiveness of the new remedy will lie in practice with the respondent Government.”
23. In the present case the Court sees no reasons to come to a different conclusion. Section 198 § 6 of the Courts Act stipulates that “court proceedings” also comprise the opening proceedings of bankruptcy proceedings. Once these have been declared open, that is, once the bankrupt is no longer entitled to deal the property forming the bankruptcy estate, Section 198 § 6 expressly provides that “filing for a decision” (das Herbeiführen einer Entscheidung) at the bankruptcy court is considered as court proceedings. It was open to the applicant to bring an application under the transitional provisions of the Remedy Act up until 3 June, and he has not made any submissions to the effect that Section 198 § 6 would not apply to his case. As to his submission that he could not afford another law suit, the Court notes that the general provisions for legal aid under German law are applicable in regard to the new remedy. The Court has repeatedly held these provisions to be compatible with the requirements of the Convention (see Taron v Germany, cited above, § 38 and Eckardt v. Germany (dec.), no. 23947/03, 10 April 2007).
It follows that this part of the complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
B. Remaining complaints
1. Lack of an effective remedy in respect of the expediency of the liquidator’s work
24. The applicant further complained that he had no remedy at his disposal to have the expediency of the liquidator’s work reviewed. He relied in this respect on Article 6 § 1 read in conjunction with Article 13 of the Convention, which provides:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
25. The Courts notes that the applicant, who is represented by counsel, has not raised this complaint with the Federal Constitutional Court. He did not give any reasons why a constitutional complaint would not have been efficient and available in his particular case after the bankruptcy court had declined to take action in 2001 and 2007.
26. It follows that this complaint must be likewise rejected as inadmissible for non exhaustion of domestic remedies under Article 35 §§ 1 and 4 of the Convention.
2. Lack of an effective remedy in respect of excessive length of the proceedings
27. Given that the applicant’s complaint under Article 6 regarding the length of the bankruptcy proceedings has been rejected for non-exhaustion of domestic remedies, the related complaint under Article 13 is manifestly ill-founded and must likewise be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Stephen PhillipsGanna Yudkivska
Deputy RegistrarPresident
Full & Egal Universal Law Academy