FIFTH SECTION
DECISION
Application no. 31765/08
Andrej LAMOVEC
against Slovenia
The European Court of Human Rights (Fifth Section), sitting on 20 May 2014 as a Chamber composed of:
Mark Villiger, President,
Angelika Nußberger,
Boštjan M. Zupančič,
Ganna Yudkivska,
Vincent A. De Gaetano,
André Potocki,
Aleš Pejchal, judges,
and Claudia Westerdiek, Section Registrar,
Having regard to the above application lodged on 23 June 2008,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Mr Andrej Lamovec, is a Slovenian national, who was born in 1970 and lives in Ljubljana. He was represented before the Court by Mrs V. Holec, a lawyer practising in Ljubljana.
2. The Slovenian Government (“the Government”) were represented by their Agent, Mrs B. Jovin Hrastnik, State Attorney.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. The applicant was a stockbroker working as the head of trading in a brokerage firm. In January 2003 the Securities Market Agency (hereinafter “the Agency”), an independent authority vested with supervisory powers in the field of securities market operations, requested from the applicant a number of records of securities transactions he had made in previous years.
5. After examining these documents and the records of the stock‑exchange trading system, on 3 December 2003 the Agency adopted a decision to initiate proceedings for revocation of the applicant’s stockbroker’s trading licence (hereinafter “the initial decision”), on the ground that in the period between 4 December 2000 and 20 December 2001 he had carried out twenty-one fictitious securities transactions and thereby breached the Ljubljana Stock Exchange Rules and the Securities Market Act. In its decision, the Agency specified the controversial transactions, explaining in detail the circumstances which in its opinion implied their fictitious character.
6. These transactions all involved cross-trading, the brokerage firm acting as both the seller and buyer of securities for its clients’ or its own accounts. In certain cases the applicant carried out multiple clients’ orders to sell securities, which were followed almost simultaneously by these same clients’ orders to buy an equal amount of the same type of securities. Moreover, in some cases the brokerage firm itself had bought securities from clients and subsequently sold them back to them. Other types of cross‑trade transactions involved alternate sale and purchase of securities of the same type between a client and the brokerage firm, where the two first sold and bought from each other a certain amount of securities of equivalent type, only to subsequently – approximately a minute later – sell/buy them back from each other under almost the same conditions.
7. According to the Agency the orders were executed by means of a special “cross-user” function key which ensured that the transactions were, as intended, carried out simultaneously between two specific parties submitting matched offers, and no third party could intervene in the prearranged transaction. Given that the sales and subsequent purchases were carried out at very short intervals, that the securities were bought and sold at almost the same prices and that the transactions did not result in any change in the economic ownership of the relevant securities, the Agency took the view that they were prearranged and that the applicant, the very person who had carried them out, must have been aware of their content.
8. Furthermore, the Agency’s decision included a detailed list of sixty‑five documents, among them copies of the trading records relating to the controversial transactions, which had given rise to its suspicion that the applicant had repeatedly breached the law, as well as the dates on which the alleged violations had occurred. Finally, the applicant was notified that he could make a statement on the reasons for initiating proceedings and submit evidence in support of his statement within thirty days of receiving the decision.
9. In his reply to the Agency’s initial decision on 13 January 2004, the applicant contested the version of events presented by the Agency, as well as the application and interpretation of the substantive and procedural law. As regards his objection to the facts, the applicant, while not contesting that he had in fact carried out the transactions in question or that these sales and purchases had been carried out between the same clients or between clients exchanging roles as buyers and sellers, argued that he had not been acquainted with the details of the transactions in question. The orders had allegedly been placed with another department, whereas the trading department had only carried them out. The applicant maintained that in the four-day period from 14 to 19 December 2000, during which four of the controversial transactions had been made, the trading department had carried out 559 securities transactions. Thus, the applicant alleged that he had not known, nor had he been required to check, whether each of these transactions was made in a correct manner. In support of his submissions, the applicant provided copies of the records of relevant transactions and balance of securities in the accounts of the relevant clients.
10. Moreover, the applicant claimed that the documents identified in the Agency’s initial decision did not justify the conclusion that he had actually used the “cross-user” function key to carry out the controversial transactions. In so far as the Agency disagreed with his view, the applicant suggested that an expert in securities trading be appointed to examine this issue. He also suggested that that expert submit his report at an oral hearing, enabling the applicant to ask him or her relevant questions, or in written form, in which case the applicant would submit written comments.
11. The applicant also joined to his reply an initiative for a review of the constitutionality of certain provisions of the Securities Market Act applicable to his case, explaining that he would be lodging this initiative with the Constitutional Court. In the initiative he challenged, inter alia, a number of provisions regulating proceedings before the Agency and judicial review proceedings, including the provision stipulating that the Agency’s decisions were, in principle, rendered without holding a hearing. The applicant requested that the initiative be considered a constitutive part of his reply.
12. On 14 January 2004 the applicant lodged his initiative for the review of constitutionality of certain provisions of the Securities Market Act with the Constitutional Court.
13. On 21 January 2004 the Agency refused the applicant’s request for an oral hearing and the appointment of an expert, without giving any reasons.
14. On 11 February 2004 the Agency, sitting in a panel composed of eight members of its Council of Experts, rendered a decision revoking the applicant’s trading licence (hereinafter “the final decision”) on the ground that he had carried out twenty-one fictitious securities transactions and thereby had repeatedly breached the law and stock-exchange trading rules. As regards, firstly, the applicant’s request for an oral hearing and the appointment of an expert, the Agency held that the information on fictitious transactions through the use of the “cross-user” function key had been obtained from the records of the stock-exchange trading system, which had been presented to the applicant. According to the Agency, the tabular extracts from the trading system records, where all controversial transactions featured the “cross-user” status, clearly manifested that the “cross-user” function key had been used in these sales and purchases.
15. In this connection, the Agency considered that the manner in which the transactions had been carried out was sufficiently established by the documentary evidence already included in its decision to initiate proceedings for revocation of the applicant’s trading licence, as well as by the records of transactions and other documents submitted by the applicant. According to the Agency, there was no controversy regarding the facts which would have necessitated an oral hearing or the appointment of an expert.
16. The applicant sought leave for judicial review before the Supreme Court, challenging the Agency’s final decision, as well as its decision rejecting his procedural requests for the appointment of an expert and for an oral hearing. In his request, the applicant essentially repeated the pleas made in his reply to the initial decision, and added a number of new complaints. Complaining that his earlier requests to this effect had been refused by the Agency without cause, the applicant requested that an expert be appointed and that an oral hearing be held, although a hearing in these proceedings was excluded by law. Nevertheless, the applicant argued that the statutory exclusion of oral submissions was unconstitutional, and proposed that this issue be raised before the Constitutional Court and that the judicial review proceedings be suspended pending the decision of the Constitutional Court. Moreover, the applicant maintained that the documents relied upon by the Agency did not prove that he had actually carried out the transactions at issue by using the “cross-user” function key, and that the Agency must have based its conclusion to this effect on other documents which had not been referred to in its decisions.
17. On 13 October 2004 the Constitutional Court rendered a decision on the review of constitutionality of certain provisions of the Securities Market Act, in which it joined several applications regarding the same matter. Some of the challenged provisions of the Act were found to be unconstitutional; however, none of those pertained to procedural matters, including the provisions on holding of oral hearings.
18. On 14 February 2006 the Supreme Court dismissed the applicant’s action for judicial review without holding an oral hearing. Having found that the controversial transactions had all involved cross-trading between what were essentially the same clients, the Supreme Court held that the Agency’s conclusions as to the facts were correct. Moreover, considering that the purchases and sales had followed each other at very short intervals, the Supreme Court agreed with the Agency that the applicant must have been aware of the irregularity of the transactions in question. The court pointed out that the applicant had failed to adduce any arguments capable of rebutting the Agency’s conclusions. Also, the court dismissed the applicant’s complaint against the Agency’s decision not to appoint an expert and/or hold an oral hearing, reiterating that the Agency had sufficiently established the facts of the case. Finally, regarding the alleged failure of the Agency to indicate all evidence on which its conclusion as to the use of the “cross-user” function key had been made, the Supreme Court held that, as the applicant had not previously challenged the initial decision, it was only possible to examine his complaints regarding the final decision of the Agency.
19. The applicant lodged a constitutional complaint against the judgment of the Supreme Court, challenging the refusal of the Agency and the Supreme Court to hold an oral hearing and appoint an expert. He also claimed that the Agency had failed to indicate all evidence used in the proceedings, and that the Supreme Court erroneously rejected his complaint in that regard without addressing its merits.
20. On 6 December 2007 the Constitutional Court dismissed the applicant’s constitutional complaint, finding, first of all, that the Agency had indicated all the documents used as evidence in the proceedings to revoke his trading licence, first in its initial decision and then in its final decision. Accordingly, the court was of the view that the Agency’s conclusions as to the applicant’s use of the “cross-user” function key were clearly based on the documentary evidence and thus did not require a complex assessment of opposing and contradictory evidence. Moreover, the applicant had been provided with sufficient opportunity to comment on the evidence which was the basis for the revocation of his licence. Therefore, although the Constitutional Court agreed with the applicant that the Supreme Court had erred in concluding that he should have challenged the Agency’s initial decision to initiate the proceedings at an earlier time, it considered that remitting the case back to the Supreme Court for further examination could not lead to a different conclusion with regard to the documentary evidence used in the proceedings before the Agency.
21. As regards the applicant’s complaint that the Agency had refused to appoint an expert, the Constitutional Court reiterated that the Agency had given an adequate explanation of the use of the “cross-user” function key and the records of the stock-exchange trading system. Therefore, in the Constitutional Court’s opinion, the Supreme Court had not been required to make a specific pronouncement on this question.
22. Finally, as regards the applicant’s complaint that the Agency had also refused to hold an oral hearing, the Constitutional Court held that he had not put forward this complaint in his application for judicial review before the Supreme Court, thereby failing to use that remedy in substance. As regards the lack of an oral hearing in the judicial review proceedings, the Constitutional Court emphasised that a hearing in those proceedings was excluded by law. Nevertheless, the Constitutional Court took the view that the applicant’s right to be heard was not affected either, as he had had the opportunity to present his submissions in written form.
B. Relevant domestic law
23. At the time of the events at issue the securities market operations and the powers of the Agency in respect thereof were regulated by the Securities Market Act. The Act designated the Agency as an independent legal entity, led by a Council of Experts which was composed of the president and eight members appointed by the Government. The members of the Council were required to hold a university degree and enjoy the reputation of renowned experts in the field of finance or commercial law.
24. Proceedings in individual matters before the Agency were conducted pursuant to the General Administrative Procedure Act, unless otherwise provided by the Securities Market Act. The parties to the proceedings were invited to make their statements in writing. An oral hearing was held only exceptionally, the Act providing as follows:
Section 315
“(1) The Agency shall adopt decisions without a hearing.
(2) Notwithstanding the first paragraph, the president of the senate may convene a hearing if he or she considers that this is necessary in order to explain or establish relevant facts.
(3) The president of the senate may, without a hearing, hear parties to the action and other persons if he or she considers that this is necessary in order to explain or establish relevant facts.”
25. Oral hearings in judicial review proceedings were specifically ruled out by Article 331 of the Act.
26. Moreover, with regard to the reasons for revoking an individual’s trading licence, the Act provided as follows:
Section 112
“(1) The Agency shall withdraw a licence to provide services ...
7. if a stockbroker acts in severe contravention of the rules pertaining to the organised market (Article 247).
(2) The following shall be deemed a severe violation of the provisions referred to in items 6 and/or 7 of the first paragraph of this Article ...
2. recurring violations of the said provisions.”
Section 247
“In providing services with regard to the securities on the organised securities market, brokerage firms shall be obliged to comply with the trading rules and other general acts of the stock exchange and with the requirements of the responsible bodies of the stock exchange.”
COMPLAINTS
27. The applicant complained that in the proceedings for revocation of his trading licence he had not been afforded either an oral hearing or the expert opinion that he had requested. He also complained that by refusing those requests the domestic courts had denied him effective judicial protection in respect of the procedural violations committed by the Agency.
28. The applicant relied on Articles 6 § 1 and 13 of the Convention. However, the Court considers that his complaints fall to be examined solely under Article 6 § 1 of the Convention, the relevant parts of which read as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair and public ... hearing ... by [a] ... tribunal ...”
THE LAW
1. The parties’ submissions
29. The Government objected that the applicant had failed to exhaust domestic remedies. Pointing out that an oral hearing could only have been held in the proceedings before the Agency, the Government argued that the applicant had failed to request the Agency to question him or any witnesses. He had only proposed obtaining expert evidence either by questioning an expert at an oral hearing or by obtaining an opinion in writing. Also in his request for judicial review before the Supreme Court, while requesting an oral hearing, which was excluded by law, the applicant had failed to complain that the Agency had violated his rights by refusing to hold an oral hearing. Hence, his later constitutional complaint was in this part rejected for non-exhaustion in substance of the available remedies.
30. In the alternative, the Government, referring to the case of Miller v. Sweden (no. 55853/00, § 29, 8 February 2005), argued that considering the particular circumstances of the present case, the domestic authorities could reasonably dispense with holding an oral hearing. They stated in this regard that the Agency’s field of activity concerned the securities market, which operated on the basis of written documents and brought together highly specialised experts. Therefore, written proceedings were better suited to the actions and situations examined by the Agency. The latter was also best placed to determine whether a particular case necessitated holding an oral hearing in order to clarify or establish the relevant facts. The Government pointed out that in the proceedings before the Agency the applicant had been able to state the facts and present his own evidence. He had been aware of the transactions which had given rise to the supervision, as he had been required by the Agency to submit documents and explanations in this regard. The Government furthermore reiterated that the applicant, who had been represented by a lawyer throughout the proceedings, had agreed to obtain expert evidence in writing instead of at an oral hearing.
31. According to the Government, the Agency’s conclusions had all been based on documentary evidence which had been included in its initial decision. The decision had also included code numbers which had allowed the identification and traceability of every transaction in the databases in the stock-exchange trading system. The applicant had been presented with printouts containing detailed information on the controversial transactions, including their “cross-user” status designating the manner in which they had been executed. Moreover, he had examined the case file, had the entire documentation at his disposal, and could verify the data included in the Agency’s initial decision. Having regard to the nature of the disputed issue, namely whether the documents relied on by the Agency provided an answer to how the controversial transactions had been executed, the Government maintained that an oral hearing or the appointment of an expert would not have contributed to the clarification of the facts.
32. Lastly, with regard to the alleged irregularities committed in the proceedings of judicial review, the Government pointed out that if the Supreme Court had found that the facts of the case had been incompletely or incorrectly established, it would have quashed the Agency’s decision and remitted the case to the Agency for reconsideration. The Government also emphasised that both the Supreme Court and the Constitutional Court had given reasons for their decisions and that the applicant’s allegations in this regard were entirely unfounded.
33. The applicant complained that the refusal of the domestic authorities to hold an oral hearing and appoint an expert had deprived him of the opportunity to put forward an effective defence. He had been unable to prove that the documentary evidence did not support the conclusion that that he had used the “cross-user” function key to carry out the controversial transactions. Moreover, the applicant alleged that there had been documents in the case file that had not been listed as evidence in the decisions of the Agency. Finally, the Agency had attributed maximum evidentiary value to the documents gathered by itself, a priori denying any evidentiary value to the evidence proposed by the applicant.
34. Moreover, according to the applicant, the domestic courts had failed to properly address his complaints regarding the lack of an oral hearing and the appointment of an expert. In the judicial review proceedings the Supreme Court had not even examined his requests for an oral hearing and an expert, as well as a number of other grievances regarding inaccurate establishment of facts, but had merely confirmed the Agency’s conclusions in this regard, giving only very general reasoning. Moreover, the Supreme Court had refused to examine the applicant’s complaint that the Agency had failed to give all the evidence on which its conclusion as to the use of the “cross-user” function key had been based, despite the fact that he could only challenge this issue under judicial review. As regards the Constitutional Court, the applicant took the view that, having found a violation of his procedural rights on account of the Supreme Court’s failure to examine his complaint as to the use of the “cross-user” function key, it should have remitted the case back to the Supreme Court.
35. Lastly, the applicant complained that the revocation of his trading licence constituted a disproportionate sanction, given that he had at that time not yet been found responsible for any other irregularities.
2. The Court’s assessment
36. The Court does not find it necessary to examine the Government’s objection concerning the applicant’s failure to exhaust domestic remedies, as the present application is in any event inadmissible for the reasons set out below.
37. It is noted at the outset that the parties have accepted that Article 6, in its civil head, is applicable to the facts of the present case. The Court shares the parties’ view that by revoking his trading licence the domestic authorities determined the applicant’s civil rights and obligations (see Diennet v. France, 26 September 1995, §§ 27-28, Series A no. 325‑A, and the references cited therein).
38. According to the Court’s established case-law an oral and public hearing constitutes a fundamental principle enshrined in Article 6 § 1 (see, among many authorities, Petrenco v. Moldova, no. 20928/05, § 39, 30 March 2010; and Miller, cited above, § 29). However, the Court has acknowledged on several occasions that holding a hearing is not an absolute obligation, as there may be exceptional circumstances that justify dispensing with such a hearing, for example where there are no issues of credibility or contested facts which necessitate a hearing and the courts may fairly and reasonably decide the case on the basis of the parties’ submissions and other written materials (see Döry v. Sweden, no. 28394/95, § 37, 12 November 2002; and Suhadolc v. Slovenia (dec.), no. 57655/08, 17 May 2011). Moreover, the Court has already held that many disputes of a technical nature involving numerous figures, such as cases concerning social-security schemes, may be better dealt with in writing than in oral argument (see Miller, cited above, § 29, and the references cited therein).
39. The present case concerns the supervision of the services provided in the securities market, a structure operating, as pointed out by the Government, on the basis of written documents involving a large quantity of numerical data. The Court notes that the applicant’s licence was revoked on the basis of the records of the controversial transactions, some of which were provided by the stock exchange and others by the applicant (see paragraphs 4, 5 and 9 above). The only factual question that in the applicant’s opinion necessitated the appointment of an expert and an oral hearing was whether use of the special “cross-user” function key could be inferred solely from the documents listed in the Agency’s initial decision. In this regard, the Court observes that the Agency explained in considerable detail, and the Constitutional Court agreed, that the “cross-user” status was recorded in the stock-exchange trading system, and that it indicated that cross-trade transactions had been carried out in a particular way, namely by the use of that special function key. In this connection, both decisions of the Agency included identical tabular presentations of the data extracted from the stock-exchange records, which featured the “cross-user” status of the controversial transactions. Moreover, it is noted that the applicant did not provide any alternative explanation of how he had carried out the controversial transactions.
40. In the light of detailed reasoning of the domestic authorities as to the relevance of the records indicating the “cross-user” status of the controversial transactions, on the one hand, and the absence of any concrete arguments on the applicant’s part contesting the credibility of these records, on the other, the Court is satisfied that the use of the special function key could be deduced from the documentary evidence cited in the two decisions at issue. Thus, the Court considers that the applicant’s case did not raise any question which could not have been adequately resolved on the basis of the case file and the applicant’s written observations.
41. For the same reasons, the Court finds no reason to call into question the Agency’s decision not to appoint an expert to provide his or her opinion on the matter. In this regard it is further noted that the applicant’s case was decided by an eight-member panel of the Agency’s Council of Experts which, as provided by the Securities Market Act, was composed of renowned experts in the field of finance or commercial law. In any event, the applicant, who was given thirty days to submit his observations and any evidence he wished to rely on, was in no way prevented from obtaining his own expert opinion in support of his submissions.
42. As to the other procedural irregularities allegedly committed by the Agency, the Court notes, firstly, that the applicant’s allegation of failure of the Agency to identify all evidence on which it based its conclusions is entirely unsubstantiated. Moreover, the Court cannot accept the applicant’s argument that the Agency a priori denied any evidentiary value to the evidence proposed by him. Reiterating that Article 6 does not lay down any rules on the admissibility of evidence as such, which is primarily a matter for regulation under national law (see Garcia Ruiz v. Spain [GC] no. 30544/96, ECHR 1999-I, § 28), the Court notes that, in any event, the Agency based its decision on both the evidence gathered by itself, as well as the documents submitted by the applicant (see paragraph 15 above).
43. Moreover, as regards the applicant’s further complaint of inadequate reasoning given by the Supreme Court in the judicial review proceedings, the Court notes that the latter court considered most of the applicant’s submissions on their merits; it examined the main points of the Agency’s reasoning and confirmed its conclusions, pointing out that the applicant had failed to adduce any arguments capable of rebutting them. The merits of the applicant’s remaining complaint with regard to the Agency’s failure to give all the evidence on which it had based its conclusions were subsequently addressed by the Constitutional Court, which analysed this question thoroughly and, finding no fault on the part of the Agency, concluded that remitting the case to the Supreme Court for further consideration of this issue was unnecessary (see paragraph 20 above). Having regard to these reasons, the Court finds no indication that the domestic courts arbitrarily failed to consider any specific argument put forward by the applicant.
44. Lastly, as regards the applicant’s complaint that the revocation of his trading licence amounted to a disproportionate sanction, the Court reiterates that Article 6 § 1 of the Convention does not in itself guarantee any particular content for civil “rights and obligations” in the substantive law of the Contracting States, although other Articles, such as the one protecting the right to respect for private and family life or the right to property, may do so (see Z and Others v. the United Kingdom [GC], no. 29392/95, § 98, ECHR 2001-V). Therefore, the Court considers that the sanction imposed on the applicant cannot be contested under Article 6. Moreover, the applicant failed to substantiate how his rights under any other provision of the Convention had been affected by the Agency’s decision.
45. In the light of the above considerations, and taking into account the proceedings as a whole, the Court finds that the requirements of fairness were complied with in the present case. This application is therefore manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court by a majority
Declares the application inadmissible.
Claudia WesterdiekMark Villiger
RegistrarPresident
Full & Egal Universal Law Academy