Communicated on 2 March 2016
FOURTH SECTION
Application no. 53257/13
SAZAS
against Slovenia
lodged on 12 August 2013
STATEMENT OF FACTS
The applicant association, Sazas, is a Slovenian copyright protection organisation based in Trzin. It is represented before the Court by Mr J. Sladič and Mrs P. Sladič-Zemljak, lawyers practising in Ljubljana.
A. The circumstances of the case
The facts of the case, as submitted by the applicant association, may be summarised as follows.
The applicant association is a collective management organisation administering copyright and related rights on behalf of its members, composers and other authors who own those rights. On an unspecified date the applicant association instituted enforcement proceedings against D.M.H. seeking payment of 450 euros (EUR) in fee for the use of nondramatic musical works. Said amount constituted the difference between the fee already paid by the defendant on the basis of the Rules on the Public Communication of Musical Works, which entered into force in 1998 (hereinafter “the 1998 Rules”), and the fee that, according to the applicant association, ought to have been paid in compliance with the rates set out is a tariff in the Rules on Public Communication of Musical Works, which were adopted in 2006 and entered into force on 1 January 2007 (hereinafter “the 2006 Rules”).
D.M.H. objected to the payment; the applicant association therefore moved to assert its claim in civil (small claims) proceedings. In its civil action, the applicant association claimed that the increase of the tariff rates in the 2006 Rules was required because of the change of currency from the Slovenian tolar to the euro and that it was in line with the increase in the retail price index.
On 1 October 2009 the Ljubljana District Court dismissed the applicant association’s claim, noting firstly that the tariff rates in the 2006 Rules had increased by 60% compared to the rates applicable under the 1998 Rules. Secondly, the District Court observed that by virtue of the Copyright and Related Rights Act (hereinafter “the CRR Act”), which had first entered into force in 1995, the tariff rates were determined unilaterally by the applicant with a prior approval of the Slovenian Intellectual Property Office (hereinafter “the SIPO”). However, the CRR Act had been amended several times, including in 2004 when the provision on determining the tariffs had been changed to the effect that they were to be set jointly by the collecting associations (such as the applicant association) and the representative associations of users of musical works. However, according to the amended CRR Act, the tariffs which had been set unilaterally by the collecting associations and were applicable when the 2004 Amendment entered into force were deemed valid agreements. Therefore, while the tariff set by the 1998 Rules was to be considered valid, the one adopted unilaterally by the applicant association in its 2006 Rules was not a valid agreement and could not be applied to the users. The District Court acknowledged that pursuant to the 1998 Rules the applicant association was entitled to an annual adjustment of the tariff in accordance with the annual increases in the retail price index, an official index of inflation, but also found that it had not conducted such an adjusted these tariffs in accordance with the index for more than ten years. In the District Court’s view, the applicant association could not exercise its right to set prices by the index in such a manner so as to cover a ten-year or longer period with a single increase, to the detriment of the users. Moreover, the District Court observed that if the increase in the tariff rates was only necessary in order to harmonise the tariff with the inflation rate and the change of currency, the applicant association could have amended the 1998 Rules accordingly instead of adopting new Rules with a new tariff.
Following an appeal by the applicant association, on 10 March 2010 the Ljubljana Higher Court overturned the lower court’s ruling, taking the view that the provision allowing for annual, index-linked adjustments constituted an adequate legal basis for the increase of the tariff rates, and that any promulgation of such an adjustment was of a merely declaratory nature. The Higher Court quashed the first-instance judgment and remitted the case back to the District Court for reconsideration.
On 22 June 2010 the Ljubljana District Court granted the applicant association’s claim in part, ordering the defendant to pay the fees in the amount of EUR 212.93 with statutory interest for those relevant periods for which no payment had yet been received by the applicant association. However, said amount was calculated on the basis of the non-revaluated tariff provided for in the 1998 Rules. The District Court did not follow the instruction of the Higher Court, explaining that the latter’s view departed from a number of that court’s previous rulings on the same matter in which it had held that the applicant association had not been entitled to conduct a unilateral index-linked adjustment of the 1998 tariff with a single increase covering a period of several years. Considering that an appeal on points of law was not allowed in small claims proceedings, and that a few cases raising the issue of the validity of the 2006 Rules were still pending before the Constitutional Court, the District Court held that previous rulings of the Ljubljana Higher Court constituted established case-law and binding precedent for its own application of substantive law. Relying on the principle of legal certainty, the District Court held that departing from that established case-law would entail a breach of the defendant’s right to equal protection before the law.
The applicant association again appealed and on 24 November 2010 the Ljubljana Higher Court allowed the appeal, overturning the lower court’s ruling and reiterating its previous view that the 1998 Rules provided a clear legal basis for annual adjustment in accordance with the increase in the retail price index. Since the tariff rates as well as the retail price index were both publicly known, the mere fact that the applicant association had not published the revaluated tariff rates on an annual basis did not breach the principle of legal certainty. In this connection, the Higher Court maintained that the promulgation of an index-linked price adjustment was of a declaratory nature. The defendant was ordered to pay the applicant association EUR 403.79 with statutory interest. Nevertheless, the Higher Court acknowledged that the case-law regarding the legal nature of the tariff provided for in the 1998 Rules and, consequently, the question of whether annual price adjustments should be published in the Official Gazette in order to be valid, was not uniform and thus required the Supreme Court to rule on the matter. The judgment was final, as no ordinary or extraordinary appeal, except for a constitutional complaint, lay against it.
Considering that the amounts claimed by the applicant association in the proceedings at issue and other similar proceedings did not exceed the threshold of the so-called “small claims”, which prevented the parties themselves from appealing on points of law, the Higher Court applied to the Office of the State Prosecutor General (hereinafter “the State Prosecutor’s Office”) to lodge a request for the protection of legality (an extraordinary remedy) before the Supreme Court in order to ensure uniform application of the law.
On 21 February 2011 the State Prosecutor’s Office, which had not been a party to the first- and second-instance proceedings, lodged a request for the protection of legality before the Supreme Court on the basis of section 385 of the Civil Procedure Act, which allowed it to lodge such an application within three months of the service of the impugned judicial decision in cases where the parties are not entitled to lodge an appeal on points of law. The State Prosecutor’s Office pointed out that the version of the CRR Act applicable at the material time required that the tariff used by the applicant association be approved by the SIPO. It further argues that only the tariff provided for in the 1998 Rules, not also their normative part providing for annual price adjustments, had been approved by the SIPO. Therefore, according to the State Prosecutor’s Office, only the initial tariff rates could be lawfully charged by the applicant association. However, even assuming that the 1998 Rules and the tariff provided for therein would both be considered applicable for the purposes of charging fees for the use of nondramatic musical works, the State Prosecutor’s Office argued that any adjustment of the tariff rates would have to be published in the Official Gazette in order to enter into force. Moreover, the State Prosecutor’s Office claimed that the manner in which such an index-linked price adjustment could be conducted allowed for several possible interpretations, which rendered the 1998 Rules unclear and contravened the principle of legal certainty.
On 3 April 2011 the applicant association replied to said request for the protection of legality, arguing that the 1998 Rules and the tariff should be regarded as a whole and not as two separate parts, a view which had also been endorsed by the Constitutional Court in one of its earlier decisions. Thus, the tariff had to be interpreted in the light of the substantive provisions of the 1998 Rules, including the one on annual index-linked price adjustments. In this connection, the applicant association was of the view that the manner in which the price adjustments were to be conducted was clearly set out in the 1998 Rules and left no room for discretionary increases of the tariff rates. It further pointed out that, regardless of the clarity of the impugned Rules, in December 2006 it had published the indexed tariff rates in the Official Gazette, thus enabling the users to take note of them. The applicant association emphasised that, as an organisation administering the collective rights of authors, it was entitled to ensure that the tariff rates at least maintained their real value, or else the essence of copyright and related rights would be eroded.
On 15 September 2011 the Supreme Court granted the request for the protection of legality and overturned the second-instance judgment. The Supreme Court acknowledged that as a copyright collective organisation, the applicant association was entitled to collect fees for the use of nondramatic musical works on behalf of their authors. However, due to its monopoly position over the exercise of copyright and related rights and the possible abuse thereof, the State was entitled to regulate certain aspects of copyright enforcement, such as the manner of determining the tariff rates for the use of copyrighted material. The Supreme Court noted that under the CRR Act as applicable at the entry into force of the 1998 Rules, the tariff had to be approved by the SIPO. The term “tariff” was not defined by the CRR Act; thus it had to be interpreted in the light of those provisions of the Act which laid down the criteria for determining the tariff. The Supreme Court noted that the then applicable CRR Act provided that the tariff had to be approved by the SIPO. It further established that such an approval had only been given to the tariff part of the 1998 Rules, but not to the normative part, which included the provision on annual price adjustments. That conclusion was also supported by the Constitutional Court in its decision relied on by the applicant association. Therefore, the Supreme Court concluded that the applicant association was not entitled to index the tariff to the annual rate of inflation. The Supreme Court further held that such an interpretation was not contrary to the constitutional guarantees enjoyed by copyright and related rights. Specifically, from 1998 until 2004 the applicant association had been entitled to unilaterally change the tariff, subject to prior approval by the SIPO. However, no such change of the tariff had even been attempted. Nor had the applicant association attempted to change the tariff according to the procedure provided for that purpose in the CRR Act as amended in 2004, or to challenge the amended legislation before the Constitutional Court. In fact, only after the CRR Act had again been amended in December 2006 had the applicant association adopted a new tariff which, however, had not been adopted in accordance with the procedure provided for by the law. The Supreme Court therefore held that also the tariff set in the 2006 Rules was not valid and could not be applied to the users.
On 22 December 2011 the applicant association lodged a constitutional complaint against the Supreme Court’s judgment, arguing that the involvement of the State Prosecutor’s Office in its case constituted a violation of its right to a fair trial and that the impugned position of the Supreme Court also violated its right to property. The applicant association also lodged an initiative for the review of the constitutionality of those provisions of the Civil Procedure Act which had enabled the State Prosecutor’s Office to lodge a request for the protection of property against final judicial decisions.
On 31 January 2013 the Constitutional Court rejected both the complaint and the initiative. As regards the former, the Constitutional Court declared it inadmissible on account of a statutory presumption that the parties in small-claims disputes do not suffer any serious consequences as a result of the alleged violations of their constitutional rights. The Constitutional Court held that the applicant association had not shown that its case was an exception and thus warranted consideration on the merits. With regard to the initiative for the review of constitutionality, the Constitutional Court held that the applicant had not exhausted the available remedies, as it had failed to raise the argument of the unconstitutionality of the impugned legislation in its reply to the request for the protection of legality before the Supreme Court.
B. Relevant domestic law
The relevant provisions of the Civil Procedure Act provide as follows:
Chapter 26 – Extraordinary legal remedies
1. An appeal on points of law
Section 367
“An appeal on points of law may be lodged against a final judgment rendered by a court of second instance within thirty days of the service of a transcript of the judgment (in cases of statutorily permitted appeal), or within fifteen days of the service of a decision of the Supreme Court granting leave to appeal (in cases of leave to appeal).
An appeal on points of law shall be permitted if the value of the contested part of the final judgment exceeds EUR 40,000 (statutorily permitted appeal).
If an appeal on points of law is not permitted under the provisions of the preceding paragraph, it may only be lodged if leave to appeal is granted by the court pursuant to Article 367.a hereof (leave to appeal).
If the law stipulates that no appeal on points of law shall be allowed, or if the value of the contested part of the final judgment does not exceed EUR 2,000, an appeal on points of law shall not be allowed by the court. Irrespective of the preceding provision, an appeal on points of law may be allowed by the court if the value of the contested part of the final judgment in labour and social disputes does not exceed EUR 2,000 ...”
Section 367.a
“Leave to appeal on points of law shall be granted when the Supreme Court’s decision may result in deciding on a legal issue of significant importance for ensuring legal certainty, uniform application of law or further development of law through case-law. Leave to appeal shall in particular be granted in the following cases:
- legal issues in respect of which there is discrepancy between the discrepancy between the decision of the court of second instance and the case law of the Supreme Court,
- legal issues in respect of which there is no case law of the Supreme Court and the case law of second instance courts is not uniform,
- legal issues in respect of which the case-law of the Supreme Court is not uniform.
The Supreme Court decides on leave to appeal on the basis of the party’s application for leave to appeal. ”
2. Request for the protection of legality
Section 385
“The State Prosecutor’s Office may submit a request for the protection of legality against a final judicial decision within a period of three months.
The request for the protection of legality may only be lodged against a final judicial decision in respect of which leave to appeal on points of law cannot be granted (fourth paragraph of section 367).
The request for the protection of legality shall be lodged by the State Prosecutor’s Office provided that the conditions laid down in the first paragraph of section 367.a hereof are fulfilled.
...
The time limit for lodging the request for the protection of legality prescribed in the first paragraph of this section shall be deemed to have started running:
1. in respect of decisions of the court of first instance against which no appeal has been lodged – on the day when the decision can no longer be appealed against;
2. in respect of decisions of the court of second instance against which leave to appeal on points of law cannot be granted or an appeal on points of law has not been lodged – on the day the decision has been served upon the last of the parties. ...”
Section 387
“The State Prosecutor’s Office may lodge a request for the protection of legality:
1. on the grounds of a violation of essential requirements of civil procedure referred to in the first and second paragraph of section 339 of the present Act except if the violation concerns the issue of territorial jurisdiction ... or arbitration agreement ..., or if the court of first instance has rendered a judgment without conducting a hearing ..., or if the court has decided upon a claim which is subject to another pending action ..., or if the public has been wrongfully excluded from the main hearing ...;
2. on the grounds of a violation of substantive law.
The State Prosecutor’s Office may not lodge a request for the protection of legality for reasons of transgression of the limits of the claim, nor on the grounds of erroneous or incomplete determination of the factual situation.”
COMPLAINT
The applicant association complains under Article 6 § 1 of the Convention that the domestic courts violated the res judicata principle by reversing a final judgment in its favour at the request of the State Prosecutor’s Office, which had not been a party to the proceedings.
QUESTIONS TO THE PARTIES
1. Having regard to the fact that the constitutional initiative in which the applicant association challenged the constitutionality of the legislation allowing the State Prosecutor’s Office to reopen final judicial decisions by means of a request for the protection of legality was rejected by the Constitutional Court on the grounds that such a challenge had not been raised in the applicant association’s reply to the request for the protection of legality, could the applicant association have obtained effective relief by raising the challenge in its reply to the request for the protection of legality, and should the latter therefore be considered an effective remedy for the purposes of Article 35 § 1 of the Convention?
Moreover, considering that the applicant association’s constitutional complaint was rejected on account of a statutory presumption that the parties in small-claims disputes do not suffer any serious consequences as a result of the alleged violations of their constitutional rights, did there nevertheless exist an effective possibility for the applicant association to have its abovementioned constitutional initiative examined on the merits, but for its failure to raise the complaint in its reply to the request for the protection of legality and, by so doing, comply with the requirement of exhaustion? Therefore, can the constitutional initiative in the circumstances of the present case be considered an effective remedy for the purposes of Article 35 § 1 of the Convention?
Lastly, was the requirement for the applicant association to raise the complaint regarding the constitutionality of legislation in its reply to the request for the protection of legality a matter of established practice of the Constitutional Court at the material time?
2. Has there been a violation of the principles of legal certainty and respect for the res judicata effect of final judgments under Article 6 § 1 of the Convention, in that the final judgment of the Ljubljana Higher Court of 24 November 2010 pertaining to the validity and interpretation of acts regulating the tariff rates for the use of nondramatic musical works was re-examined by the Supreme Court based on a request for the protection of legality lodged by the Office of the State Prosecutor General? Did the Supreme Court’s judgment overturning the final judgment of 24 November 2010 comply with the abovementioned principles?
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