AS TO THE ADMISSIBILITY OF
Application No. 29010/95
by the Credit and Industrial Bank
and Antonín MORAVEC
against the Czech Republic
The European Commission of Human Rights (Second Chamber) sitting
in private on 20 May 1998, the following members being present:
MM J.-C. GEUS, President
M.A. NOWICKI
G. JÖRUNDSSON
J.-C. SOYER
H. DANELIUS
Mrs G.H. THUNE
MM F. MARTINEZ
I. CABRAL BARRETO
J. MUCHA
D. SVÁBY
P. LORENZEN
E. BIELIUNAS
E.A. ALKEMA
A. ARABADJIEV
Ms M.-T. SCHOEPFER, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 4 May 1995 by the
Credit and Industrial Bank and Antonín MORAVEC against the Czech
Republic and registered on 31 October 1995 under file No. 29010/95;
Having regard to :
- the reports provided for in Rule 47 of the Rules of Procedure of
the Commission;
- the observations submitted by the respondent Government on
4 November 1996 and the observations in reply submitted by the
applicants on 17 January 1997 and 25 September 1997;
Having deliberated;
Decides as follows:
THE FACTS
The first applicant is a bank, a joint stock company with a
registered office in Prague ("the bank"). The second applicant, a
Czech citizen born in 1945, was the President of the bank's Board of
Directors and a majority shareholder of the bank ("Mr Moravec").
Before the Commission, the applicants are represented by Mr Oldrich
Chodera, a lawyer practising in Prague.
The facts of the case as submitted by the parties may be
summarised as follows.
A. The particular circumstances of the case
On 27 September 1993 the Czech National Bank (Ceská národní
banka), pursuant to Section 26(1)(a) of the Banks Act No. 21/1992
(Zákon o bankách) ("the Banks Act"), took the bank into compulsory
administration with effect from 30 September 1993 to 31 March 1994, due
to its repeatedly unsatisfactory financial situation. At the same
time, a compulsory administrator was appointed to act in place of the
bank's statutory organ. The decision (rozhodnutí) on compulsory
administration contained a notice that the provisions of administrative
procedure did not apply to it and that no appeal lay against it.
On 29 September 1993 the compulsory administration decision was
published in the Commercial Bulletin (Obchodní vestník).
By ruling (usnesení) of 30 September 1993 of the Prague 1
District Court (Obvodní soud) the compulsory administration decision
and the appointment of the compulsory administrator were entered in the
Companies Register (Obchodní rejstrík). The bank was not served with
the ruling.
On the same day, the compulsory administrator and a
representative of the Czech National Bank came to the bank and informed
all employees that the bank had been taken into compulsory
administration. The representative of the Czech National Bank notified
Mr Moravec of the decision of the Czech National Bank of
27 September 1993.
On 4 October 1993 the Prague 1 District Court approved the ruling
by issuing a legal validity clause.
On 18 March 1994 the Czech National Bank extended the compulsory
administration until 30 June 1994. On 30 March 1994 the extension was
published in the Commercial Bulletin. By ruling of 30 March 1994 of
the Prague 1 District Court the extension was entered in the Companies
Register. On the same day the Prague 1 District Court approved the
ruling by a legal validity clause. The bank was not served with the
ruling.
On 1 and 6 April 1994 respectively, the bank, having become aware
of the existence of the rulings of 30 September 1993 and 30 March 1994,
appealed against them to the Prague Municipal Court (Mestsky soud).
It claimed that it should have been considered as a party to the
proceedings by which the compulsory administration was ordered and
contended that the rulings had not been served on the bank. It also
claimed that the decision of the Czech National Bank of
27 September 1993 could not be reviewed and, therefore, the bank was
not able to say whether the compulsory administration had been imposed
in accordance with the law or not, and that it contained an incorrect
notice about impossibility to appeal. The bank added that when it
would be served with the rulings, it would make more complete
submissions.
In its ruling of 17 May 1994, rejecting the appeals, the Prague
Municipal Court stated inter alia:
"... the Czech National Bank's decisions in question were
adopted in accordance with Section 25 of [the Banks Act].
... In view of the decision of 27 September 1993, the
compulsory administration was imposed due to the repeatedly
unsatisfactory financial situation ... of the bank.
Section 26(4) of [the Banks Act] expressly states that
administrative law applies to the procedure concerning the
imposition of penalties ... Accordingly, the
administrative law does not apply to other decisions taken
in accordance with Section 26 of this Act ... It is true
that the appellant did not receive the court's rulings.
However, it is apparent from the appeals which the
appellate court dealt with as introduced in time, that the
Credit and Industrial Bank has got familiar with both of
them ..."
On 21 June 1994 the bank filed a cassation appeal with the Court
of Cassation (Vrchní soud) against the Prague Municipal Court's ruling
of 17 May 1994, pursuant to Sections 237(f) and 241(3)(d) of the Code
of Civil Procedure.
On 22 June 1994 the bank lodged a constitutional appeal with the
Constitutional Court against the Prague Municipal Court's ruling of
17 May 1994.
On 23 June 1994 the Czech National Bank extended the compulsory
administration until 31 December 1994. On 29 June 1994 the extension
was published in the Commercial Bulletin. By ruling of 30 June 1994
of the Prague 1 District Court the extension was entered in the
Companies Register. On the same day the Prague 1 District Court
approved the ruling by a legal validity clause. The ruling was sent,
as a private mail, to the bank's legal representative's office. On
21 July 1994 the bank appealed against the ruling to the Prague
Municipal Court.
In the meantime, on 29 June 1994, the Constitutional Court had
declared the bank's constitutional appeal inadmissible finding that the
ruling of 17 May 1994 had not been served on the parties to the
proceedings and, therefore, had not become final.
On 29 July 1994 Act No. 156/1994, which amended the Banks Act in
particular as to the procedure on compulsory administration, came into
force. According to Article IV, the Act has become retroactively
applicable to all compulsory administrations imposed before that date.
On 30 August 1994 the ruling of the Prague Municipal Court of
17 May 1994 was served on the bank and thereby became final.
On 15 September 1994 the bank filed another cassation appeal
against the Prague Municipal Court's ruling of 17 May 1994 asking the
Court to stay the proceedings on the first cassation appeal which had
been lodged before the notification of the ruling.
On 15 September 1994 the bank introduced a second constitutional
appeal against the Prague Municipal Court's ruling of 17 May 1994. It
pointed out that the ruling had became final by its notification and
was, therefore, subject to appeal before the Constitutional Court. The
bank submitted that it should have been a party to the proceedings on
registration in the Companies Register and should have been served with
all decisions relating to these proceedings. It further challenged an
allegedly wrong interpretation of Section 26(4) of the Banks Act by the
Prague Municipal Court and suggested that the provision together with
Section 41(2) of the Banks Act should be repealed.
On 13 October 1994 the Prague Municipal Court dismissed the
bank's appeal against the Prague 1 District Court's ruling of
30 June 1994 as being introduced by an unauthorised person. The Court
found that the bank's statutory organ, pursuant to Section 29(2) of the
Banks Act as amended, had been replaced by the compulsory
administrator, who alone could represent the bank or authorise a legal
representative.
On 1 December 1994 the Czech National Bank decided that the
compulsory administration would not finish on 31 December 1994, but it
would terminate for one of the reasons indicated in Section 33 of the
Banks Act as amended. On 7 December 1994 the decision was entered in
the Companies Register.
In the meantime, on 6 December 1994 the bank had lodged a third
constitutional appeal, this time against the Prague Municipal Court's
ruling of 13 October 1994. It complained in particular that the Prague
Municipal Court had violated the bank's right to be protected by a
court in that it considered its appeal as being introduced by an
unauthorised person. It claimed that Act No. 156/1994 entered into
force after the compulsory administration had been imposed and,
therefore, could not be applied to this case.
On 13 December 1994 the Constitutional Court declared
inadmissible the bank's second constitutional appeal against the Prague
Municipal Court's ruling of 17 May 1994. The Court held that when the
constitutional appeal had been lodged, the Prague Municipal Court was
dealing with the bank's appeal and the cassation appeal (dovolání)
introduced in the meantime was still being dealt with. Accordingly,
there was no final decision at all.
On 31 January 1995 the Constitutional Court dismissed the bank's
third constitutional appeal as being unsubstantiated and as being
introduced by an unauthorised person. The Court stated in particular:
"... the Prague Municipal Court founded its decision
expressly on Section 29(2) of [the Banks Act] ... according
to which a compulsory administrator replaces the statutory
organ of a bank during compulsory administration. ...
[the bank's legal representative] was not authorised by the
compulsory administrator of the bank to make an appeal or
lodge a constitutional appeal.
It is not true that, as of the date of the entry into force
of Act No. 156/1994, the compulsory administration was not
in force as against the bank. The Constitutional Court
found from the case file of the Prague 1 District Court
that the decision imposing the compulsory administration
... was ordered by the Czech National Bank on 27 September
1993 ... The compulsory administration became effective,
in accordance with Article 29(1) of [the Banks Act], by its
registration in the Companies Register, pursuant to the
Prague 1 District Court's ruling of 30 September 1993 which
became final on 4 October 1993. ...
Moreover, according to [the Banks Act], administrative law
was not applicable to the proceedings concerning compulsory
administration, with the exception of cases explicitly
stated by this Act (Sections 26(4) and 41). The
administrative law became applicable only after the entry
into force of Act No. 156/1994 (Section 26(4)). In this
respect, an administrative complaint could be lodged
against a decision given by the Czech National Bank
(Section 26(8)). An administrative complaint could also be
made under Section 41(1) of [the Banks Act]. However, only
by Section 26(7) of the Banks Act as amended, did the Czech
National Bank become obliged to notify its decision on
compulsory administration to [the bank]. ..."
On 15 June 1995, pursuant to Section 33(1) of the Banks Act as
amended, the Czech National Bank withdrew the bank's business licence
(povolení pusobit jako banka) and on 15 August 1995, upon the bank's
appeal, it confirmed this decision.
On 23 August 1995 an application form with a form of authority
dated 10 August 1995 and made on behalf of Mr Moravec was submitted to
the Commission.
On 2 October 1995 the Prague Regional Commercial Court (Krajsky
obchodní soud) instituted bankruptcy proceedings against the bank.
On 5 January 1996 a second form of authority dated
29 November 1995 on behalf of Mr Moravec was sent to the Commission by
his representative.
By letter of 12 June 1996 the bank's and Mr Moravec's
representative confirmed that the application had been introduced on
behalf of both applicants.
On 7 January 1997 the Prague Regional Commercial Court, to which
the bank's cassation appeal had been transferred, stayed the
proceedings on the ground that the bank had not paid the court fees
although it was ordered to do so by the Court's ruling of 22 May 1995
(amended on 10 July 1996 and served on the bank on 12 August 1996).
B. Relevant domestic law
Until 29 July 1994 the compulsory administration proceedings were
regulated by the Banks Act No. 21/1992 ("the Banks Act").
According to Section 26(1), compulsory administration is a
measure which the Czech National Bank, as an administrative authority
under Section 1(3) of the Czech National Bank Act No. 6/1993, can
impose upon a bank if it does not respect the conditions laid down in
its business licence and/or if it infringes the law (i.e. if its
financial situation and solvency considerably or repeatedly fail to
satisfy the conditions laid down in the law, and prior measures have
not remedied the situation).
According to Section 26(4), administrative law applied to
proceedings concerning the imposition of penalties. The Act did not
oblige the Czech National Bank to notify its decision concerning the
imposition of compulsory administration to the bank concerned. It did
not specify the parties to the proceedings and did not indicate any
remedy against a decision imposing compulsory administration.
According to Section 29(1), compulsory administration became
effective on the day of its registration in the Companies Register.
Before registration, the decision of compulsory administration had been
published in the Commercial Bulletin.
Compulsory administration proceedings were modified by Act
No. 156/1994 ("the Banks Act as amended") which entered into force on
29 July 1994 and which was retroactively applied to all compulsory
administrations imposed before this date. According to this Act,
administrative law does now apply to the proceedings concerning
imposition of compulsory administration. It determines the obligation
for the Czech National Bank to notify its decision to the bank
concerned and specifies the parties to the proceedings. A defendant
bank can lodge an administrative complaint (rozklad) against such a
decision.
Section 14 of the Code of Administrative Procedure (Act
No. 71/1967) recognises as a party to proceedings any person whose
rights, obligations or interests protected by law are to be dealt with,
or, whose rights, obligations or interests protected by law may be
directly affected by an administrative decision.
According to Section 61 of the Code of Administrative Procedure,
any administrative decision taken by a central state administrative
authority at first instance can be contested by an administrative
complaint lodged within 15 days from the date on which the
administrative decision was served.
The following sections of the Code of Civil Procedure were
applied in the present case:
Section 167 provides inter alia that "Unless provided by law
otherwise, the court decides by a ruling. Where it is not stated
otherwise, the provisions relating to judgments shall be deemed to
apply to such rulings".
Section 159(1) provides that "a judgment which is not subject to
appeal shall become final as soon as it has been served".
According to Section 161(2), "if a judgment does not create an
obligation, it becomes enforceable when it becomes final".
Section 168(2) provides inter alia that "a ruling is served on
the parties where it cannot be appealed".
Section 171(2) provides inter alia that "if a ruling does not
create an obligation, it becomes enforceable on the day on which it is
served".
According to Section 206, "if an entitled person makes, in time,
an appeal against a ruling, the ruling becomes final only after an
appeal court has decided on the appeal".
According to Section 200a, the proceedings concerning entries
into the Companies Register shall be instituted upon a request of a
natural or legal person concerned or a person entitled by law to do so.
According to Section 200b, the court shall decide on the contents
of an entry into the Companies Register by a ruling, without a hearing.
According to Section 236(1), any decision of the court of appeal,
which has become final, may be challenged by a cassation appeal
(dovolání) in cases provided by law [the Code of Civil Procedure].
According to Section 237(1)(f), a cassation appeal may be lodged
against a decision of the court of appeal if a party to the proceedings
was prevented from acting before the court due to a wrong court
procedure.
According to Section 240, a party to the proceedings can lodge
a cassation appeal within one month from the date on which the decision
of the court of appeal which decided at first instance became final.
Section 241(3)(d) provides that a cassation appeal can be lodged
against a decision based on incorrect legal examination of the matter.
The administrative appeal (správní zaloba) is governed by the
following sections:
Under Section 247, any person who claims to have been affected
by a decision taken by an administrative authority may challenge the
lawfulness of that decision before the court.
According to Section 250i(1) the facts at the time when the
decision in question was given are decisive. No examination of
evidence takes place.
Section 250j(1) provides that the court, upon finding that the
decision in question has been made in accordance with law, rejects the
administrative appeal.
Section 250j(2) provides that the court, upon finding that the
decision in question has not been made in accordance with law, may
quash the decision and return the matter to the indicated
administrative authority for further proceedings. The court may also
quash a decision when it appears during the course of the proceedings
that the decision cannot be reviewed for lack or confusion of reasons.
The relevant provision of the Commercial Code (Act No. 513/1991),
Section 27(2), provides that the facts entered in the Companies
Register become effective with respect to everyone from the date on
which the entry was made.
The powers of the Constitutional Court and proceedings before it
are governed by Constitutional Court Act No. 182/1993.
According to Section 72(2), a constitutional appeal shall be
lodged within a period of 60 days from the date on which the decision
on the last domestic remedy available to the applicant under law became
final. According to Section 75(1), the constitutional appeal shall be
inadmissible where the applicant has not exhausted all remedies
available to him under the law.
The Constitutional Court of the Czech Republic in a judgment of
3 February 1994 in case No. III. ÚS 40/93 ruled on the principles of
the exhaustion of a cassation appeal before introduction of a
constitutional appeal. The Court held in particular:
"In cases where the law [Code of Civil Procedure] does not admit
a cassation appeal, the latter cannot be regarded as a procedural
remedy available under the law for protecting the rights and
freedoms recognised in a constitutional law or an international
treaty within the meaning of Article 10 of the Constitution of
the Czech Republic. In these cases, the time-limit for
introducing a constitutional appeal starts running on the day on
which the decision of the court of appeal becomes final. A
decision by which the cassation appeal was declared inadmissible
must be regarded as a decision of declaratory character
confirming the non-existence of a right - in this case the right
to lodge a cassation appeal against the final decision of the
court of appeal. ..."
COMPLAINTS
1. The applicants complain that they were not considered to be
parties to the proceedings on registration of the compulsory
administration in the Companies Register. Therefore, neither the
ruling on the registration of the compulsory administration nor the
rulings on its two extensions were communicated to them. They also
allege that their right of access to court guaranteed by Article 6
para. 1 of the Convention was breached in that their appeal against the
registration of the second extension of the compulsory administration
was rejected as being introduced by an unauthorised person.
2. They further maintain that during the period of the compulsory
administration they were deprived of their right to participate in the
financial administration of the bank. They claim that the measures
taken by the Czech National Bank constituted an unlawful interference
with their right to the peaceful enjoyment of their possessions
contrary to Article 1 of Protocol No. 1 to the Convention. They submit
that the compulsory administrator was appointed on the basis of
unlawful legal acts which have never come into effect.
PROCEEDINGS BEFORE THE COMMISSION
The application was introduced on 4 May 1995 and registered on
31 October 1995.
On 4 September 1996 the Commission decided to communicate the
application to the respondent Government, pursuant to Rule 48
para. 2(b) of the Rules of Procedure.
The Government's observations were submitted on 4 November 1996.
The applicants replied after an extension of the time-limit fixed for
that purpose on 17 January 1997. They complemented their observations
on 25 September and 8 October 1997.
THE LAW
The applicants complain that during the period of the compulsory
administration they were deprived of their right to participate in the
financial administration of the bank, and claim that the measures taken
by the Czech National Bank constituted an illegal interference with
their right to the peaceful enjoyment of their possessions contrary to
Article 1 of Protocol No. 1 (P1-1) to the Convention. They further
claim that neither the ruling on the registration of the compulsory
administration nor the rulings on its two extensions were communicated
to them. They also allege that their right of access to court under
Article 6 para. 1 (Art. 6-1) of the Convention was breached in that
their appeal against the registration of the second extension of the
compulsory administration was rejected as being introduced by an
unauthorised person.
Article 25 (Art. 25) of the Convention
The respondent Government first submit that the application was
not presented on behalf of the bank as a legal person, but only on
behalf of Mr Moravec as a natural person, whose rights are not involved
notwithstanding that he is a shareholder of the bank. The Government
refer to the application form of 23 August 1995 which was completed in
the name of Mr Moravec only.
The applicants maintain that according to a basic legal
principle, any legal act must be interpreted according to its contents
and the intention of the person concerned, and not according to the
form of the legal act. The applicants emphasise that from the text of
the application it is clear that the Credit and Industrial Bank was a
party to the compulsory administration proceedings. Therefore, the
claim of Mr Moravec that the compulsory administration proceedings to
which the bank was a party, were incompatible with the Convention,
should be accepted as a statement of intention on the part of the bank
to bring an application. The applicants further refer to the extract
from the Companies Register of 7 October 1997 from which it appears
that Mr Moravec as the President of the bank's Board of Directors was
entitled to represent the bank and to commence proceedings in domestic
law when the compulsory administration came into effect.
The Commission recalls that under Article 25 para. 1 (Art. 25-1)
of the Convention, it may receive petitions from any person, non-
governmental organisation or group of individuals claiming to be the
victim of a violation by one of the High Contracting Parties of the
rights set forth in this Convention.
The bank was affected by the compulsory administration in that
it prevented the bank from managing its affairs. It is therefore clear
that the bank has an interest in the subject-matter of the application.
The Commission finds that even though the application form was formally
completed in Mr Moravec's name only, it appears from the substance of
the application that the bank through Mr Moravec wished to introduce
an application. Therefore, the forms of authority submitted by
Mr Moravec can be accepted as sufficient to introduce the application
on behalf of the bank.
In these circumstances, the Commission finds that the bank lodged
an application with the Commission within the meaning of Article 25
(Art. 25) of the Convention and the Commission has competence to
examine it. In this respect the Commission recalls that not only
substantive rights under Section I of the Convention or its Protocols
but also Article 25 (Art. 25) of the Convention, which confers upon
individuals and non-governmental organisations a right of a procedural
nature, must be interpreted as guaranteeing rights which are practical
and effective as opposed to theoretical and illusory (see Eur. Court
HR, Cruz Varas and Others v. Sweden judgment of 20 March 1991, Series
A no. 201, p. 36, para. 99).
It follows that the Government's objection on this point must be
rejected.
As to Mr Moravec in his personal capacity, the Commission
observes that it is not contested by the Government that he validly
introduced a petition with the Commission. However, the Commission
finds that as a shareholder of the bank, albeit a majority shareholder,
he may not claim to be a victim of an alleged violation of the bank's
rights under the Convention (see Eur. Court HR, Agrotexim and Others
v. Greece of 24 October 1995, Series A no. 330, pp. 25-26, paras. 68-
71).
It follows that, insofar as the application has been lodged by
Mr Moravec as a majority shareholder of the bank, it must be rejected
as incompatible ratione personae with the provisions of the Convention,
under Article 27 para. 2 (Art. 27-2) thereof.
Article 26 (Art. 26) of the Convention
To the extent that the bank is an applicant before the
Commission, the Government object that the application is inadmissible
for failure to exhaust all domestic remedies.
The Government submit that on 30 September 1993, when the bank
was informed about the compulsory administration and received the Czech
National Bank's original decision of 27 September 1993, it had no
objections. Only seven months later did the bank appeal,
unsuccessfully, against three rulings of the Prague 1 District Court
concerning the registration in the Companies Register of the compulsory
administration and its two extensions.
The Government also maintain that two constitutional appeals
lodged against the Prague Municipal Court's ruling of 17 May 1994, by
which the appeals made by the bank against the registrations of the
imposition of the compulsory administration and of its first extension
were dismissed, were declared inadmissible by the Constitutional Court
on the grounds that there was no final decision. The Government stress
that no other constitutional appeal against this ruling, after it
became final, was lodged by the bank although it was informed by the
Constitutional Court about this remedy. They note that on
6 December 1994 the bank filed another constitutional appeal, this time
against the Prague Municipal Court's ruling of 13 October 1994, by
which the bank's appeal against the registration of the second
extension of the compulsory administration was dismissed. The
Constitutional Court, having regard to the registrations in the
Companies Register of the compulsory administration and of its first
extension, considered only the extension of the compulsory
administration and rejected the constitutional appeal as being
manifestly ill-founded. The Government add that the bank never invoked
Article 6 para. 1 (Art. 6-1) of the Convention in any of its
constitutional appeals.
The applicants dispute the Government's submission concerning the
second constitutional appeal. They note that the constitutional appeal
was dismissed because, in the meantime, they had lodged a cassation
appeal. However, according to the applicants, they used this remedy
as a matter of procedural prudence because the Code of Civil Procedure
provides for very strict conditions of its access. They submit that,
according to Section 72(2) of the Constitutional Court Act, a
constitutional appeal shall be lodged within a 60 days' time-limit from
the date on which the decision regarding the last admissible remedy
became final. Therefore, if the applicants had delayed their
constitutional appeal until the decision on the cassation appeal became
final, they might have run the risk of being outside the prescribed
time-limit. In their view, the Constitutional Court should either have
discontinued the proceedings until the applicants' cassation appeal had
been considered, or it should have made a preliminary ruling of its
own. Finally, the applicants declare that, contrary to the
Government's allegation, they received no indication from the
Constitutional Court that it would deal with their constitutional
appeal.
The applicants also object to the Government's submission that
having failed to exhaust all remedies upon the imposition of the
compulsory administration, they could not subsequently challenge the
decisions on its extension as it was only the compulsory administrator
who was authorised to do so after the compulsory administration had
come into effect. In the applicants' view this opinion violated the
fundamental principles of a democratic legal state. Indeed, there
existed an obvious collision of two opposing interests: one can hardly
expect a remedy to be requested by someone whose function would be put
at risk thereby. The applicants conclude that the statutory organ of
the bank should have continued to enjoy limited competence even after
the imposition of compulsory administration.
The Commission recalls that under Article 26 (Art. 26) normal
recourse should be had by an applicant to remedies which are available
and sufficient to afford redress in respect of the breaches alleged.
The existence of the remedies in question must be sufficiently certain
not only in theory but also in practice, failing which they will lack
the requisite accessibility and effectiveness. Article 26 (Art. 26)
also requires that the complaints intended to be made subsequently at
Strasbourg should have been submitted to the appropriate domestic body,
at least in substance and in compliance with the formal requirements
and time-limits laid down in domestic law and, further, that any
procedural means that might prevent a breach of the Convention should
have been used. Moreover, it is incumbent on the Government claiming
non-exhaustion to satisfy the Court that the remedy was an effective
one available in theory and in practice at the relevant time, that is
to say, that it was accessible, was one which was capable of providing
redress in respect of the applicant's complaints and offered reasonable
prospects of success. However, once this burden of proof has been
satisfied it falls to the applicant to establish that the remedy
advanced by the Government was in fact exhausted or was for some reason
inadequate and ineffective in the particular circumstances of the case
or that there existed special circumstances absolving him or her from
the requirement (see Eur. Court HR, Akdivar and Others judgment of
16 September 1996, Reports of Judgments and Decisions 1996-IV, p. 1210-
1211, paras. 66-68).
The Commission observes that the constitutional appeal was
pursued in the present case. It is true that the first constitutional
appeal was declared inadmissible on the ground that the ruling of
17 May 1994 of Prague Municipal Court against which the appeal was
directed had not become final. However, on 30 August 1994 this ruling
became final and on 15 September 1994 the bank lodged the second
constitutional appeal within the 60 days' time-limit under Section
72(2) of the Constitutional Court Act. In this regard, the Commission
cannot agree with the Government's submission that "no other
constitutional appeal against this ruling after it became final has
been lodged".
Even if the Government considered that the above mentioned ruling
was not a final decision at the relevant time as the Court of Cassation
had not decided on the bank's cassation appeal, the Commission must
consider whether this appeal can be regarded as a remedy to be
exhausted under Article 26 (Art. 26) of the Convention in the present
case.
The Commission notes that according to Section 75(1) of the
Constitutional Court Act, a constitutional appeal is inadmissible where
the applicant has not exhausted all remedies available to him under
national law except for a request for re-opening of the trial.
However, this provision does not specify whether the applicant must
exhaust other extraordinary remedies; in Czech law these are a
cassation appeal in civil matters and an appeal by the Minister of
Justice to the Supreme Court against a decision contravening a
statutory provision in criminal matters. The Constitutional Court has
clarified this problem in civil matters by its case-law, according to
which in cases where the cassation appeal is not admissible, it cannot
be regarded as a procedural remedy before introducing the
constitutional appeal. Accordingly, the 60 days' time-limit begins
from the date on which the judgment of the court of appeal became final
(cf. III. ÚS 94/93).
The case-law of the Constitutional Court has not, however,
resolved the situation where the admissibility of a cassation appeal
is not clear, in particular when the cassation appeal is lodged, as in
the present case, under Section 237 of the Code of Civil Procedure
because its admissibility depends on the findings of the Court of
Cassation. Moreover, according to Section 240 of the Code of Civil
Procedure, the cassation appeal is available only to the parties to the
proceedings. However, in the instant case, this was a disputed point
and subject of the proceedings before the national courts. The
Commission finds, therefore, that the cassation appeal did not offer
the bank reasonable prospects of success and cannot be said to be
effective for the purposes of the present case.
Accordingly, the application cannot be declared inadmissible for
non-exhaustion of domestic remedies.
Article 6 para. 1 (Art. 6-1) of the Convention
The applicants complain that they were not considered to be
parties to the proceedings on registration of the compulsory
administration in the Companies Register. Therefore, neither the
ruling on the registration of the compulsory administration nor the
rulings on its two extensions were communicated to them. They also
allege that their right of access to a tribunal guaranteed by Article 6
para. 1 (Art. 6-1) of the Convention was breached in that their appeal
against the second extension of the compulsory administration was
rejected as introduced by an unauthorised person.
Article 6 para. 1 (Art. 6-1) of the Convention, insofar as
relevant, reads as follows:
"In the determination of his civil rights and obligations ...,
everyone is entitled to a fair and public hearing within a
reasonable time by an independent and impartial tribunal
established by law. ..."
The Government contend that the right of the bank to access to
a court under Article 6 para. 1 (Art. 6-1) of the Convention was not
violated.
The Government first submit that the bank could have, under
Section 247 of the Code of Civil Procedure, filed an administrative
appeal to a court against the Czech National Bank's original decision
and claimed that the latter breached its property rights guaranteed by
Article 11 of the Charter of Fundamental Rights and Freedoms. Invoking
Article 36 para. 2 of the Charter of Fundamental Rights and Freedoms,
the bank could have insisted on examination by the court of the Czech
National Bank's decision as it concerned the bank's fundamental rights
and freedoms.
As to the registration of the imposition of compulsory
administration and of its first extension which were then objected to
before the Constitutional Court, the Government submit that the
constitutional appeals had to be dismissed without decision on the
merits because the bank did not follow the instructions of the
Constitutional Court. Consequently, the Constitutional Court refused
also the third constitutional appeal concerning the registration of the
second extension.
The Government further contend that the bank's submission that
this right was breached by the fact that the appeal against the second
extension of the compulsory administration was rejected by the Prague
Municipal Court as being introduced by an unauthorised person, is
unsubstantiated. In the Government's view, the main issue is not that
the Prague Municipal Court denied justice to the bank, but that the
latter disposed of an effective domestic remedy (a constitutional
appeal) to challenge the decision in question but failed to exhaust it.
The Government add that in the course of the proceedings before the
national courts, the bank never invoked Article 6 para. 1 (Art. 6-1)
of the Convention which is a part of the Czech legal order.
The applicants emphasise that they did not wish to challenge the
merits of the imposition of the compulsory administration which
evaluation is a matter for administrative deliberation. For this
reason they did not introduce an administrative appeal under
Section 247 of the Code of Civil Procedure as the Government submit.
They claim that upon this appeal, an administrative decision may only
be attacked on grounds of legality. According to Section 250(j)(2) of
the Code of Civil Procedure, the court may quash an administrative
decision only for (i) incorrect legal evaluation, (ii) inconsistency
between the established facts and the content of documents, (iii)
impossibility to verify the facts or (iv) insufficient evidence. The
question of necessity or inevitability of the compulsory administration
cannot be, therefore, the subject of an administrative appeal. The
applicants submit that the extent of the necessity can be evaluated
only by an administrative authority and within the framework of
administrative proceedings. The decision of the Czech National Bank
should therefore have contained information indicating the
admissibility of a remedy in order to maintain the principle of two
levels of jurisdiction in administrative proceedings. This should have
entailed an administrative complaint in accordance with Section 61 of
the Code of Administrative Procedure. Moreover, the applicants did not
lodge an administrative appeal because the compulsory administration
came into effect by the registration in the Companies Register.
The applicants further submit that the compulsory administration
infringed their rights and obligations. They maintain that even during
the compulsory administration, the statutory organ of the bank should
have retained limited competence regarding the acts of public
administration. They submit that they were not notified about the
registration of the compulsory administration and of its first
extension and that their appeal against the registration of the second
extension of the compulsory administration was dismissed as being
introduced by an unauthorised person. Thus, the statutory organ of the
bank was deprived of any means of redress.
The applicants contend that the decision of the Czech National
Bank concerning the imposition of the compulsory administration
instructed them that no remedy was admissible. In their view, this
violated the principle of two levels of jurisdiction in administrative
proceedings. They recall that it was impossible to lodge an
administrative appeal because, within the framework of administrative
jurisdiction, only the legality of the decision could be examined, not
the administrative review itself.
The applicants also object to the Government's submission that
having failed to exhaust all remedies upon the imposition of the
compulsory administration, the applicants could not subsequently
challenge the decisions on its extension as it was only the compulsory
administrator who was authorised to do so after the compulsory
administration had come into force. The applicants conclude that they
had not sufficient access to a court with sufficient powers or review.
The Commission considers, in the light of the parties'
submissions, that this part of the case raises complex issues of law
and of facts under the Convention, the determination of which should
depend on an examination of the merits of the application as a whole.
The Commission concludes, therefore, that this part of the
application is not manifestly ill-founded, within the meaning of
Article 27 para. 2 (Art. 27-2) of the Convention. No other grounds for
declaring it inadmissible have been established.
Article 1 of Protocol No. 1 (P1-1) to the Convention
The applicants maintain that during the period of the compulsory
administration, they were deprived of their right to participate in the
financial administration of the bank. They claim that the measures
taken by the Czech National Bank constituted an unlawful interference
with their right to the peaceful enjoyment of their possessions
contrary to Article 1 of Protocol No. 1 (P1-1) to the Convention. They
submit that the compulsory administrator was appointed on the basis of
unlawful legal acts which have never come into effect.
Article 1 of Protocol No. 1 (P1-1) to the Convention provides:
"Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his
possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary
to control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions
or penalties."
The Government maintain that all measures of the Czech National
Bank were performed in accordance with the national law and the second
paragraph of Article 1 of Protocol No. 1 (P1-1) to the Convention. The
Government state that the purpose of compulsory administration is to
prevent the current management of a bank from continuing to perform its
economic activities which are in breach of legal regulations and which
lead to the bankruptcy of the bank. In the present case, it was
therefore relevant that during the compulsory administration the
management of the bank did not have the right to participate in the
financial management of the bank.
The Government further submit that it was necessary to impose the
compulsory administration on the bank in the general interest as well
as in the interest of keeping the stability of the banking system in
the Czech Republic and in the interest of third persons who deposited
their financial means in the bank which used them in variance with
legal regulations and rules of care, which resulted in its bankruptcy.
The applicants submit that the compulsory administration
constitutes, in the name of public interest, a limitation of property
rights. However, when the compulsory administration is imposed in a
procedurally erroneous way, the rights of the persons affected are
themselves breached, irrespective of whether there are reasons for the
imposition or not. The applicants state that they had no opportunity
to express themselves concerning the reasons for the limitation of
their property rights as they had no opportunity to present their case
to an appellate authority for an examination of these reasons.
Therefore, their rights under Article 1 of Protocol No. 1 (P1-1) to the
Convention were not violated in isolation, but in relation to the
violation of their rights guaranteed by Article 6 para. 1 (Art. 6-1)
of the Convention.
The Commission considers, in the light of the parties'
submissions, that this part of the case raises complex issues of law
and of fact under the Convention, the determination of which should
depend on an examination of the merits of the application as a whole.
The Commission concludes, therefore, that this part of the application
is not manifestly ill-founded, within the meaning of Article 27 para. 2
(Art. 27-2) of the Convention. No other grounds for declaring it
inadmissible have been established.
For these reasons, the Commission,
unanimously,
DECLARES THE APPLICATION INADMISSIBLE as regards Mr Moravec, a
majority shareholder of the bank;
by a majority,
DECLARES THE APPLICATION ADMISSIBLE, without prejudging the
merits of the case, as regards the bank.
M.-T. SCHOEPFER J.-C. GEUS
Secretary President
to the Second Chamber of the Second Chamber
Full & Egal Universal Law Academy