THIRD SECTION
DECISION
Application no. 25101/15
TRAPEZA EUROBANK ERGASIAS A.E.
against Greece
The European Court of Human Rights (Third Section), sitting on 20 February 2024 as a Committee composed of:
Yonko Grozev, President,
Ioannis Ktistakis,
Andreas Zünd, judges,
and Olga Chernishova, Deputy Section Registrar,
Having regard to:
the application (no. 25101/15) against the Hellenic Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 12 May 2015 by Trapeza Eurobank Ergasias A.E. (“the applicant bank”), established in Athens since 1924 and represented by Mr A. Georgiadis, a lawyer practising in Athens;
the decision to give notice of the application to the Greek Government (“the Government”), represented by their Agent, Ms N. Marioli, President of the State Legal Council, and their Agent’s delegate, Ms O. Patsopoulou, Legal Counsellor at the State Legal Council;
the parties’ observations;
Having deliberated, decides as follows:
SUBJECT MATTER OF THE CASE
1. The application concerns an alleged violation of Article 1 of Protocol No. 1 to the Convention because of the dismissal of the applicant bank’s claim for compensation arising from a public works contract on the grounds that no prior written warning had been given to the owner of the project.
2. Following an invitation to tender under Law no. 3263/2004, company M. concluded on 7 May 2007 a public works contract with ERGOSE S.A. (hereinafter “ERGOSE”) at a cost of 150,542,251.62 euros (EUR), as part of the high-speed railway line between Kiato and Patras. Company M. subsequently transferred part of its claims against ERGOSE to the applicant bank (see paragraph 7 below). An interim time‑limit for the delivery of part of the construction was set at 27 December 2008 and the time-limit for the completion of the entire project was set at 7 November 2009. The planning stipulated that the land plots for construction would be provided in time by ERGOSE, so that company M. could proceed to the works.
3. ERGOSE S.A. was a subsidiary of OSE, the Hellenic Railways Organisation, and was owned by it. It constituted a public utility company belonging to the broader public sector. The project in the present case was part of the programme for transport works of the Cohesion Fund 2000-2006, co-funded by the European Union.
4. On 21 May 2007 company M. submitted to ERGOSE the initial timeline for the project as provided for in Article 5 § 4 of Law no. 1418/1984 on public works. Following an exchange of correspondence and further clarifications, on 30 January 2008 it submitted a document with the final timeline, together with the technical report on the project, in which it was underlined that only a part of the land plots had become available, notably due to complications in expropriation procedures. The technical report noted that an extension of the intermediate and general deadlines was necessary and that company M. would seek reimbursement of losses incurred, as provided in Article 7 § 2 of Law no. 1418/1984.
5. On 8 May 2009 company M. asked ERGOSE to compensate its losses in the amount of EUR 17,125,827.71 for the damage resulting from the delay in making available the land plots. After three months the request was deemed tacitly dismissed, and on 12 October 2009 the higher authority of ERGOSE dismissed a similar objection of the company on the grounds that a necessary, prior written formal notice (όχληση) had not been lodged.
6. Following the tacit dismissal of a similar application to the Minister of Transport, company M. lodged a recourse before the Nafplio Court of Appeal. By its judgment no. 95/2011 delivered on 1 June 2011, the recourse was dismissed. The court held that, in accordance with Article 7 § 2 of Law no. 1418/1984, a claim of compensation should have been preceded by a written formal notice served on ERGOSE, stating at least the facts establishing the latter’s default (υπερημερία) in the fulfilment of contractual obligations and the damage caused to the contractor for which it would claim compensation in the future. If such formal notice has not been served on the owner of the project after its default started, the claim would be considered premature and as having no legal effect. The letter of 30 January 2008 could not, in view of its content (see paragraph 4 above), be interpreted as the formal notice of the compensation claim. That letter had been submitted before the alleged default of the project owner and had not specified the damage for which company M. would claim compensation.
7. On 8 November 2011 company M. transferred 43.9% of its claims against ERGOSE to the applicant bank. On 13 November 2013 the applicant bank appealed on points of law against judgment no. 95/2011 arguing, among other things, that the requirement of prior formal notice in Article 7 § 2 of Law no. 1418/1984, replaced by similar Article 36 § 11 of Law no. 3669/2008, constituted a deviation from the general provisions of contract law in the Civil Code. Additionally, in public works the owner of a project, such as ERGOSE in the present case, was put in a more favourable situation than the contractor, such as company M. and the applicant as its transferee company. The owner of the project would not be required to give such formal notice to pursue their claims against the contractor. The provision at issue was thus contrary to the constitutional principle of equality and to Article 1 of Protocol No. 1 to the Convention in view of an interference with the applicant’s possessions, without a real reason of public interest. It further questioned the application of the legislation on public works at issue to ERGOSE, which was a limited liability company (ανώνυμη εταιρία) established under private law.
8. By judgment no. 1866/2014 the Court of Cassation dismissed the appeal on points of law and confirmed the appellate court’s reasoning, holding, inter alia, that Article 7 § 2 of Law no. 1418/1984 was not contrary to the principle of equality and to Article 1 of Protocol No. 1 to the Convention. It held that the requirement at issue did not constitute a significant restriction of the right of the contractor to claim compensation and that it had been justified by the specific conditions inherent in contracts for public works. It had not imposed procedural barriers to the judicial protection of the right. The financial obligations of the administration, in case of default in its contractual obligations in contracts for public works may be reasonably outlined by law. The provision at issue aimed to clarify the aspects of the case at the level of the administrative authorities, as by the formal notice the default and the extent of the damage were determined, thus facilitating the judicial assessment of the case. The burden placed on the contractor by this procedure, which was easy to comply with, in no way violated the right to protection of property. It concluded that the appellate court was right in having ruled that the letter of 30 January 2008 had not constituted formal notice.
9. The applicant bank complained that the requirement of written formal notice introduced a derogation in breach of Article 1 of Protocol No. 1 to the Convention.
THE COURT’S ASSESSMENT
10. The Court notes that the Government raised the objections that the applicant bank failed to exhaust domestic remedies and that the application is incompatible ratione materiae. It does not consider it necessary to examine these objections as the application is in any event inadmissible for the reasons stated below.
11. The Court accepts that, in the present case, the dismissal of the applicant bank’s claim for compensation case could be considered as interference with the right to property and should be examined in the light of the general principle laid down in the first rule of Article 1 of Protocol No. 1. It must therefore be examined whether it was in compliance with that Article – namely, whether it was lawful, pursued an aim that was in the general interest and whether a “fair balance” was struck between the general interest in question and the applicant bank’s property rights (see Vistiņš and Perepjolkins v. Latvia [GC], no. 71243/01, §§ 93-94, 25 October 2012).
12. The Court notes at the outset that the requirement that a previous written formal notice of default be served on the owner of the project was explicitly stated in Article 7 § 2 of Law no. 1418/1984, which was the standard law applicable in the call for tenders and mentioned in the contract signed by company M. Article 7 § 2 provided that in the case of contractual default of the owner of the project, the contractor might claim compensation for damage only after written formal notice was served on the owner. Additionally, the Government adduced established case-law of the Supreme Administrative Court, explaining that the written notice should contain at least the relevant facts establishing the default of the owner of the project and the damage caused to the contractor for which compensation was to be claimed (see paragraph 6 above). It also adduced a judgment of the Supreme Administrative Court confirming that the notice should be served on the owner of the project after the default, not to be considered premature.
13. The scope of the concept of foreseeability depends to a considerable degree on the content of the instrument at issue, the field it is designed to cover and the number and status of those to whom it is addressed. Persons carrying out a professional activity must proceed with a high degree of caution when pursuing their occupation (see Vistiņš and Perepjolkins, cited above, § 97, and Lekić v. Slovenia [GC], no. 36480/07, § 97, 11 December 2018). Company M., acting in its professional capacity as a specialised contractor, as acknowledged by the applicant bank, and successful tenderer to a large public works contract, was expected to take such special care as regards the applicable rules and its relevant obligations.
14. Next, as it appears from its recourse before the Nafplio Court of Appeal, company M. was fully aware of the applicable legislative framework; it explicitly acknowledged the purpose of the requirement to address the formal written notice and considered that it had complied with this obligation by the letter of 30 January 2008. Having regard to the wording of the legal provision in question and the relevant practice of domestic courts, as well as the status of company M. in the present case, the Court is satisfied that the requirement in question was sufficiently accessible, precise, and foreseeable in its application.
15. The Court also accepts the domestic courts’ argument about the aim of the formal notice to facilitate the judicial assessment of the case. It further gives credence to the Government’s submission that it was of particular importance in the field of public works to notify the owner about the contractor’s compensation claims, which could have a significant impact on the project’s budget, and to enable the owner to react timely. It thus considers that it pursued the legitimate public interest, namely the efficient management of public works contracts and the good administration of justice.
16. The Court recalls that it is not its task to review the interpretation of the domestic legislation, or to take the place of the national courts, its role being rather to ensure that the decisions of those courts are not flawed by arbitrariness or otherwise manifestly unreasonable. It is not its function to deal with errors of fact or law allegedly committed by a national court unless and in so far as they may have infringed rights and freedoms protected by the Convention (see García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999‑I).
17. This is all the more true where, as in the present case, the question concerns the interpretation of national law in the specific field of public works contracts with mandatory procedures which must be strictly complied with. The applicant bank was afforded the opportunity to argue about an alleged breach of the right to property and the Court of Cassation concluded that the letter of 30 January 2008 had not constituted the required formal notice (see paragraph 8 above), therefore dismissing its claim. The Court finds no basis for concluding that the decision of the Court of Cassation was arbitrary or that it was otherwise manifestly unreasonable and cannot call into question its findings on this point.
18. In conclusion, the Court does not find that the applicant bank had to bear an excessive or disproportionate burden of an interference with its right to property.
19. In view of the above considerations, the Court considers that the interference with the applicant bank’s right under Article 1 of Protocol No. 1 did not breach the requirement under that provision that a fair balance must be struck between the individual’s Convention rights and the public interest.
20. Accordingly, the application is manifestly ill‑founded and should be rejected pursuant to Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 21 March 2024.
Olga Chernishova Yonko Grozev
Deputy Registrar President