FIRST SECTION
FINAL DECISION
AS TO THE ADMISSIBILITY OF
Application no. 53818/00
by T.W. COMPUTERANIMATION GmbH and Others
against Austria
The European Court of Human Rights (First Section), sitting on 1 February 2005 as a Chamber composed of:
MrC.L. Rozakis, President,
MrsS. Botoucharova,
MrA. Kovler,
MrsE. Steiner,
MrK. Hajiyev,
MrD. Spielmann,
MrS.E. Jebens, judges,
and Mr S. Nielsen, Section Registrar,
Having regard to the above application lodged on 31 July 1999,
Having regard to the partial decision of 6 February 2003,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the third applicant,
Having deliberated, decides as follows:
THE FACTS
The first applicant, T.W. Computeranimation GmbH, is a limited liability company with its seat in Vienna. The second and third applicants, Mr Wolfgang Tesar and Mrs Martina Tesar, are Austrian nationals, born in 1956 and 1958, respectively, and live in Vienna. Following communication of the application, the third applicant was represented before the Court by Mr H. Wachter, a lawyer practising in Vienna. The respondent Government were represented by Ambassador H. Winkler, Head of the International Law Department at the Federal Ministry of Foreign Affairs.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
At the time of the material facts and at the time of the introduction of the application the first applicant was a limited company. The second and third applicants were its sole shareholders. The second applicant was also its managing director.
On 30 April 1996 the Federal Act on the Restructuring of Economy (Strukturanpassungsgesetz, Federal Law Gazette no. 201/1996) was enacted by which the Corporation Tax Act (Körperschaftssteuergesetz) entered into force. The amendment raised the minimum corporation tax (to be paid irrespective of whether any profits had been earned) as provided for in section 24 § 4 of the Corporation Tax Act from 15,000 Austrian schillings (ATS) per year to ATS 50,000 per year.
On 27 June 1996 the Tax Office for Corporations (Finanzamt für Körperschaften) issued a tax order on the first applicant ordering it to pay advances for its corporation tax liability of ATS 50,000 for the year 1996. The first applicant's appeal to the Regional Tax Authority (Finanzlandes-direktion) was to no avail.
On 20 November 1996 the first applicant introduced a complaint with the Constitutional Court (Verfassungsgerichtshof), complaining that the 1996 amendment of the Corporation Tax Act was unconstitutional. About 11,000 other limited companies equally lodged complaints with the Constitutional Court. The first applicant, like many of the other companies concerned, used a standard complaint which had been elaborated by the Chamber of Certified Public Accountants. However, in accordance with section 17 § 2 of the Constitutional Court Act (Verfassungsgerichtshofgesetz) the first applicant's complaint had to be signed by a practising lawyer. The applicants submit that the lawyer at issue charged them ATS 18,000 for lodging the application.
The Constitutional Court took up four of the complaints, not including the one lodged by the first applicant, and, on 27 November 1996, introduced ex-officio proceedings for the review of the constitutionality of section 24 § 4 of the Corporation Tax Act.
On 24 January 1997 the Constitutional Court found section 24 § 4 of the Corporation Tax Act to be unconstitutional and ordered that the previous version of this provision enter into force again. Pursuant to Article 140 § 7 of the Federal Constitution (Bundes-Verfassungsgesetz) the Constitutional Court further ordered that the 1996 version of section 24 § 4 should not only be inapplicable in the four cases which it had taken up (Anlaßfälle) but that its inapplicability should be extended to all cases in which a final decision on the minimum corporation tax liability for 1996 had been taken on the basis of the 1996 version of section 24 § 4, which included the some 11,000 cases pending before it. Furthermore, the Constitutional Court declared that all cases concerning minimum corporation tax pending before it were terminated without a formal decision being taken on each individual claim, including claims for reimbursement of costs incurred in the proceedings.
Also on 24 January 1997, the Constitutional Court, by separate decision, quashed the tax orders in the four cases it had taken up and awarded procedural costs.
On the same day, the Constitutional Court issued a press release in which it gave a brief summary of the decision taken and the reasons, explaining, inter alia, why it had extended the effect of annulment to all decisions on minimum corporation tax already taken by the tax authorities. The Constitutional Court stated that it had felt obliged to make extensive use of the powers conferred on it by Article 140 § 7 of the Federal Constitution, i.e. the power to extend the effect of the annulment of a provision of law beyond the case in issue, because a formal decision in all of the 11,000 cases would have taken years and would have hindered the Constitutional Court in dealing with other pending cases. This specific interest in protection by the law (Rechtsschutzinteresse) had to prevail therefore over the interest that each of the 11,000 pending applications be individually dealt with including any claims for reimbursement of procedural costs.
On 30 January 1997 the operative part of the Constitutional Court's decision of 24 January 1997, by which it had found section 24 § 4 of the Corporation Tax Act as amended in 1996 to be unconstitutional, was published in the Federal Law Gazette (no. 18/1997).
The effect of the Constitutional Court's decision was that in all cases, in which minimum corporation tax for 1996 had already been collected, this sum had to be reimbursed by the tax authorities or set off against other tax claims.
On 29 December 1998 the applicants requested the Constitutional Court to reimburse their procedural costs of ATS 18,000.
The applicants submitted that they were aware of the Constitutional Court's decision which had found section 24 § 4 of the Corporation Tax Act as amended in 1996 to be unconstitutional and confirmed that, meanwhile, the tax authorities had reimbursed the corporation tax paid. Thus, their claim had been satisfied. Referring to section 88 of the Constitutional Court Act, they argued that a party whose claim has been satisfied has a claim to reimbursement of procedural costs. The applicants submitted that they were also aware that the Constitutional Court had awarded procedural costs in the cases it had taken up for decision. They alleged a violation of Article 14 of the Convention, arguing there were no objective reasons to refuse their claim for reimbursement of procedural costs. Furthermore, relying on Article 1 of Protocol No. 1 they complained about the obligation to be represented by lawyer in the proceedings before the Constitutional Court.
On 23 February 1999 the Constitutional Court rejected the applicants' request for reimbursement of procedural costs. It referred to its decision of 24 January 1997 by which it had declared all proceedings concerning minimum corporation tax pending before it terminated without a formal decision being taken on each individual claim, including claims for reimbursement of costs incurred in the proceedings. Consequently, the Constitutional Court found that it was no longer competent to decide on the applicants' request.
It follows from the documents submitted by the third applicant that she transferred all her shares in the limited company, TW Computeranimation GmbH, to the second applicant on 21 March 2000. On the same day the limited company was transformed into a one-man-firm owned by the second applicant alone.
On 17 February 2004 the Court sent a letter to the first and second applicants by registered mail, noting that they had failed to submit observations within the time-limit and warning them that it might strike their case out of its list. The first and second applicant did not reply.
B. Relevant domestic law
1. The Federal Constitution
Article 140 § 7 of the Federal Constitution reads as follows:
“If an Act has been repealed on the basis that it is unconstitutional or if the Constitutional Court has held under paragraph 4 that an Act is unconstitutional, its decision shall be binding on all courts and administrative authorities. Except in relation to the case before the court, repeal of an Act shall not have retrospective effect, unless specifically so provided in the judgment. If in its repeal decision the Court has set a time-limit under paragraph 5 [for a maximum of one year], the Act shall remain applicable to facts occurring until the expiry of the time-limit, except for facts related to the case before the Court."
2. The Constitutional Court Act
Section 88 of the Constitutional Court Act (Verfassungsgerichtshof-gesetz), insofar as relevant, reads as follows:
“A party which loses its case or satisfies the other party's claim, may, upon request, be ordered to reimburse the procedural costs incurred by the other party. ..."
3. The Corporation Tax Act
Section 24 § 4 of the Corporation Tax Act, as amended by the Federal Law of 30 April 1996 (Federal Law Gazette 201/1996), reads as follows:
“Registered companies which are subject to unlimited tax liability shall pay for every full quarterly period of unlimited tax liability a minimum tax of ATS 12 500. ... The minimum tax is regarded as a tax advance within the meaning of section 45 of the Income Tax Act 1988, to the extent that it exceeds corporation tax liability actually due for the year. The exceeding amount may be carried forward and counted towards corporation tax liability in the following years, provided that in these years the actual corporation tax liability is higher than the minimum tax."
COMPLAINT
The applicants' remaining complaint, made under Article 1 of Protocol No. 1, was that the Constitutional Court refused to award them procedural costs although they “won” their case since the Constitutional Court quashed Section 24 § 4 of the Corporation Tax Act as unconstitutional. Furthermore, relying on Article 14 of the Convention, they complained that the Constitutional Court discriminated against them in that it awarded costs to the applicants in the four cases which it had taken up for decision while it did not award costs in their case.
THE LAW
The applicants raise complaints under Article 1 of Protocol No. 1 and under Article 14 of the Convention.
Article 1of Protocol No. 1 provides as follows:
“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.”
Article 14 reads as follows:
“The enjoyment of the rights and freedoms set fourth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
A. The first and second applicants
The Court notes that the first and second applicants did not submit any observations within the time limit-set by the Court. Nor did they react to the Court's letter of 17 February 2004 warning them that the Court may strike their application off its list.
In these circumstances, the Court, considers that the first and second applicant do not intend to pursue the application within the meaning of Article 37 of the Convention, which so far as material, reads as follows:
“1. The Court may at any stage of the proceedings decide to strike an application out of its list of cases where the circumstances lead to the conclusion that
(a) the applicant does not intend to pursue his application; ..
...
However, the Court shall continue the examination of the application if respect for human rights as defined in the Convention and the Protocols thereto so requires.”
The Court considers that respect for human rights as defined in the Convention and its Protocols does not require it to continue the examination of the case. It, therefore, decides to strike the remainder of the first and second applicants' application out of its list of cases in accordance with Article 37 § 1 (a) of the Convention.
B. The third applicant
The Government asserted that the constitutional complaint of 20 November 1996 had been filed by the first applicant, i.e. the addressee of the impugned tax order, while the second and third applicants, being its shareholders were only indirectly affected by that tax order and were not complainants before the Constitutional Court. In fact, they did not have standing under domestic law to lodge a complaint.
Moreover, referring to the Court's case-law (see Agrotexim and Others v. Greece, judgment of 24 October 1995, Series A no. 330‑A), the Government argued that the second and third applicants cannot claim to be victims of the alleged violations within the meaning of Article 34 of the Convention.
The third applicant asserted that she could claim to be a victim of the alleged violation as she had been a shareholder of the first applicant. She had a pecuniary interest in pursuing the application as she had invested her capital in the first applicant. She stated that, in March 2000, she had transferred her shares to the second applicant. At the same time the limited company was transformed into a one-man firm, owned by the second applicant alone. Moreover, pursuant to the divorce agreement concluded by her and the second applicant in May 2003, she was entitled to receive half of the amount, in case the Court awarded just satisfaction in the present proceedings.
Noting that the first and second applicants did not pursue the application, the Court will examine whether the third applicant can claim to be a victim of the alleged violations.
The Court observes that only the first applicant was the addressee of the impugned tax order. Consequently, the constitutional complaint of 20 November 1996 was lodged by the first applicant alone. The request of 29 December 1998 for reimbursement of costs and the application to this Court was made by all three applicants. The third applicant's complaints are based on the proposition that the alleged violation of the first applicant' right to peaceful enjoyment of its possessions adversely affected her own financial interests, since she was a shareholder of the applicant company at the material time.
In the Court's view the third applicant is trying to pierce the “corporate veil”. The Court has found earlier that disregarding an applicant company's legal personality in similar cases can by justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Convention institutions through the organs set up under its articles of incorporation or, in the event of liquidation – through its liquidators (see Agrotexim and Others, cited above, p. 25, § 66; CDI Holding and Others v. Slovakia (dec.), no. 37398/97, 18 October 2001). There are no such circumstances in the present case. The Court notes that, following the introduction of the application, the first applicant has been transformed from a limited company into a one-man-firm, owned by the second applicant. However, there is no indication that this successor company could not, through the second applicant, pursue the application if it so wished. In conclusion the Court finds that the third applicant cannot claim to be a victim of the alleged violations.
It follows that, as far as the third applicant is concerned, the remainder of the application is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.
For these reasons, the Court unanimously
Decides to strike the remainder of the application out of its list of cases as regards the first and second applicants;
Declares the remainder of the application inadmissible as regards the third applicant.
Søren NielsenChristos Rozakis
RegistrarPresident
Full & Egal Universal Law Academy