TrustHLT/LaCour huggingface dataset:
AP3 (Applicant): According to the advocate general, and I quote, the national legal orders prescribe a limitation of liability for companies which share capital.
AP3 (Applicant): And although the formulations differ, the idea always is that the members are not liable vis-a-vis the company's creditors, end of quote.
AP3 (Applicant): The comparative law analysis of the University of Maribor that we have submitted upon requests of the judge rapporteur points to the same conclusion.
AP3 (Applicant): In no former Yugoslav Republic other than Slovenia, the striking off of inactive companies ever resulted in the automatic shifting of liability from the company to the shareholders.
AP3 (Applicant): The same holds true for other European states, such as Austria, Germany, and Italy.
AP3 (Applicant): This conclusion is reinforced by the comparative analysis submitted by the responding government with regard to Czech Republic, the Netherlands, Poland, Romania, Estonia, and Russia, and also by the third party brief of the Malta Institute of Management with regard to Malta.
AP3 (Applicant): According to the well-established case law of this court, the so-called common ground factor plays a crucial role in the assessment of proportionality, which is relevant under both Article 6 and Article 1, Protocol 1.
AP3 (Applicant): And the comparative law analysis provided by the parties clearly show that all legal systems of the Council of Europe member states do not allow personal and unlimited liability of shareholders, save in extreme cases where they have provably abused corporate vay.
AP3 (Applicant): This leads me to my third point.
AP3 (Applicant): Slovenia had been in line with this common standard ever since the 1993 Companies Act.
AP3 (Applicant): Then change came abroad in 1999.
AP3 (Applicant): And after that, the regulation of shareholders' liability was repeatedly amended by the Parliament and by the Constitutional Court.
AP3 (Applicant): Ultimately, it was repealed in 2011, and the principle of the corporate veil was fully reinstated.
AP3 (Applicant): In our written submissions, we have set out in detail the discriminatory effects of these subsequent changes of legislation and the great weight that these carries in the assessment of the proportionality issue.
AP3 (Applicant): It is thus rather surprising to hear from the government that this chain of modifications of the legal framework had no influence on the applicant case.
AP3 (Applicant): Mr. President, this is precisely our claim.
AP3 (Applicant): As in Pine Valley, to quote but an example, the subsequent changes in the law did not avail the applicant, although they could have done so.
AP3 (Applicant): For instance, the 2008 amendment excluding the personal liability of shareholder holding less than 25% share did not benefit the applicant, nor could it benefit from the 2011 reform that eventually cancelled the shareholder personal liability.
AP3 (Applicant): This shows that the measure complained of does not satisfy the test of proportionality and cannot be deemed in accordance with the general interest.
AP3 (Applicant): Turning to my last point, it must be underlined that the applicant's case is not an isolated incident.
AP3 (Applicant): As mentioned earlier, his fate is shared by tens of thousands of former shareholders who have been held personally liable based on the same legal fiction introduced by the FOCA.
AP3 (Applicant): The main argument on which the chamber relied in order to justify the interference, namely an alleged lack of due diligence of the liable shareholders, is then clearly contradicted by the actual reach of the measure in question.
AP3 (Applicant): We are not saying that this lack of diligence has not been assessed in a fair manner.
AP3 (Applicant): What we say is that he has not been assessed at all.
AP3 (Applicant): It has not been assessed in the applicant's case.
AP3 (Applicant): It has not been assessed in respect of the other thousands of shareholders concerned.
AP3 (Applicant): After all, had such an assessment been carried out, the FOCA would have just missed its main objective, which, according to the government, was to relieve domestic court from the flawed bankruptcy proceedings that should have been undertaken under the Companies Act.
AP3 (Applicant): Mr. President, there are faces behind numbers
AP3 (Applicant): and there are families behind each shareholder.
AP3 (Applicant): As noted in the amicus curia of the civil initiative, these families strive to get through while their basic income, being a salary or pension, is being seized by creditors of strong struck-off company.
AP3 (Applicant): It is also on behalf of all the victims of the company's erasure that the applicant pleads for the Green Chamber to reverse the chamber's finding on the basis of a more careful and thorough assessment of the factors outlined above.
AP3 (Applicant): Thank you very much, Mr. President.
AP2 (Applicant): Mr. President, distinguished judges of the court,
AP2 (Applicant): I will address the applicant's complaint concerning the failure to personally serve on him the strike-off decisions issued by the District Court of Ljubljana against the company in which he held a minority share.
AP2 (Applicant): Admittedly, the applicant had no actual or constructive knowledge of the strike-off proceedings.
AP2 (Applicant): Yet it is precisely the striking-off decision that resulted in the applicant's personal and unlimited liability for the company's debts.
AP2 (Applicant): The chamber overlooked this procedural aspect by holding that the matter was absorbed in the complaint under Article 1 of Protocol Number 1.
AP2 (Applicant): However, there are strong arguments warranting a separate examination under the head of Article 6 or Article 13, and ultimately a different conclusion on the merits.
AP2 (Applicant): The underlying facts are clear-cut.
AP2 (Applicant): It is undisputed that both the decision to initiate the striking-off proceedings and the final decision's strike-off have been served at the company's premises rather than on the applicant in person as a liable shareholder.
AP2 (Applicant): It is likewise undisputed that no service occurred since the company had ceased to operate at its premises years before, and accordingly, both decisions were returned to the District Court of Ljubljana.
AP2 (Applicant): Therefore, the applicant was not made aware of the strike-off proceedings.
AP2 (Applicant): It is our contention that Slovenia fell short of its positive obligation under Article 6 to ensure that litigants are fully informed and can take part in the proceedings in which their civil rights are at stake.
AP2 (Applicant): It is precisely the lack of personal service that deprived the applicant of the opportunity to challenge the decision to initiate the proceedings and to appeal against the strike-off decision within the prescribed time limit.
AP2 (Applicant): Now, it is true that the two decisions were entered into the Court Registry's notice board and that the final decision on strike-off was also published on the official gazette.
AP2 (Applicant): But this is no substitute for personal service.
AP2 (Applicant): As pointed out by this Court, the general concept of a fair trial presupposes that the person against whom proceedings have been initiated should be informed of that fact.
AP2 (Applicant): If court documents are not served in person, then an applicant might be prevented from defending himself in the proceedings.
AP2 (Applicant): In this respect, the chamber upheld the government's argument that a pragmatic approach to the method of service was necessary because it would otherwise be excessively time-consuming or even impossible to attempt to serve the documents on individual members of the companies.
AP2 (Applicant): We cannot see the relevance of this argument, which is in any way belied by the facts of the case.
AP2 (Applicant): First, the applicant's name and address were mentioned in the Court Register and in a number of documents of the proceedings, including the decision to initiate strike-off proceedings and the actual strike-off decision.
AP2 (Applicant): Second, the applicant had been summoned in person in the framework of the proceedings instituted by the Railway of Slovenia.
AP2 (Applicant): And this was just two months before the service of the decision to initiate the strike-off proceedings.
AP2 (Applicant): These two circumstances utterly prove that personal service was not excessively time-consuming, let alone impossible, as the government contend.
AP2 (Applicant): Like in the case of Diaz-Ochoa versus Spain of 2006, the authorities were aware of the applicant's address, and yet they failed to personally serve on him the relevant decisions.
AP2 (Applicant): As a matter of fact, the focus system was based on the assumption that service on the company's premises would have sufficed to ensure knowledge of the proceedings.
AP2 (Applicant): However, this Court already held that service affected by means of a public notice affixed on the gate of a company's premises does not measure up to Article VI.
AP2 (Applicant): And I refer to SC Carbochim and others versus Romania of 2017 as a recent example.
AP2 (Applicant): On a different note, it cannot be said that the applicant had constructive knowledge of the strike-off proceedings by means of publication of the relevant decisions on the Court Registry's notice board and or the official gazette.
AP2 (Applicant): In Zavotnik versus Slovenia of 2015, this Court has already voiced criticism concerning this matter of service.
AP2 (Applicant): It held that, and I quote, it would be unrealistic to expect the applicant to regularly consult the notice board of a court or to gain access to every issue of the official gazette, end of quote.
AP2 (Applicant): The case of Mr. Lekic is an all fours with these presidents.
AP2 (Applicant): The formalistic implementation of the manner of service under the FOCA undermine the very essence of his right to access to a court.
AP2 (Applicant): This is further compounded by the fact that the District Court of Ljubljana failed to examine whether the applicant had been duly summoned and to adjourn the examination of the case as required by the settled case law of this court.
AP2 (Applicant): Against this background, it is hard to avoid the conclusion that the erasure was carried out automatically and without prior notification and that the applicant was not given the opportunity to challenge it before the competent domestic authorities.
AP2 (Applicant): Mr. President, these are the precise words
AP2 (Applicant): of the Grand Chamber in the Kudic judgment.
AP2 (Applicant): History repeats itself.
AP2 (Applicant): Slovenia had to deal with over 25,000 former Yugoslav citizens, and they simply erased them from the register of permanent residence.
AP2 (Applicant): They had to deal with some 24,000 allegedly inactive companies, and they simply erased them from the company's register.
AP2 (Applicant): Well, it seems that when dealing with complex situations, Slovenia tends to resort to massive erasures, obliterating any and all procedural guarantees.
AP2 (Applicant): In the instant case, it was a lack of personal service that allowed the striking off proceedings to be conducted so swiftly and that ultimately triggered the personal and unlimited liability of the applicant.
AP2 (Applicant): Moreover, in the subsequent enforcement proceedings, he cannot raise any objection relating to the striking off owing to the final character of the decision, a decision about which he had been quite simply kept in the dark.
AP2 (Applicant): This plainly offsets the basic requirements of Article 6 and 13 of the convention, making the applicant's right of access to a court merely illusory.
Guido Raimondi (JudgeP): Thank you very much, Mrs. Borgna.
Guido Raimondi (JudgeP): And I call Mr. Zamboni.
AP1 (Applicant): Thank you Mr. President, distinguished judges of the court.
AP1 (Applicant): It is our submission that the striking off of the company from the court register and the automatic, personal, and unlimited liability of the applicant for the company's debt amount to an interference with the rights guaranteed by Article 1 of Protocol 1.
AP1 (Applicant): This interference is not foreseeable and it is not proportionate to the public interest.
AP1 (Applicant): I'm going to deal with the following three points.
AP1 (Applicant): First, the unfettered character of Article 27, paragraph 4 of the FOCA, which provides for the shareholders' liability as an automatic consequence of the striking off of the company.
AP1 (Applicant): Second, the vague distinction between active and passive shareholders established by the Constitutional Court decision number 135 of 2002.
AP1 (Applicant): And third, the lack of the required guarantees in the enforcement proceedings against the applicant.
AP1 (Applicant): These three points will lead me to the conclusion that as in Jokila versus Finland, the combined effect of the striking off and of the applicant's ensuing liability breached his general right to peaceful enjoyment of possessions as guaranteed by the first sentence of the first paragraph of Article 1, and that the Constitutional Court decision of 2002, as applied in the applicant's case, did not remedy the shortcomings of the contested legislation.
AP1 (Applicant): My first point focuses on the letter of Article 27, paragraph 4 of the FOCA.
AP1 (Applicant): This article does not contain an express provision on personal liability.
AP1 (Applicant): It simply states that shareholders are deemed to have filed a certified statement provided by Article 394, paragraph 1 of the Companies Act of 1993, that is to say, the statement that they accept personal and unlimited liability for the debt of the struck-off company.
AP1 (Applicant): Under Article 394, however, the statement was a precondition for the opening of voluntary striking off proceedings at the request of the shareholders.
AP1 (Applicant): As such, it reflected their actual will to accept personal liability and the full knowledge of its consequences.
AP1 (Applicant): Moreover, the Slovenian Parliament passed the FOCA through summary procedure.
AP1 (Applicant): In that context, personal and unlimited liability was never discussed and eventually came as a surprise.
AP1 (Applicant): This is confirmed by the minutes of parliamentary hearings and even by the Constitutional Court decision of 2002.
AP1 (Applicant): This is further confirmed by the introductory notes to the FOCA that the government has now submitted.
AP1 (Applicant): These notes do refer to the protection of creditors and the legal consequences of striking off, but they completely omit to set out what these consequences would actually be.
AP1 (Applicant): The truth is, the consequences of the contested measure were all but foreseeable for the applicant and for all the other shareholders concerned.
AP1 (Applicant): Therefore, the conclusions of the Chamber on this point are to be reviewed with the utmost care.
AP1 (Applicant): The same goes for the Chamber's assessment of the proportionality of the interference.
AP1 (Applicant): In fact, Article 27, paragraph 4 does not strike a fair balance between the competing interests of shareholders and companies' creditors, first and foremost because personal liability is an automatic consequence of the law.
AP1 (Applicant): In Papakellas v. Greece, the Grand Chamber found that a legal presumption taking no account of the diversity of situations
AP1 (Applicant): is too inflexible to comply with the requirements of Article 1.
AP1 (Applicant): Strictly speaking, Article 27, paragraph 4 does not even qualify as a presumption.
AP1 (Applicant): It is pure legal fiction.
AP1 (Applicant): The question in the present case is not whether or not the shareholders are able to prove that they did not provide the liability statement.
AP1 (Applicant): There is no such statement.
AP1 (Applicant): And the government do not deny this obvious fact.
AP1 (Applicant): After all, the system envisaged by the FOCA would not have worked otherwise.
AP1 (Applicant): But this system is affected by a fundamental defect in terms of Conventional Standards, a defect which, and I turn to my second point, has not been remedied by the Constitutional Court decision of 2002.
AP1 (Applicant): Indeed, the distinction between active and passive shareholders is based on criteria which are far from being clear, accessible, and foreseeable within the meaning of this Court's case law.
AP1 (Applicant): The Constitutional Court decision only contains a non-exhaustive list of miscellaneous considerations which eventually boil down to the shareholders' involvement in the company's management and his influence in making the debt.
AP1 (Applicant): This list is open, is vague, and does not offer clear and objective guidance.
AP1 (Applicant): It rather leaves to lower courts to establish the shareholders' personal liability at their ultimate discretion.
AP1 (Applicant): This leads me to my third point.
AP1 (Applicant): The enforcement proceedings against the applicant did not measure up to the standards of adversarial proceedings required for an interference to comply with Article 1 of Protocol 1, according to the constant case law of the Court, and I refer to Antrish v. France as an example.
AP1 (Applicant): In the present case, the enforcement proceedings have been no more than a paper exercise.
AP1 (Applicant): No public hearing was held before domestic courts, and the decision was taken only on the basis of documents, the main document being, of course, the final decision to strike off the company.
AP1 (Applicant): Against this background, the vague criteria laid down by the Constitutional Court carried no actual weight in the applicant's case.
AP1 (Applicant): On the one hand, the domestic courts acknowledged that the contested debt was incurred at a time when the applicant had not yet acquired his share in the company.
AP1 (Applicant): But this fact was deemed to be completely irrelevant.
AP1 (Applicant): On the other hand, the domestic court stressed that the applicant had served as acting and then managing director of the company from 1993 to 1996, but they stated that, and I quote from the decision of the higher court of 2006, in the assessment of the member's passivity, it is not legally decisive whether or not the member performed any managerial function at all.
AP1 (Applicant): End of quote.
AP1 (Applicant): This means that the applicant's liability would have been established even if he had never performed any managerial function.
AP1 (Applicant): And as a matter of fact, among the former shareholders of the company, only the deceased ones have been exonerated from personal liability.
AP1 (Applicant): All the others have been held personally liable, whether they had been managers or not.
AP1 (Applicant): Rather than on the basis of the criteria laid down by the Constitutional Court, the applicant's liability was established on the basis of yet another presumption, the presumption that a shareholder can influence a company in which he holds 10 percent share or more.
AP1 (Applicant): This presumption is based on Articles 445 and 446 of the Companies Act, which provide shareholders holding at least 10 percent share in a company with some minority rights, such as the right to require a general meeting and a vote on a particular matter and the right to information.
AP1 (Applicant): In spite of the limited scope of these rights, the domestic courts presumed that by making use of them, any given minority shareholder could have theoretically ensured the payment of the company's debts.
AP1 (Applicant): With his 11.11 percent share, the applicant was therefore sanctioned with personal and
AP1 (Applicant): unlimited liability for having allegedly failed to do so, regardless of his efforts to wind up the company back in 1997.
AP1 (Applicant): It follows that, far from remaining exceptional, presumptions are rife in this case.
AP1 (Applicant): They move from the company's purported inactivity and result into the shareholder's personal and unlimited liability.
AP1 (Applicant): The last and crucial link of this chain of presumptions is neither laid down in the FOCA nor established by the Constitutional Court decision of 2002.
AP1 (Applicant): This chain of presumptions leads to the automatic imposition of what the domestic courts and the Chamber itself qualified as a sanction.
AP1 (Applicant): Yet, as conceded by the Constitutional Court at paragraph 73 of its decision, the imposition of this sanction is based on no more than an abstract risk.
AP1 (Applicant): Mr. President, it is a respectful submission that these are pivotal arguments to reverse
AP1 (Applicant): the Chamber's findings.
AP1 (Applicant): The FOCA clearly fails the Convention's standards of foreseeability, proportionality, and procedural safeguards against abuse.
AP1 (Applicant): This conclusion should not be taken in any way as seeking to minimize or understate the importance of the reasons which are relied by the Government.
AP1 (Applicant): We do not deny that the State has the power to take legislative action to foster good corporate governance, all the more after a transition to market economy.
AP1 (Applicant): But this power must be exercised in full compliance with the Convention, and any measure interfering with shareholders' rights must be properly assessed against the Convention's standards.
AP1 (Applicant): Yet Slovenian courts never assessed whether the FOCA complied with the Convention.
AP1 (Applicant): Quite simply, in 2002, the Constitutional Court excluded that the shareholders' liability amounted to an interference with Article I of Protocol 1.
AP1 (Applicant): It therefore never assessed the proportionality of the FOCA from the standpoint of the Convention and never explained why the public interest could not be met by other, less intrusive, available means.
AP1 (Applicant): This is all the more unjustified, considering that in 2007, the Constitutional Court found that Article I of Protocol 1 did, conversely, protect the legitimate expectations of those who
Guido Raimondi (JudgeP): Mr. Zamboni, I apologize, may I ask you to conclude please?
AP1 (Applicant): Oh yes, thank you Mr. President, I get to my conclusion.
AP1 (Applicant): The conclusion is hard indeed to avoid.
AP1 (Applicant): The state has failed to strike a fair balance between the competing interests of the Railway of Slovenia and Mr. Leckage.
AP1 (Applicant): The Railway of Slovenia, a big, powerful company, was put in the position to collect its entire claim in both nominal value and interest.
AP1 (Applicant): Mr. Leckage, a minority shareholder in a limited liability company, has been forced to surrender
AP1 (Applicant): his personal property to cover the company's debt.
AP1 (Applicant): We therefore conclude that such an unfair arrangement cannot stand the Grand Chamber's scrutiny.
Guido Raimondi (JudgeP): Thank you very much, Mr. Zamboni.
Guido Raimondi (JudgeP): Now I call Mrs. Jovin Hrastnik.
GR1 (Government): Distinguished Court, the applicant lodged two applications.
GR1 (Government): The first application relates to the proceedings of striking off the company LE from the court register.
GR1 (Government): This application has been served on the government.
GR1 (Government): The second application relates, according to the applicant, to the enforcement proceedings in which his personal liability for the debts of strike off company was established.
GR1 (Government): That application has never been served on the government.
GR1 (Government): However, the chamber judgment deals with both aspects, whereas according to the government's view, it should have been limited to the strike off proceedings.
GR1 (Government): The widening of scope in the chamber's judgment has enabled the applicant that he now puts forward new facts and complaints, that is, at the late phase of the proceedings, although proceedings before the grand chamber are not designed for that.
GR1 (Government): During the limited time available at this hearing, the government will now address only part of these complaints.
GR1 (Government): The present case refers only to the applicant leakage and to no one else.