TrustHLT/LaCour huggingface dataset:
Robert Spano (Judge): Could you clarify what you mean by rights to manage or participate in the management of a company?
Robert Spano (Judge): Thank you very much.
Guido Raimondi (JudgeP): Judge Ravarani and then Judge Paczolay
Georges Ravarani (Judge): J'ai une seule question factuelle qui se pose depuis la plaidoirie de la partie requérante, de son premier intervenant, mais la question s'adresse également au gouvernement.
Georges Ravarani (Judge): Si j'ai bien compris, l'avocat du requérant a dit que la responsabilité personnelle des associés a été introduite par la loi de 1999 appelée FOCA.
Georges Ravarani (Judge): Selon mes notes personnelles, mais là, je peux me tromper, et vous pouvez alors me corriger, moi, j'avais noté qu'en 1993, la loi sur les sociétés...
Georges Ravarani (Judge): Il y a une nouvelle loi sur les sociétés avec une possibilité pour les associés disposant de plus de 10 % des parts de demander la dissolution et la mise en faillite en cas d'insolvabilité avec, en cas d'omission, responsabilité personnelle.
Georges Ravarani (Judge): Donc est-ce que cette responsabilité personnelle a été introduite en 1999 ou est-ce qu'elle existait déjà dans la loi de 1993?
Georges Ravarani (Judge): Merci beaucoup. Merci.
Guido Raimondi (JudgeP): Merci beaucoup. Judge Paczolay please.
Péter Paczolay (Judge): Thank you very much.
Péter Paczolay (Judge): I have two questions to the applicant and to the applicant's representatives.
Péter Paczolay (Judge): The first regards the factual background of the personal involvement of the applicant in the outcome of this procedure.
Péter Paczolay (Judge): First, why did the applicant not himself lodge an action before the competent court to be dissolved under the Companies Act of 1993?
Péter Paczolay (Judge): Secondly, why did the applicant not withdraw from the company, as provided again by the Companies Act of 1993?
Péter Paczolay (Judge): Third, why did not he profit from the adversarial procedure by appealing the court procedure?
Péter Paczolay (Judge): And finally, why did he not lodge a constitutional complaint against the strike of decision immediately after the decision, but only a year later?
Péter Paczolay (Judge): My second question to the representatives or applicant regards this reference to the two erasure, so to say two erasure procedures in the history of Slovenia.
Péter Paczolay (Judge): First, the erasure of the former Yugoslav citizenship, and the second, the erasure of the companies.
Péter Paczolay (Judge): And here, the representative or applicant referred to the Kuric versus Slovenia case.
Péter Paczolay (Judge): How can you explain to us the difference between the decisions of the Constitutional Court regarding the erasure of citizens and the erasure of the companies?
Péter Paczolay (Judge): Because basically, at the same time, the same composition of the Constitutional Court found unconstitutional the citizenship law, and also the government acknowledged its illegality.
Péter Paczolay (Judge): Most at the same time, the Constitutional Court upheld the FOCA law.
Péter Paczolay (Judge): And so I would like to have an explanation for that.
Péter Paczolay (Judge): My question is to the government.
Péter Paczolay (Judge): First, because here we have heard that the 2.5% of the population was affected by the FOCA law.
Péter Paczolay (Judge): Are there perhaps any statistical data on that?
Péter Paczolay (Judge): How many persons have been held liable?
Péter Paczolay (Judge): How many persons have been held liable under this veil of the lifting of the corporate fur for debts of struck-off companies when the FOCA law was in force regarding this issue?
Péter Paczolay (Judge): My second question to the government would return to an issue that was raised during the deliberation by the applicant's representative, and this is the retroactive application of the FOCA law.
Péter Paczolay (Judge): If you could elaborate on that question, I would be very curious whether it was retroactive or not.
Guido Raimondi (JudgeP): Thank you very much. Monsieur le juge Lemmens.
Paul Lemmens (Judge): I would like to ask two questions, one primarily to the applicant.
Paul Lemmens (Judge): The applicant has argued extensively about the fact that he was not informed of the hearing relating to the strike of proceedings, nor about the decision that had been taken by the court.
Paul Lemmens (Judge): My question is, what would have been the possibility for the applicant to argue before the court or on appeal?
Paul Lemmens (Judge): And that has something to do with the text of Article 25 of the FOCA.
Paul Lemmens (Judge): Is there any possibility for the court, or was there any possibility for the court to come to an other decision, taking into account that for 12 consecutive months, there had not been any payments by the company?
Paul Lemmens (Judge): That's the first question.
Paul Lemmens (Judge): The second one relates somewhat to what the government said at the very end of its argument.
Paul Lemmens (Judge): We know what the situation is of the applicant, but there were also other shareholders who have also been held personally liable in the proceedings against the railway company.
Paul Lemmens (Judge): Was it possible, is it possible for the applicant to turn to the fellow shareholders or to their heirs and obtain some part from them, the part of what he had to pay to the railway company?
Paul Lemmens (Judge): And if so, how would then the individual responsibility of each of the shareholders be determined in the proceedings between them?
Guido Raimondi (JudgeP): Thank you very much. Judge Zalar, please.
Boštjan Zalar (Judge): Thank you, Mr. President.
Boštjan Zalar (Judge): I would have two questions for both parties and one question just for the government.
Boštjan Zalar (Judge): And the first question concerns the so-called irregularities or respect or disrespect of the principle of good corporate governance.
Boštjan Zalar (Judge): And this is a disputed issue between the parties since the applicant says in his observations of 15 December that the applicant did avoid committing any irregularity under the company law and that he also behaved with the diligence required to a private individual who is a minority shareholder of a limited liability company.
Boštjan Zalar (Judge): In paragraph 197 of the observations, the applicant even says that not even the government claimed that the applicant actually committed any irregularity in the management of the company.
Boštjan Zalar (Judge): But on the other side, the government in its observations of 15 December denies that by saying that it has drawn attention to how the applicant should have and could have acted.
Boštjan Zalar (Judge): Separately from the element of active membership, which is, in my opinion, a relevant element for the assessment of proportionality, eventual irregularities or serious professional misconduct are relevant, too, for the assessment of proportionality of interference in the light of the Institute of Lifting the Corporate Whale.
Boštjan Zalar (Judge): For example, the chamber's judgment in this respect in paragraphs 125 and 126 mentions rather very broad elements, such as inadequate capitalization, failure to observe the law and good business practices, prolonged state of insolvency, inactivity of the part of the company's management, and in much more concrete terms, the chamber's judgment mentioned the failure to institute bankruptcy proceedings.
Boštjan Zalar (Judge): So my question is, what were the concrete specific, although the most important, irregularities or serious professional misconduct caused by the management of the company before the strike-off proceedings were initiated?
Boštjan Zalar (Judge): And my second question, which is related to the first one, is, what could the applicant do in order to avoid liability for the debt of the company?
Boštjan Zalar (Judge): Apart from bankruptcy, missed opportunity for the bankruptcy proceedings, is it correct to say that the applicant could simply have withdrawn from the company?
Boštjan Zalar (Judge): And by doing so, he would have avoided liability, as this is claimed by the government in its observations from 15 December under paragraph 76.
Boštjan Zalar (Judge): In this respect, in the paragraph 76 on page 30 of the government's observation, the government relies on a decision of Ljubljana High Court mentioned in the footnote 86.
Boštjan Zalar (Judge): But this decision relates to a legal situation under the law which was enforced in 2009, while the applicant's company was strike-off in 2001.
Boštjan Zalar (Judge): So my second question is, what could the applicant do to avoid being liable for a company's debt?
Boštjan Zalar (Judge): And this is relevant, in my opinion, from the standpoint of the standard of excessive burden, as this being part of the proportionality test.
Boštjan Zalar (Judge): And finally, I have a very short question only for the government.
Boštjan Zalar (Judge): Was there any particular reason that legislator did not introduced the model of somehow limited liability of the members of the company?
Boštjan Zalar (Judge): Because it seems that the law introduced unlimited liability of the members of the company.
Guido Raimondi (JudgeP): If there are no further questions, the court will now withdraw for 20 minutes, following which the parties will be able to submit brief observations in reply to each other's submissions and reply to the questions from the judges.
Guido Raimondi (JudgeP): So the hearing is resumed and I call Mr. Saccucci.
AP1 (Applicant): I will address the manager issue, and in so doing, I will try to respond to some of the judges' questions on this point.
AP1 (Applicant): The government now suggests that the applicant was the actual company's manager up until 2000.
AP1 (Applicant): But this suggestion, with all due respect, is preposterous.
AP1 (Applicant): In fact, the applicant has served as acting manager for less than two years, from 1993 to 1995, and as managing director for less than one year and three months, from 1995 to 6 May 1996.
AP1 (Applicant): The government themselves acknowledge in their pleadings that the applicant resigned on 6 May 1996.
AP1 (Applicant): That is to say, more than three years before the FOCA was approved, and more than 4 and 1 1 2 years before the striking of proceedings were initiated.
AP1 (Applicant): Actually, in a letter to the district court of 18 November 2000, the applicant clarified that he was not the manager of the company anymore, and also that he had made efforts to wind up the company through voluntary bankruptcy proceedings in 1997.
AP1 (Applicant): Besides, even domestic jurisdiction said that the applicant's former managerial position was not decisive in order to establish his personal liability.
AP1 (Applicant): As a matter of fact, all the other shareholders against whom the Railway of Slovenia brought enforcement proceedings under the FOCA have been held personally liable, even if they had neither served as managers nor been actively involved in the management of the company.
AP1 (Applicant): The case of one of these shareholders, Mr. Pogorelic,
AP1 (Applicant): is exemplary in this respect, because Mr. Pogorelic
AP1 (Applicant): was considered to be an active shareholder only because he owned an 11.11% share in the company.
AP1 (Applicant): But Mr. Pogorelic was seriously injured in the car accident
AP1 (Applicant): that occurred in 1993, which caused the death of two key members and managers of the company, so that his actual influence in the company was virtually non-existent.
AP1 (Applicant): That notwithstanding, he was found to be an active shareholder on the basis of the very same presumption that was applied against the applicant.
AP1 (Applicant): We have submitted the decision of the Constitutional Court in the case of Mr. Pogorelic.
AP1 (Applicant): We have also submitted the decisions of the District and Higher Court of Maribor of 2003 and 2013 concerning the case of three former employees of a Strakhov company who received around 12% share each in order to show loyalty to the director who owned 51% of the company.
AP1 (Applicant): All that notwithstanding, domestic courts found that these three minority shareholders were active within the meaning of the Constitutional Court decision of 2002.
AP1 (Applicant): And once again, these findings were exclusively based on their theoretical possibility to influence the company making use of their minority rights.
AP1 (Applicant): Clearly, these rights were useless against a single shareholder holding 51% share.
AP1 (Applicant): Yet the higher court stated that the shareholders alone were guilty for remaining passive and rather paradoxically maintained that it was precisely their passivity that made them active shareholders under the FOCA.
AP1 (Applicant): In conclusion, it is the government themselves who say at paragraph 76 of their observation that in order to avoid liability, the applicant could have withdrawn from the company and that case law confirmed that only persons who were company members at the time the company was struck off from the court register were liable for the obligations under the FOCA.
AP1 (Applicant): So the only fault that can be attributed to the applicant is that he had not given up his shares before striking off.
AP1 (Applicant): And he didn't do so precisely because he acted in good faith.
Guido Raimondi (JudgeP): Thank you very much, Mr Zamboni.
AP2 (Applicant): I will address some other questions posed by the judges in a joint fashion, and I will start dealing with the entry into force of Chapter 3 of the FOCA.
AP2 (Applicant): According to Article 41 of the FOCA, the new law entered into force on 23 July 1999.
AP2 (Applicant): According to Article 25, Paragraph 2 of the FOCA, a company is presumed as having no asset if it makes no payment through its bank account for 12 consecutive months.
AP2 (Applicant): Therefore, the Chamber's finding and the government's contention that Chapter 3 entered into force after one year by gas alleges, thus providing inactive and solvent companies with sufficient time to institute appropriate proceedings in order to have the company dissolved, is, to say the least, simply wrong.
AP2 (Applicant): Chapter 3 entered into force on 23 July 1999, as the rest of the FOCA.
AP2 (Applicant): It was Article 25 itself that stated that the condition for a company to be presumed inactive depended upon the absence of transactions through its bank account for 12 consecutive months.
AP2 (Applicant): And against this background, it transpires that the company in which the applicant held his minority share was among the first limited liability companies to be struck off pursuant to Chapter 3 of the FOCA.
AP2 (Applicant): Indeed, the 12 months provided for under Article 25, Paragraph 2 of the FOCA, expired on 23 July 2000.
AP2 (Applicant): The striking off proceedings of the company in which the applicant held a minority share were initiated on 19 January 2001.
AP2 (Applicant): That is to say, less than six months from the date Chapter 3 became applicable.
AP2 (Applicant): And that was even before the beginning of the proceedings that eventually culminated in the Constitutional Court's judgment, number 135 of 2002.
AP2 (Applicant): And this further corroborates the argument that the applicant could not foresee the consequences of the implementation of the new legislation.
AP2 (Applicant): And I will also use this short time at my disposal to deal on a separate note with the nature of Article 27, Paragraph 4 of the FOCA.
AP2 (Applicant): As we pointed out earlier, presumptions are crucial in this case.
AP2 (Applicant): Both the violation of Article 6 and the violation of Article 1 of Protocol 1 ultimately stem from a chain of legal presumptions introduced by the FOCA.
AP2 (Applicant): As a matter of fact, Mr. Leckage suffered the effects of a chain of presumptions which virtually deprived him
AP2 (Applicant): of any opportunity to challenge the measures complained of.
AP2 (Applicant): First, the company was presumed as having no asset because it did not make any payment through its bank account for 12 consecutive months.
AP2 (Applicant): Second, the company having no asset was presumed to be inactive and therefore subjected to striking off proceedings.
AP2 (Applicant): Third, shareholders, including the applicant, were presumed to have knowledge of the striking off proceedings owing to the service of the relevant decisions on the company's premises.
AP2 (Applicant): Fourth, shareholders were presumed to have filed a certified statement accepting personal liability for the struck off company's debt.
AP2 (Applicant): And fifth, shareholders were presumed to be active if they held at least a 10 percent share of the company.
AP2 (Applicant): None of these presumptions was rebuttable in law, nor was the applicant able to effectively challenge them in practice in order to avoid personal liability.
AP2 (Applicant): Similar situations have already been found to be in breach of the Convention.
AP2 (Applicant): In Papakellas v. Greece of 1999, the ground chamber held that a legally irrebuttable presumption contravenes Article 1 of Protocol 1.
AP2 (Applicant): In the subsequent case of Estatillo and Mikailidis v. Greece of 2003, the Court came to the same conclusion,
AP2 (Applicant): even though the national courts had in the meantime accepted that the presumption in question was no longer irrebuttable.
AP2 (Applicant): The case of Mr. Leckage is even more serious because we're not talking about just one presumption.
AP2 (Applicant): We're talking about five combined presumptions leading up to the imposition of a sanction.
Guido Raimondi (JudgeP): Mr. Saccucci please.
AP3 (Applicant): Mr. President, very briefly on the government's procedural objection
AP3 (Applicant): concerning foreseeability, which also addressed one of the judges' questions, the government argued that the question of foreseeability of the FOCA falls outside the scope of the case, as the applicant allegedly did not claim at all, that he was not familiar with that legislation.
AP3 (Applicant): This is not true, because even before the chamber, the paragraph 67 of his observation of 2nd May 2013, the applicant did, in fact, complain that he was unable to foresee the criteria for personal liability, since these criteria at the time were not laid down in the law.
AP3 (Applicant): And even more importantly, in our view, the chamber dove in substance with a question of foreseeability at paragraph 90 to 96 of its judgment.
AP3 (Applicant): And however unsatisfactory the chamber's assessment on this issue certainly brings it within the scope of the case before the Green Chamber in accordance with the set of case law on this point.
AP3 (Applicant): About the lack of proportionality, we say that the system envisaged by the FOCA did not strike a fair balance between the public interest to protect creditors and the burden imposed on shareholders' rights.
AP3 (Applicant): First, the system excessively affected the position of shareholders vis-a-vis the position of the company's creditors.
AP3 (Applicant): Creditors got it all, while the liable shareholders got a zero.
AP3 (Applicant): And in Beck versus Finland, these courts said that in order to strike a fair balance between creditors and debtors, an arrangement should take into account such factors as the market value of the claim, the risk of financial loss accepted by the creditor, and the public interest in affording debtors the possibility of seeking a debt adjustment.
AP3 (Applicant): Now clearly none of these factors has been taken into account in the present case.
AP3 (Applicant): Second, there were other less afflictive measures available in Slovenian legal system at the material time that could be used in order to tackle the problem of inactive companies and to offer a sufficient degree of protection to companies' creditors, such as the traditional institution of piercing the corporate bail, which was indeed provided by Article VI of the Companies Act of 1993, or the ex officio bankruptcy proceedings, again provided by the Companies Act proceedings which were never opened in the applicant case.
AP3 (Applicant): Third, the shareholders had no possibility to be exonerated from personal liability once the striking of proceeding had been initiated, because they could not anymore apply for voluntary bankruptcy.
AP3 (Applicant): And this is particularly troublesome in the applicant's case, as he actually sought to have the company wind up well before the entry into force of the FOCA.
AP3 (Applicant): Fourth, the provision of shareholders joined in several liability allows the creditors to choose the shareholder against whom to enforce their claims under the FOCA.
AP3 (Applicant): A minority shareholder can therefore be more attractive for a company's creditor, just because he or she has more assets to foreclose, irrespective of their actual role or influence in the company.
AP3 (Applicant): And the other shareholders may even go free of any consequence if the creditor freely decides not to enforce his claims against them, as it happened for one of the shareholders of the LE company.
AP3 (Applicant): Fifth, precisely because it departs from the universal principles of company law, the FOCA system is fundamentally unfair, also for the creditors of struck-off companies.
AP3 (Applicant): Instead of creating a mechanism for the orderly repayment of companies' outstanding debt based on the principle of the par conditio creditorum, the FOCA gives precedence to the first creditor who takes action against the shareholders.
AP3 (Applicant): And the consequence is that if the personal assets of individual shareholders are not sufficient to satisfy all the creditors of the company, some of them may be left without any protection at all.
AP3 (Applicant): About one of the questions that was posed by the judges, we believe that it's not for the court to speculate as to what the outcome of the proceedings would have been if the applicant had been made aware of the striking-off proceedings, or he had been allowed to effectively challenge the final decision on striking off.
AP3 (Applicant): The applicant repeatedly asked the domestic court to be judged in accordance with Article 6 of the Companies Act.
AP3 (Applicant): But as we said, no such an assessment was ever made by domestic court.
AP3 (Applicant): The line to be drawn under the convention is that piercing the corporate vase should be allowed only in extreme cases where abuses have been committed and established by shareholders to the company's creditors' detriment.
AP3 (Applicant): And the difference with the Courage case, it's very simple.
AP3 (Applicant): In the Courage case, the Constitutional Court of Slovenia found that the domestic legislation was in breach of fundamental rights.
AP3 (Applicant): In our case, the Constitution found that the convention standards did not apply to the FOCA.
Guido Raimondi (JudgeP): Thank you very much, Mr. Saccucci .
Guido Raimondi (JudgeP): I call Mrs. Jovin Hrastnik.
Guido Raimondi (JudgeP): Please, you have the floor, madam.
GR1 (Government): First, we would like to comment on the two decisions of Maribor Courts submitted by the applicant before this hearing.
GR1 (Government): These decisions refer to the personal liability of company members for the debts of the struck-off company D.
GR1 (Government): The case of the company D differs from the case of the applicant's company L.E.
GR1 (Government): Both companies were established on the basis of the Yugoslav Undertakings Act.
GR1 (Government): After the adoption of the Slovenian Companies Act in 1993, all existing companies had to be brought into line with the new rules until the end of the following year.
GR1 (Government): So they had to adjust their share capital or to transform into a type of company for which they fulfilled the conditions.
GR1 (Government): While the applicant's company L.E. adjusted itself, the company D did not do so.
GR1 (Government): So the Companies Act determined that in such case, company members became immediately personally liable for the debts of the non-adjusted, but at that time still existing companies.