5.  The applicant company is a bank with its registered office in Vienna. According to the information available to the Court, the applicant company has been in liquidation since November 2016 and the proceedings have not yet been terminated.
6.  The applicant company purchased and kept shares in deposit, predominantly shares in the IF company (hereafter – “IF”), for third parties. The applicant company and IF were related to each other; the management board partly consisted of the same persons and staff employed by the applicant company were provided to IF. The A. company, an investment advisor, functioned as an important distribution partner of the applicant company.
7.  Due to a significant, successive loss in value of the shares purchased in IF, starting from the second half of 2007, numerous court proceedings were instituted against the applicant company.
8.  Following consultations with the A. company, F.M. and H.H. ordered the applicant company, between 2006 and 2008, to purchase and keep IF shares in deposit.
9.  In 2009 F.M and H.H. filed a civil action against the applicant company and requested the annulment of their share purchase. IF joined the proceedings as an intervening party (Nebenintervenientin) on the side of the applicant company.
10.  On 6 April 2012 the Vienna Commercial Court (Handelsgericht Wien) granted the action and ordered the applicant company to repay F.M. and H.H. the amount invested in exchange for the shares acquired by them. The Commercial Court found that F.M. and H.H. had not been adequately informed about the risks of such a share purchase by the A. company and that the applicant company was to be held accountable for the inadequate information given, having regard to the close professional ties between these two companies.
11.  On 20 September 2012 the Vienna Court of Appeal (Oberlandesgericht Wien) granted the applicant company’s appeal, finding in essence that any inadequate advice given to F.M. and H.H. by employees of the A. company could not be attributed to the applicant company.
12.  Thereupon, F.M. and H.H. filed an ordinary appeal on points of law (ordentliche Revision).
13.  On 17 June 2013 the Supreme Court (the Second Section), sitting as a five-judge panel, granted the ordinary appeal on points of law and restored the Commercial Court’s judgment of 6 April 2012. It considered that due to the close professional ties, the applicant company had had a significant interest in selling IF shares. For that reason, employees of the A. company had been provided with inadequate information material. The Supreme Court hence found that the applicant company had been liable for the inadequate advice given to F.M. and H.H.
14.  On 12 August 2013 the applicant company filed an action for nullity (Nichtigkeitsklage) under section 529 of the Code of Civil Procedure (see paragraph 25 below). It claimed that Judge N., who had been one of the five judges sitting on the Supreme Court’s panel, had been biased because he had himself purchased shares in IF whose value had dropped, following advice by the A. company. Moreover, Judge N. had previously declared himself biased in comparable cases concerning the purchase of shares in IF. The Supreme Court had accepted Judge N.’s withdrawal from all these cases. According to the respective decisions, Judge N. had even considered filing an action on account of the losses he had suffered due to his acquisition of the shares, with the applicant company being one of the parties against whom such an action might potentially be introduced. He had thus been subjectively and objectively biased, which constituted a reason for challenge under section 19 § 2 of the Act on Exercise of Jurisdiction (Jurisdiktionsnorm) (see paragraph 21 below). As Judge N. had not withdrawn from the case at hand, there had been a breach of Article 6 § 1 of the Convention.
15.  The applicant company further explained that it had only learned about the composition of the panel – and thus the involvement of Judge N. in the proceedings at issue – when the Supreme Court’s judgment had been served on the applicant company. It had thus not been possible for the applicant company to challenge Judge N. for bias prior to the delivery of the Supreme Court’s judgment.
16.  On 4 September 2013 the Supreme Court (the Seventh Section) excluded Judge N. from taking part in the proceedings concerning the applicant company’s action for nullity.
17.  On 27 November 2013 the Supreme Court (the Second Section) decided on the applicant company’s action for nullity. It confirmed that Judge N. had purchased shares in IF prior to their decrease in value. In 2009 Judge N. had offered his shares to a litigation funder (Prozessfinanzierer) in order to introduce possible actions against IF or other persons and entities involved. For this reason Judge N., even though he had not considered himself personally biased, had withdrawn from at least two cases concerning IF shares (see the Supreme Court’s decisions of 14 May 2010, 9 Nc 13/10a, and of 26 November 2012, 9 Nc 38/12f). However, after the litigation funder had terminated the contract with Judge N., the latter had decided not to pursue any claims against IF and had, furthermore, no longer considered it necessary to withdraw from cases dealing with these shares.
18.  Following these explanations, the Supreme Court rejected the applicant company’s action for nullity, holding that a decision which had become final could only be contested under section 529 of the Code of Civil Procedure on the ground that a judge who had taken part in the decision had been excluded by law from exercising his or her office (see paragraph 25 below). In contrast, bias of a judge (referring to its decision of 13 November 2013, 7 Nc 19/13y, see paragraph 20 below) did not constitute a ground for nullity. The Supreme Court pointed out that it had recently held, in a case concerning arbitration law, that only in particularly grave cases, where the reason for challenge came close to a reason for exclusion under section 20 of the Act on Exercise of Jurisdiction, could an exception be made (see paragraph 27 below). In the present case, however, no such particularly grave reason had been shown, since the participation of a judge who had in the past considered filing an action against one of the parties to the proceedings was not comparable to a ground enumerated in section 20 of the Act on Exercise of Jurisdiction (see paragraph 21 below). Lastly, the Supreme Court held that no issues arose under Article 6 of the Convention.
19.  In other proceedings concerning an action brought against the applicant company (by a different person) in connection with the purchase of shares in IF, the applicant company filed an extraordinary appeal against a judgment of the Court of Appeal of 29 November 2012 with the Supreme Court and subsequently challenged Judge N. for bias in those proceedings.
20.  On 13 November 2013 the Supreme Court (the Seventh Section, 7 Nc 19/13y) granted the applicant company’s challenge and declared Judge N. biased, since his impartiality could appear open to doubt. The fact that Judge N. had in the past withdrawn from two comparable cases due to the acquisition of shares in the same company gave rise to doubts as to his impartiality, notwithstanding that he no longer intended to file any civil action in this regard. The fact that he had withdrawn of his own motion from previous cases increased fears as to Judge N.’s impartiality and rendered such doubts objectively justified, even if he did not consider himself personally biased.