PROCEDURE

The case originated in an application (no. 17350/03) against the Kingdom of Sweden lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Swedish nationals, Mr Lars Rey and Ms Inger Rey, and a Swedish company, Pulverbränsle Summa AB (“the applicants”), on 26 May 2003.

The applicants were represented by Mr J. Thörnhammar, a lawyer practising in Stockholm. The Swedish Government (“the Government”) were represented by their Agent, Ms I. Kalmerborn, Ministry for Foreign Affairs.

On 26 September 2006 the Court declared the application partly inadmissible and decided to communicate the complaint concerning the length of the proceedings to the Government. Applying Article 29 § 3 of the Convention, it decided to rule on the admissibility and merits of the application at the same time.

THE FACTS

THE CIRCUMSTANCES OF THE CASE

The first two applicants, a married couple, were born in 1935 and 1944 respectively and live in Klippan. The third applicant was a limited liability company wholly owned by the first two applicants.

On 28 October 1992 the company concluded a contract with a municipal energy company, Drefviken Energi AB, concerning deliveries of wood-powder fuel.

On 3 December 1992 a bank, Skandinaviska Enskilda Banken, and two other investors granted the company loans to construct a plant for the production of wood-powder fuel. The bank's loan, amounting to 5.8 million Swedish kronor (SEK), was to be paid in instalments. In December 1992 and January 1993, 3.8 million SEK of the loan was paid to the company.

In March 1993, at a first testing of the completed plant, it was discovered that certain modifications had to be made. In March and April, the company therefore requested the bank to pay the remaining 2 million SEK of the loan. However, the bank refused to do so.

In April 1993, Drefviken Energy AB cancelled the fuel delivery contract, apparently due to the fact that the company had not concluded the construction of the plant and it was therefore very doubtful whether it would be able to deliver the agreed amounts of fuel for the 1993/94 season.

Subsequently, the company tried to find other customers and reiterated its request to the bank to receive the remainder of the loan. It was paid to the company on 28 June 1993.

The bank's payment, together with an additional loan from another investor, enabled the company to uphold a limited production capacity for a time. However, on 7 September 1994 it was declared bankrupt.

The bank instituted proceedings against the first and second applicants, claiming their joint liability for 1.1 million SEK of the company's loan in accordance with the personal guarantees they had signed. On 24 February 1995, in a different action, the applicants and a company named Boket Konsult AB (hereinafter “Boket”) claimed compensation from the bank in the amount of 37 million SEK for the damage allegedly caused by the bank's initial refusal to pay the last instalment of the loan. They claimed that that refusal had violated the terms of the loan contract and, in any event, that the bank had incurred liability for damages due to negligence, since the project in question had depended on the loan being paid out on demand.

On 3 October 1995 the Supreme Court (Högsta domstolen) ordered that the proceedings should be examined jointly by the District Court (tingsrätten) of Stockholm.

Throughout the subsequent proceedings, the parties lodged several supplementary arguments and procedural requests and submitted documentary evidence to the court. The parties asked for and were granted extensions of the time-limits set by the court on several occasions. It further appears that the judge in charge of the proceedings was replaced on several occasions.

An oral preparation with the parties was held by the District Court on 18 September 1995. By a decision of 10 June 1996, the court rejected the bank's request for the applicant company's and Boket's action to be dismissed due to lack of standing. A further oral preparation, scheduled for 16 December 1996, was cancelled due to the illness of the applicants' and Boket's counsel. In February 1997, the applicants and Boket asked the court to rule on the alleged breach of contract in a partial judgment. An oral preparation was held on 7 April 1998. On 29 September 1998 the court sent a summary of the cases to the parties and, by a decision of 30 September 1998, it rejected the request for a partial judgment. On 14 December 1998 the applicants and Boket requested that the court order the bank to produce the files concerning the loan. On 29 June 1999 the court granted this request, and on 23 July 1999 the bank produced the loan files. On 17 January 2000 Boket's action was struck out of the court's list. On 5 July 2000 the court delivered another summary of the cases and gave the parties the opportunity to make comments, which they did in September 2000. On 26 and 27 March and 2 April 2001 an oral hearing was held.

By a judgment of 27 April 2001, the District Court found in favour of the bank. It noted that 2 million SEK of the bank loan had been pledged by the company at the time when the loan contract had been concluded through the deposit of that amount on a blocked bank account. It found that, in the absence of any other clauses or agreements with regard to the bank loan or the pledge, this measure showed that the amount, like any other pledge, was only available for withdrawal if so approved by the bank. Consequently, the bank had not breached the loan contract by its initial refusal to pay the amount in question. Moreover, on account of the difficulties related to the company's fuel production, the bank had had good reasons to be cautious and not make available the disputed amount earlier than July 1993, the date originally projected. The bank could not therefore be held liable for negligence towards the company.

The applicants appealed to the Svea Court of Appeal (Svea hovrätt). On 5 February 2002, following a hearing, the appellate court agreed with the District Court's reasoning and upheld its judgment. On 29 November 2002, after the applicants had been granted several respites to complete their submissions, the Supreme Court refused the applicants leave to appeal.