ITEMID: 001-105443
LANGUAGEISOCODE: ENG
RESPONDENT: ALB
BRANCH: ADMISSIBILITY
DATE: 2011
DOCNAME: VEFA HOLDING SH.P.K. AND ALIMUCAJ v. ALBANIA
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Ján Šikuta;Lech Garlicki;Nebojša Vučinić;Nicolas Bratza;Päivi Hirvelä;Zdravka Kalaydjieva
TEXT: 1. The applicant company, Vefa Holding sh.p.k., is a limited liability company, currently in compulsory administration, whose registered office is in Tirana, Albania. The application was introduced on its behalf by Mr Vehbi Alimuçaj, an Albanian national who was born in 1949 and is serving a prison sentence in Peqin prison (“the individual applicant”). Mr Alimuçaj was the applicant company’s president and sole shareholder until it was placed in compulsory administration.
2. The applicants were represented before the Court by Mr Sh. Dizdari, a lawyer practising in Tirana. The Albanian Government (“the Government”) were represented by their Agent, Mrs E. Hajro of the State Advocate’s Office.
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. The individual applicant was the owner of the applicant company, which was initially founded as a trading company on 28 August 1992. The scope of its activity progressively expanded over the years, as a result of which it changed its registered name and scope of activity on 14 December 1993, 10 December 1994 and 3 February 1997 respectively, to be finally registered and known as “Vefa Holding sh.p.k.” Owing to the unwillingness of the commercial banks to provide financial resources for its expansion, the applicant company entered into loan agreements (kontratë huaje) with individuals. It would appear that from 1994 to 1997 the applicant company continued to borrow money in order to proceed with its investment plans.
5. In 1997 Albania was hit by large-scale civil unrest, which was prompted by the collapse of the alleged pyramid schemes which had been established during the preceding years.
6. The State intervened to restore public order and passed legislation.
7. On 23 January 1997 the Pyramid Schemes Prohibition Act was enacted (see “Relevant domestic law and practice” below). The Act precluded both applicants from continuing to enter into loan agreements with individuals to pursue the company’s investments.
8. On 9 May 1997 the Non-banking Entities Audit Act (“Act no. 1”) was enacted. Act no. 1 underwent a number of amendments as outlined in the “Relevant domestic law and practice” section below.
9. On 22 August 1997 the Government decided to subject the applicant company to an audit pursuant to section 5 of the amended Non-banking Entities Audit Act (“Act no. 2”). It therefore appointed three Albanian administrators. The decision did not mention any of the specific legal grounds referred to in section 5, upon which the Government relied.
10. On an unspecified date in 1997 the applicant company appealed against the Government’s decision of 22 August 1997 to the Tirana Court of Appeal (“the Court of Appeal”).
11. On 17 September 1997 the Court of Appeal quashed the decision and ordered the suspension of the compulsory administration measure. It found that no public interest existed for the appointment of administrators.
12. On 28 October 1997 the Government confirmed the same three administrators as in its previous decision of 22 August 1997, giving no further reasons under section 5 of Act no. 2.
13. On 6 November 1997 the Government concluded a contract for services with an international company, D, which was to replace the three individual administrators and act as the single administrator of the applicant company. Under the terms of reference, D’s tasks were to be performed in two phases. During the first phase D would, inter alia, take control of the applicant company, exercise all the powers and rights vested in the company, including the power to carry on its business, pay its debts, suspend operations, sell its assets and retain, dismiss or replace staff or managers. An inventory of the applicant company’s assets would be compiled and a plan of action prepared for the recovery of the assets. An audit would be conducted by qualified auditors to be appointed by the Government. During the second phase, D would implement the plan of action for the recovery of the assets, including their sale, deposit all the proceeds of the asset recovery with the entity designated by the Government, assist in the redistribution process, collaborate in the preparation of an audit of the closing position and prepare a final report for the Government.
14. On an unspecified date in 1997 the individual applicant challenged section 7 of Act no. 2 before the Constitutional Court, insofar as it empowered the administrators to replace him and take over all the property rights which were stricto sensu related to his ownership of the applicant company.
15. On 13 November 1997 the Constitutional Court declared unconstitutional section 7 of Act no. 2. It found that assigning the administrators certain tasks, such as the suspension of contractual obligations, the management of business operations and the entity’s property, the exercise of the shareholder’s rights and the sale of property, had divested the sole shareholder of all property rights in breach of sections 10 and 11 of the Act on Major Constitutional Provisions. As such rights lay only within the purview of the domestic courts, their transfer to the administrators had encroached upon the constitutional principle of separation of powers. It held that section 7 of Act no. 2 was contrary to section 3 of the Act on Major Constitutional Provisions.
16. On 19 November 1997 section 10 of the Act on Major Constitutional Provisions was supplemented by introducing the right of the State to control and administer the property of private entities such as the applicant company. As a result, on the same day, Parliament passed an amendment to the Non-banking Entities Audit Act (“Act no. 3”), reintroducing the wording of the previously unconstitutional section 7 of Act no. 2.
17. On 24 November 1997 the Government repealed its decision of 28 October 1997 (see paragraph 12 above). It renewed the compulsory administration measure in respect of the applicant company and appointed D as the administrators.
18. On 31 January 1998 D submitted its first report to the Government. Valuation schedules for key assets, projected returns from sales and financial statements were appended to the report. The executive summary of the report contained a paragraph in bold letters which stated (taken from the original version in English):
“The Administrators’ recommendation is to sell the company’s assets. This should be done in the most appropriate manner to ensure the best return to creditors within a reasonable time period.”
19. The report further stated that the applicant company had been a diverse business consisting of more than 200 operations in Albania and joint venture operations and agencies in at least eight other countries. Many of its operations had been damaged in the civil unrest in the spring of 1997. In preparing the report, no audit of the applicant company was conducted as that was not part of their mandate. D stated that the financial information provided to them by the company or by third parties, including various Government agencies, was often unreliable or incomplete due to destruction of documents and records during the riots, the alleged disappearance of certain of the companies books and records, the refusal of some parties to produce relevant information or, when requested, to provide explanations of questionable information or data and, the failure of some of the parties to maintain proper books and records. In addition, certain properties allegedly owned by the applicant company could not be located; properties not listed were discovered, some properties had been ‘occupied’ and, at other properties, ownership was claimed by third parties. Further, the data on aggregate creditors’ claims had come from the company’s owners’ books and records, not from the creditors themselves.
20. The key findings about the financial position of the applicant company as of 30 November 1997 contained, inter alia, that the applicant company never operated at a profit, would run out of cash in the near future, were unable to meet their liabilities and were insolvent, their balance sheet did no reflect funds received from creditors and their books and records were not consistent with each other. The proposed strategy to maximise recovery for creditors was to sell the applicant company’s assets.
21. On 6 March 1998 the Government decided to conduct an audit of the applicant company and appointed five individual auditors.
22. On 25 March 1998 the Minister of Finance modified the terms of reference of the contract that had been concluded between the Government and the administrators, D, according to which the administrators would “make every effort to convert as many assets and business of the funds as possible to cash (liquidate) before 31 December 1998”. This marked the initiation of the second phase of the administrators’ services.
23. On 24 June 1998 the Government appointed company B as auditors in addition to the individual auditors appointed on 6 March 1998. Consequently, on 5 January 1999 B filed a report. According to the report, it had been impossible to obtain any documents until 28 July 1998. Owing to this delay, the limited time available did not allow B to conduct and complete the audit of the company.
24. The audit of the applicant company was to be based solely upon documents provided by the Board of Supervisors and the administrators, D, and was to be completed by 31 December 1998. No documents or financial data about the company prior to 1996 were obtained as they had been destroyed during the riots in March 1997. Additionally, an examination of the documents that were kept by the prosecutor’s office in the course of the criminal proceedings against the individual applicant, including ten computer terminals, was not permitted. Therefore, according to the report, the cash flow provided did not accurately represent the applicant company’s actual cash flow as “absolute accuracy, albeit desirable, could not be achieved (and will not be achieved) given the available information”.
25. The report provided a summary of the company’s domestic and international operations, its organisational chart and the organisation of its accounting system and auditing. Section four included a table of the cash flow (pasqyra e rrjedhjes së fondeve). The report concluded by stating that “at its inception, it would appear that [the company] was engaged in commercial business. However, following the taking of loans [towards the end of 1994, in 1995 and particularly in 1996], it started to display characteristics of a pyramid scheme, in which the commercial activity took on a secondary role compared to deposits. In fact, the level of income from commercial activities was not and could not be sufficient to pay off the high interest rates and the capital invested by depositors, to the extent that new deposits had to be accepted in order to pay off previous depositors.”
26. On 30 July 1998 the Sale of Non-banking Entities’ Property Act was enacted, on the basis of which all property belonging to non-banking entities that had taken loans from members of the public would be put up for sale by the administrators within the same year. The applicant company’s assets and property were subsequently sold.
27. On 28 November 1998 the Constitution of Albania entered into force. On an unspecified date the applicant company, relying on the Constitution, requested the Constitutional Court to declare unconstitutional the Non-banking Entities Audit Act and the Sale of Non-banking Entities’ Property Act. On 17 January 1999 the Constitutional Court dismissed the request on the grounds that it did not comply with Articles 131 (f) and 134 of the Constitution, apparently for lack of standing (see “Relevant domestic law” below).
28. On an unspecified date, most likely in 1999, the administrators submitted a financial report corresponding to the conclusion of the second phase, which had focused on the sale of the applicant company’s property. The report also included a statement of receipts and disbursements, a summary of cash flow and an estimated outcome statement as at 31 March 1999.
29. On 17 March 2003 Parliament established a commission of inquiry (komision hetimor) to investigate the transparency of the process for the administration and sale of property belonging to, inter alia, the applicant company. The dissenting opinion of members of the commission of inquiry, running to 145 pages, was highly critical of the entire process, notably the extrajudicial insolvency procedure that had been followed by the Government.
30. On 22 November 2007 the Board of Supervisors informed the applicant company that the process was still ongoing and that no court decision had yet been taken to declare the company insolvent.
31. On 29 March 2010 the Board of Supervisors sent a letter to the State Advocate’s Office. According to the letter the applicant company was certified as a company operating under a pyramid scheme on the basis of the administrators’ report. By a decision of the Council of Ministers the repayment coefficient for the applicant company was fixed at eleven per cent. The applicant company’s outstanding debt amounted to 34,361,781,170 Albanian leks (ALL), owed to 73,509 creditors in total. 57,742 creditors had benefited from repayment and the liquidation process was continuing for the remaining 15,757, for a total amount of ALL 440,550,176. It concluded that efforts were being made for the repatriation to Albania of a number of deposits found in foreign countries. The compulsory administration of the applicant company continued in accordance with the laws and by-laws in force.
32. On 12 April 1998 the administrators requested that the individual applicant be criminally prosecuted for deception. On 28 April 1998 the prosecutor charged the individual applicant with deception (mashtrim). The individual applicant was arrested on the same day.
33. On 10 March 1999 the prosecutor decided to appoint three experts to prepare a financial accounting report of the applicant company.
34. On 21 April 1999 the experts submitted their report, according to which the number of creditors was 68,857 and the applicant company’s total liabilities were 32,060,884,036 Albanian leks (“ALL”), the equivalent of 325,029,238 United States dollars (“USD”). Their estimates were based on the information that had been deposited with and processed by the Board of Supervisors. They had not relied on the report produced by the auditing company appointed by the Government on 24 June 1998.
35. By a detailed judgment of 31 May 2000 the District Court found the applicant guilty of deception and sentenced him to five years’ imprisonment. The applicant and the prosecutor appealed on an unspecified date in June 2000.
36. On an unspecified date in May 2001 the Court of Appeal appointed the same three experts to produce another financial report.
37. On 17 October 2001 the experts submitted their report. According to the report, the total number of creditors was 57,923 and the overall debt amounted to ALL 29,249,622,461, the equivalent of USD 199,045,000 at the material time. This figure was drawn from the applicant company’s computers, which had been seized by the prosecutor’s office. Referring to the number of claims made by creditors after the start of the compulsory administration proceedings, the report indicated that the overall number of creditors was 38,652, whereas the total debt was USD 127,019,677.
38. As regards the value of the applicant company’s assets, the report concluded that, as of 27 June 1997, its assets totalled USD 336,563,915. This estimate was based on a decision of the District Court of 27 June 1997, which listed the company’s property and the corresponding monetary value. However, it deducted the value of mines and other mineral reserves.
39. Following the start of the compulsory administration proceedings, the total value of the applicant company’s assets amounted to USD 14,683,493, of which USD 8,675,975 consisted of the proceeds from the sale of assets and USD 6,007,513 was the estimated value of assets which had not yet been sold.
40. As regards the cash flow in the applicant company’s bank accounts, the report concluded that its balance was USD 11,533,063. However, not all the banks concerned had submitted cash flow reports. The outstanding debt owed by third parties to the applicant company was calculated to be USD 18,453,348. The report assessed the damage to the applicant company’s assets as a result of the 1997 civil unrest at USD 201 million.
41. On 24 December 2001 the Court of Appeal relied on the same facts as set forth in the District Court’s judgment. It found the individual applicant to be responsible for the deception of 57,923 creditors in the total amount of ALL 29,249,622,461. The court explained the decrease in the overall number of creditors and the total amount of debt by the deduction of capitalised interest and the exclusion of inaccurate records. The court further dismissed the figures resulting from the compulsory administration proceedings as being inaccurate, having regard to the fact that not all creditors might have submitted their claims.
42. The Court of Appeal sentenced the individual applicant to twenty years’ imprisonment in accordance with Article 143 § 2 of the Criminal Code (“the CRC”), which had entered into force on 24 January 2001.
43. On 22 January 2002 the individual applicant appealed.
44. On 22 November 2002 the Supreme Court found the individual applicant guilty as charged. Relying on the same facts as those described in the lower courts’ decisions, the Supreme Court held that the individual applicant’s actions and the applicant company’s activities had been improper and unlawful. It upheld the findings of the Court of Appeal with regard to the total number of creditors, namely, 57,923. However, it concluded that the total amount of the applicant’s liabilities was ALL 22,374,141,130 (approximately USD 157,453,000 at the material time) after having deducted the company’s cash flows, which totalled ALL 6,875,481,331.
45. In passing sentence on the individual applicant, the Supreme Court reasoned that he should be held criminally liable on as many counts as the overall number of creditors, that is 57,923, in accordance with Article 143 § 1 of the CRC, which prescribed a term of imprisonment of five years. Consequently, it sentenced the individual applicant to twenty years’ imprisonment.
46. A detailed description of the facts concerning the criminal proceedings against the individual applicant can be found in the case of Alimuçaj v. Albania, no. 20134/05 communicated on 7 December 2009.
47. By note verbale of 4 March 1997, which was registered at the Secretariat General on 10 March 1997, the Albanian Ministry of Foreign Affairs, in accordance with Article 15 of the Convention, informed the Secretary General of the Council of Europe of the Government’s intention to derogate from its obligations under the Convention. According to the note verbale restrictions had been imposed inter alia on the right of assembly, the freedom of press and information and the free movement of people. No restrictions were imposed on the right of property.
48. By note verbale of 26 July 1997, registered at the Secretariat General on 24 October 1997, the Albanian Ministry of Foreign Affairs informed the Secretary General of the Council of Europe that the Government were withdrawing their notice of derogation under Article 15 of the Convention.
49. Until the adoption of the Constitution in 1998, the Act on Major Constitutional Provisions was the basic law in Albania. Section 3 provided for the separation of powers (the legislative, the executive and the judiciary). Section 10, which enshrined the right to economic activity, read as follows:
“The country’s economy is based on diversity of property ownership, the free initiative of all economic entities and the regulatory role of the State.
Economic initiatives by legal entities and natural persons may not be taken contrary to the social interest and should not infringe individuals’ safety, liberty and human dignity.”
50. Section 11 recognised the enjoyment of the right of property
51. Following the Constitutional Court’s decision of 13 November 1997 (see paragraph 15 above), the following paragraphs were added to section 10 of the Act on Major Constitutional Provisions on 19 November 1997:
“The unlawful activity of private entities which widely affects the interests of individuals or social groups, opposes and damages the principles of the free market economy and of national and international economic fiscal policies and undermines the economic and social stability of the country, shall be placed under the control and administration of specialised national and international institutions.
The degree of interference, as well as the powers of control and administration of these private entities by the above-mentioned institutions, shall be defined by law.
In such cases, the State has the right and duty to take possession of (disponojë) the property of private entities only in order to protect the interests of injured parties.
No one shall be denied the right of access to a court to contest measures aimed at the control, administration and disposal (disponim) of his or her property, and to seek full compensation for the damage suffered.”
52. On 15 April 1998 the Venice Commission’s sub-commission on Constitutional Reform adopted an opinion on the amendments effected to the Act on Major Constitutional Provisions on 19 November 1997. According to the opinion, the constitutional ad hoc amendment had a legitimate purpose and might have been required by specific temporary needs. However, the opinion stated that the first section of the amendment, which provided the basis for the State intervention, used a large number of broad concepts to which it was very difficult to give a precise legal meaning. It was of the view that the ad hoc text, which responded to a pressing social need of the moment, was not viable as a long-term principle of the Albanian constitutional order. It cautioned against the repeated use of such ad hoc constitutional amendments in the area of economic regulation and considered that the text chosen should not be integrated as it was into the future Constitution of Albania.
53. The Constitution of Albania entered into force on 28 November 1998. It repealed the Act on Major Constitutional Provisions as outlined above. The relevant provisions read as follows:
Article 131
“The Constitutional Court shall decide on:
(a) the compatibility of a law with the Constitution or international agreements as provided for under Article 122
...
(f) final complaints by individuals alleging a violation of their constitutional rights to a fair hearing, after all legal remedies for the protection of those rights have been exhausted.”
Article 134 §§ 1 (f) and 2
1. The Constitutional Court may initiate proceedings only at the request of:
...
(f) political parties and other organisations;
(g) individuals.
2. The entities designated in the first paragraph, letters ... (f) and (g), may lodge applications only on issues connected with their interests.”
54. Article 1050 of the Civil Code (“the CC”) provides:
“A loan is a contract by which one party (the lender) transfers into the possession of another party (the borrower) an amount of money or other material objects defined by their quantity, weight or size. The borrower is obliged to repay an equal amount of money or material objects of the same kind and quality, within the term provided for in the contract, or in the absence of such a term, at the request of the lender.”
55. Articles 324–333 regulate the adjudication of administrative disputes.
56. Article 326, as in force at the material time, provided that no action could be brought against a Government administrative act, in so far as it contained a general obligation, unless it infringed citizens’ lawful rights and interests.
57. The Bankruptcy Act, as in force at the material time, applied to legal entities which, like the applicant company, had been established in accordance with the Companies Act. For proceedings to be started on the strength of a legal action by the creditor, he or she needed to prove that the debtor had defaulted on payment. In any event, the debtor could also file a similar action. Bankruptcy proceedings were court proceedings. Consequently, the decision to declare them open lay with the district court which could decide to place the debtor in compulsory administration by appointing an administrator. During the discharge of his duties, the administrator acted under the supervision of the court, which was empowered to replace the administrator by stating reasons. The Bankruptcy Act provided for the adoption of a restructuring plan, which required the court’s approval. In the event that the restructuring plan was rejected, the court would decide to proceed with the immediate liquidation of the debtor’s assets. The Bankruptcy Act provided for the right to appeal against the district court’s decision.
58. The Act provided that organised borrowing (huamarrja) on the basis of fraudulent pyramid schemes was unlawful. The establishment and operation of fraudulent pyramid borrowing schemes constituted a criminal offence, carrying a sentence of no less than twenty years’ imprisonment and the confiscation of movable and immovable property.
59. Section 1 stated that all the companies and non-banking entities concerned were to be subject to a financial audit in relation to their financial position, the number of creditors, their assets and liabilities and their domestic and foreign deposits, by a group of financial experts appointed by the Government in accordance with Act no. 1.
60. Section 2 established a Board of Supervisors (Grupi Mbikqyrës), composed of three members, to monitor the entire process. The Board of Supervisors coordinated activities between the experts and the entities subject to Act no. 1 in accordance with section 3 and reported to the Council of Ministers.
61. Under section 4 the financial experts examined the companies’ cash books, contracts concluded with the creditors and any other relevant documents. Section 6 stipulated that the final experts’ reports were to be submitted to a number of relevant State bodies, including the General Prosecutor’s Office.
62. Act no. 1 did not provide for any possibility of judicial scrutiny.
63. Section 4 outlined the scope of Act no. 2. All individuals and legal entities who had taken loans from members of the public were subject to an audit, with the exception of: banks licensed by the Bank of Albania in accordance with the legislation in force; companies which issued bonds for investment in accordance with the legislation in force; and natural persons who had taken loans in accordance with the Civil Code, on condition that three requirements were cumulatively satisfied.
64. Under section 5, the Government appointed administrators (administrator) for entities subject to the financial audit. The administrators were to be natural persons or a legal entity. The administrators were appointed on condition that: a) the entity concerned had defaulted on payments or there was a risk of its defaulting on payments; b) the entity concerned had suspended, or was ready to suspend, payments or was unable to satisfy its obligations on the relevant date, in accordance with the agreements concluded with third parties; c) the business operations of the entity concerned were in breach of recognised financial principles and rules; d) the business and financial situation of the entity concerned was in breach of recognised financial principles and rules; e) it was in the public interest that the entity concerned and other individuals related to it be subject to the law, owing to the fact that they had attracted the investment of third parties’ property.
65. The entity concerned had the right to appeal to the Court of Appeal within ten days against the appointment of the administrators. If the Court of Appeal upheld the appeal, it would order the Council of Ministers to suspend (ndërpres) the compulsory administration measure. The delivery of a court decision (in the event that it quashed a Government decision) did not prevent the Government from taking another decision on the appointment of other administrators in relation to the entity concerned, provided that the law was complied with.
66. Under section 7, the administrators appointed by the Government had, inter alia, the following tasks: to suspend partially or entirely the payment of a loan or obligation to third parties; to manage the operations and property of the entity concerned; to exercise all shareholders’ rights, partners’ rights and the related rights of administrative personnel; to sell or legally dispose of the property of the entity concerned as he or she deemed appropriate; to seize the assets of named individuals connected with the schemes; and to hire experts and trace assets abroad.
67. Section 11 provided that administrators could be dismissed from their position by the Government under certain conditions. Under section 15, administrators had to provide regular reports to the Government about the progress of work.
68. The Act did not provide for any legal remedies to be made available to non-banking entities to challenge the administrators’ actions.
69. Following the insertion of the new paragraph in section 10 of the Act on Major Constitutional Provisions (see above), section 1 of the 1997 Act no. 3 reintroduced the wording of section 7 of the 1997 Act no. 2, which had been repealed by the Constitutional Court’s decision of 13 November 1997 (see paragraphs 15–16 above).
70. Section 1 of Act no. 4 provided that “insofar as the companies concerned are subject to audit and compulsory administration under the Act, the judicial authorities shall not hear any civil actions and shall suspend all enforcement proceedings in respect of previously adopted decisions.”
71. Section 1 of Act no. 5 provided that the Board of Supervisors was to report to the Minister of Finances.
72. Section 1 empowered the administrators of non-banking legal entities to proceed with the sale of the property of such entities and those of their owners and the latter’s family members. The proceeds would be used to provide the public with monetary compensation during the redistribution process. Under section 3 former presidents of companies which were subject to the Non-banking Entities Audit Act did not have the right, following the sale of property, to buy it or lodge an action with the domestic courts for its return.
73. Section 4 stipulated that the administrators were responsible for the sale of the property and for deciding on the procedure. The starting sale price was determined by an evaluation group pursuant to section 9. Any natural person or legal entity, whether domestic or foreign, could attend the sale of the property in accordance with section 5. Under section 6 of the 1998 Act, the sale had to take one of the forms prescribed by law: direct sale, auction or public tender. Under the 2006 Act, the sale took the form of auction. Section 11 of the 1998 Act provided that the process was to be concluded, in principle, before the end of 1998. Under the 2006 Act, property that had not been sold by 31 December 2005 was to be put up for sale by the Ministry of Finance.
74. Section 14 provided that only the auditors (ekspert kontabël) could seek to have the sale declared null and void by a court. The request had to be made within 30 days from the date when they considered a breach of the provisions of the Act to have occurred.
75. Section 3 stipulated that the redistribution of financial assets of non-banking entities was to be carried out on the basis of a repayment coefficient which was different for each entity. In accordance with section 4, the coefficient was to be calculated as the division of the sum of the existing monetary values in the non-banking entities’ bank accounts and the proceeds secured from the sale of their property by the amount of the outstanding debt that the non-banking entity owed to its creditors.
76. On 28 January 2005 the Government adopted a decision on the redistribution of financial assets to the applicant company’s creditors on the basis of a coefficient. According to the decision, the redistribution coefficient for creditors was calculated at eleven per cent. The proceeds collected from the sale of assets totalled ALL 3,800,000,000 (approximately 26,620,100 euros – “EUR”). The outstanding debt of the company remained at ALL 34,361,781,170 (approximately EUR 240,714,000).
77. Section 4 provided that the administrators were to identify all natural persons and legal entities which had outstanding debts and obligations towards non-banking entities that had been subject to the Non-banking Entities Audit Act. Under section 5 the administrators were to adopt a decision on the names of persons who would be declared debtors and the outstanding financial and proprietary assets that should be returned to the bank accounts of the non-banking entities. This decision constituted an execution title and was enforceable. Section 7 gave debtors 45 days from notification of the administrators’ decision in which to comply; failure to comply resulted in mandatory enforcement by the bailiff.
78. Under section 8, the aggrieved party had the right to challenge the administrators’ decision and the bailiff’s actions within ten and five days respectively before the Court of Appeal.
79. On 31 August 1999 the applicant company’s administrators adopted a decision concerning the names of the company’s debtors. A list containing 25 debtors and their corresponding outstanding debts was appended to the decision. The individual applicant’s name was included on the list, with an outstanding debt in the amount of ALL 171,924,300 (approximately EUR 1,204,380).


ITEMID: 001-70499
LANGUAGEISOCODE: ENG
RESPONDENT: CZE
BRANCH: ADMISSIBILITY
DATE: 2005
DOCNAME: CBC-UNION, S. R. O. v. THE CZECH REPUBLIC
IMPORTANCE: 4
CONCLUSION: Inadmissible
TEXT: The applicant, CBC-Union, s.r.o., is a private company with its headquarters in Karlovy Vary. It is represented before the Court by Mr Jiří Kozák, a lawyer practising in Liberec.
The facts of the case, as submitted by the parties, may be summarised as follows.
On 29 May 1993 the applicant company acquired a building under construction from the Town of Teplice (Město Teplice) at an auction. The original lawful asking price, CZK 22,540,000 (EUR 751,333), was not reached and the bidding finally stopped at 1,409,000 (EUR 46,967). On 1 July 1993 the applicant company concluded a purchase contract whereby the purchase price was fixed at CZK 1,409,000.
On 23 February 1994 the Finance Office issued a tax order against the applicant company ordering it to pay a gift tax of CZK 3,877,548 (EUR 129,252), the base of assessment being fixed at CZK 21,134,100 (EUR 704,470) by virtue of the Taxation Act.
On 10 March 1994 the Finance Office, in reply to the applicant company’s letter of 7 March 1994, explained that the basis of the taxation had been the difference between the asking price and the final bid.
On 19 December 1996, on the applicant company’s appeal, the Ústí nad Labem Finance Directorate (Finanční ředitelství) reduced the tax due to CZK 1,087,876 (EUR 36,263), taking into account a new expert assessment made of the taxation basis (CZK 8,488,200 (EUR 282,940)).
On 10 February 1999 the Ústí nad Labem Regional Court (krajský soud) dismissed the applicant’s action against the tax order finding, in particular:
“The transfer of the estate was effected in 1993, when [the Taxation Act], as amended by Act no. 18/1993, was in force. If the real estate was transferred for a lower price than that established by the expert ... the tax liability is shared between the assignor and assignee. Under section 10 the real estate-transfer tax base is the price of the estate legally established on the date of the acquisition of the whole real estate, or part of it if the transfer was effected partly free of charge. Gift tax under section 6(1) of the [Taxation] Act was payable on real estates acquired by an act in law other than the death of an owner, provided that the act in law was effected fully or partly free of charge. ...
Under section 7(1) of [the Taxation Act], the base of the gift tax was the price of the estate minus the price which was paid if the act in law was effected partly free of charge. The [Taxation] Act did not take into account the current value of the estate and only considered the legally established price. The first-instance authority’s error in establishing the price and tax base was rectified by the [Finance Directorate] ... which requested that a new expert report be submitted on the price of the property at the date of its acquisition; it informed [the applicant company] about the findings of the expert, and discussed [the applicant company’s] comments with the expert, who issued another report, which was not challenged by [the applicant company].”
On 10 April 1999 the applicant company lodged a constitutional appeal (ústavní stížnost) alleging, inter alia, a violation of Article 11 § 5 of the Charter of Fundamental Rights and Freedoms (Listina základních práv a svobod).
On 3 August 2000 the Constitutional Court (Ústavní soud) dismissed the applicant company’s constitutional appeal, endorsing the reasons on which the lower administrative and judicial authorities had based their decisions.
Under section 5, persons liable to gift tax were those who had acquired property. Section 6(1)(a) provided that gift tax was payable on estates acquired by an act in law other than the death of an owner, provided that the act in law was effected fully or partly free of charge. Under section 7(1)(c), the gift tax basis was the price of the taxable property minus the price paid if the property was acquired partly free of charge.
Section 8(1)(a) provided that persons liable to pay real estate-transfer tax were those who had assigned estates. Under section 9(1) real estate-transfer tax was payable on transfers of property rights to estates provided that the transfers were carried out fully or partly in return for payment. Section 10 provided that the real estate-transfer tax base was the price of the estate established under the relevant legal provisions on the day of its acquisition.
“Real estate-transfer tax is assessed as a percentage of the price established in accordance with the law ... Parties to a purchase contract may, with reference to the Civil Code and Decree no. 393/91, ... agree on a higher price or ... a lower price. However, tax is based on the price calculated under Decree no. 393/1991, as amended. The purchase price or price agreed between the parties is not decisive ...”
Under section 5 persons liable to gift tax are those who received estates. Section 6(1)(a) provides that gift tax is payable on estates acquired free of charge by an act in law other than the death of an owner. If the assignee acquired the estate partly free of charge, only the relevant part of the estate was taxable. Under section 7(1)(c) the gift tax base was the price of the taxable estate.
Section 8(1)(a) provided that persons liable to pay real estate-transfer tax are those who have assigned or sold estates. Under section 9(1) real estate-transfer tax is payable on the transfer of an estate carried out in return for payment. Section 10 provides that the real estate-transfer tax base was the price established under the relevant legal provisions on the day of the acquisition of the estate, even if the price agreed between the parties is lower than the legally established price; the difference is not taxable under the provisions on gift tax. If the price agreed is higher than the legally established price, the price agreed constitutes the tax base.
Under Article 11 § 5 taxes and fees may be levied only on the basis of law.
Principle no. 5
“Gift tax was payable on movable and immovable items, debts, securities and other property rights acquired by an act in law other than the death of a citizen, provided that the act in law was effected fully or partly free of charge. ...”
Principle no. 6
“The gift tax basis was the price of the acquired property ...”
Principle no. 9
“The real estate-transfer tax base is the price of the property. If the payment is lower than the price established under special regulations, the transfer is considered to be carried out up to the amount of the payment in return for payment, and the transfer corresponding to the difference between the payment and the price established under the special regulation as the transfer free of charge, which is subjected to the gift tax.”
Section 10 concerning the tax base provided that the real estate-transfer tax base is the price agreed, at least the price established under special regulations.
In cases relating to facts which had occurred prior to the amendment of the Taxation Act, which entered into force on 1 January 1994, the domestic courts generally held that real estate-transfer tax had to be paid on transfers of real estates, which were carried out in return for payment. The courts considered that if the purchase price was lower than the legally established price, the estate was transferred partly free of charge. The difference between the prices constituted the gift tax base.
In 1996 certain appellate courts expressed a different legal view.


ITEMID: 001-97108
LANGUAGEISOCODE: ENG
RESPONDENT: TUR
BRANCH: CHAMBER
DATE: 2010
DOCNAME: CASE OF AKTAR v. TURKEY
IMPORTANCE: 4
CONCLUSION: Violation of Art. 6-1
JUDGES: András Sajó;Françoise Tulkens;Ireneu Cabral Barreto;Nona Tsotsoria;Vladimiro Zagrebelsky
TEXT: 4. The applicant was born in 1940 and lives in Ankara.
5. On 15 January 1977 the applicant bought seven plots of land in the Bozcaada region of Çanakkale from a private person by way of a bill of sale.
6. On an unspecified date, a land registry survey was carried out in the region, as a result of which the plots in question were registered in the name of the Treasury.
7. On 21 August 1991 the applicant raised an objection before the Bozcaada Cadastral Court against the land registry survey and requested its annulment.
8. The first hearing was held on 5 November 1991. The applicant did not attend the hearings held between 16 June 1992 and 17 November 1998. Moreover, the hearings were adjourned between 16 June 1992 and 22 February 1994 pending the determination of the applicant's address by the Treasury.
9. At the hearing held on 3 May 1994 the Bozcaada Cadastral Court ordered an on-site inspection of the plots in question. However, the official notice for the payment of the inspection fee was only served on the applicant on 21 July 1998, and the inspection was conducted on 4 September 2000.
10. On 29 March 2002 the Bozcaada Cadastral Court partially granted the applicant's request in relation to three of the plots in question. The court held that there was no record of ownership in the land register in respect of these three plots and the applicant had therefore acquired title to them by way of adverse possession. The remaining four plots, however, were registered in the Treasury's name in the land register and could not, therefore, have changed ownership by way of adverse possession. The bill of sale executed in 1977 to convey the title of the disputed land was also void for the same reason. Moreover, even if the Treasury had held no valid title to the plots in question, the conditions for adverse possession of unregistered land had not been fulfilled by the applicant in the instant case. The applicant, therefore, could not claim title to them. In reaching its decision the Bozcaada Cadastral Court relied on a number of sources, including onsite inspection reports, statements from witnesses and local experts, title deeds, tax records, bills of sale, sketch plans and agricultural and technical expert reports.
11. After holding a hearing on the merits of the case, on 4 February 2003 the Court of Cassation upheld the judgment of the Bozcaada Cadastral Court. On 18 June 2003 the Court of Cassation rejected the applicant's rectification request. This decision was served on the applicant on 11 July 2003.
VIOLATED_ARTICLES: 6
VIOLATED_PARAGRAPHS: 6-1


ITEMID: 001-22740
LANGUAGEISOCODE: ENG
RESPONDENT: TUR
BRANCH: ADMISSIBILITY
DATE: 2002
DOCNAME: YÜGÜRÜK v. TURKEY
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Ireneu Cabral Barreto;Mark Villiger
TEXT: The applicant, Mr Bayram Yüğrük, is a Turkish national, who was born in 1974 and lives in Kütahya.
The facts of the case, as submitted by the parties, may be summarised as follows.
Following an administrative ordinance issued by the General Staff (Genel Kurmay Başkanlığı) on 20 June 1995 the applicant and his family were denied to access to the military premises on the grounds that a photo showing his wife wearing an Islamic scarf was not acceptable for the military and social security identity cards. The applicant’s close relatives wearing Islamic scarves were also not allowed into the military buildings.
On 3 December 1998 the Supreme Military Council (Yüksek Askeri Şura) decided to discharge the applicant from the army on grounds of acts of “insubordination and immoral conduct” pursuant to Article 94(b) of Law 926.
The Government submit the following in the light of the intelligence reports concerning the applicant:
The applicant, a sergeant, adopted extreme religious ideology and was considered as an undisciplined and insubordinate soldier by his superiors. He had an antisocial character and his wife wore an Islamic scarf. He refused to participate in social gatherings and followed extreme religious publications.
The applicant was sentenced to four days’ confinement for lack of discipline and to four days’ confinement for being absent when called out.
A committee of nine members of the armed forces concluded, in the light of the findings of the above intelligence reports, that the applicant had breached military discipline and that he should be discharged from the army. Subsequently, the Supreme Military Council based its decision on that opinion.
The relevant provisions of the Constitution are as follows:
“None of the rights and freedoms set forth in the Constitution may be exercised with the aim of undermining the territorial integrity of the State or the indivisible unity of its people, imperilling the existence of the Turkish State and the Republic, abolishing fundamental rights and freedoms, handing over control of the State to a single individual or group or bringing about the dominance of one social class over the others, establishing discrimination on the grounds of language, race, religion or adherence to a religious sect or setting up by any other means a State order based on such beliefs and opinions.”
“Everyone shall have the right to freedom of conscience, faith and religious belief. Prayers, worship and religious services shall be conducted freely, provided that they do not violate the provisions of Article 14. No one shall be compelled to participate in prayers, worship or religious services or to reveal his religious beliefs and convictions; nor shall he be censured or prosecuted because of his religious beliefs or convictions. ...
No one may exploit or abuse religion, religious feelings or things held sacred by religion in any manner whatsoever with a view to causing the social, economic, political or legal order of the State to be based on religious precepts, even if only in part, or for the purpose of securing political or personal influence thereby.”
“All acts or decisions of the administration are subject to judicial review ...
Decisions of the President of the Republic concerning matters within his sole jurisdiction and decisions of the Supreme Military Council shall not be subject to judicial review.
...”
Article 129 §§ 2, 3 and 4 of the Constitution provides that a disciplinary action cannot be imposed to the civil servants provided that that the right to defence is respected. Moreover, it lays out that the disciplinary actions, other that the warnings and the reprimands are subject to legal control. The provisions concerning the soldiers are reserved. Article 21 of Law on the Military Administrative High Court stipulates that the disciplinary actions imposed to the soldiers are not subject to legal control.
Section 22 (c) of the Military Legal Service Act provides:
“Irrespective of length of service, servicemen whose continued presence in the armed forces is adjudged to be inappropriate on account of breaches of discipline or immoral behaviour on one of the grounds set out below, as established in one or more documents drawn up during their service in the last military rank they held, shall be subject to the provisions of the Turkish Pensions Act.
...
Where their conduct and attitude reveal that they have adopted unlawful opinions.”
Section 50 (c) of the Military Personnel Act provides:
“Irrespective of length of service, servicemen whose continued presence in the armed forces is adjudged inappropriate on account of breaches of discipline and immoral behaviour shall be subject to the provisions of the Turkish Pensions Act. The Regulations for Military Personnel shall lay down which authorities have jurisdiction to commence proceedings, to examine, monitor and draw conclusions from personnel assessment files and to carry out any other act or formality in such proceedings. A decision of the Supreme Military Council is required to discharge an officer whose case has been submitted by the Chief of Staff to the Supreme Military Council.”
Section 94 (b) of the Military Personnel Act provides:
“(b) Discharge from the army for the acts of insubordination and immoral conduct:
Notwithstanding the seniority in the service, the non-commissioned officers whose maintenance is considered to be inappropriate for the acts of insubordination and immoral conduct are subject to Law on the Turkish Pension Fund. The investigation, examination and follow-up of the notation reports and the formalities and the competent authorities fulfilling these duties are subject to the provisions of The Regulations on assessment of officers and non-commissioned officers. The General Staff determines which non-commissioned officers’ cases concerning their discharge from the army should be examined by the Supreme Military Council.”
Article 99 of the Regulations on assessment of officers and non-commissioned officers provides:
“Irrespective of length of service, the compulsory retirement procedure shall be applied to all servicemen whose continued presence in the armed forces is adjudged to be inappropriate on account of breaches of discipline or immoral behaviour on one of the grounds set out below, as established in one or more documents drawn up during their service in the last military rank they held:
...
(e) where by his conduct and attitude the serviceman concerned has provided evidence that he holds unlawful, subversive, separatist, fundamentalist and ideological political opinions or takes an active part in the propagation of such opinions.”


ITEMID: 001-104602
LANGUAGEISOCODE: ENG
RESPONDENT: HUN
BRANCH: ADMISSIBILITY
DATE: 2011
DOCNAME: TÖRKÖLY v. HUNGARY
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: András Sajó;David Thór Björgvinsson;Françoise Tulkens;Guido Raimondi
TEXT: The applicant, Mr Tibor Törköly, is a Hungarian national who was born in 1969 and is detained at Szeged Prison. He was represented before the Court by Mr A. Cech, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr L. Höltzl, Agent, Ministry of Public Administration and Justice.
The facts of the case, as submitted by the parties, may be summarised as follows.
On 5 December 2004 the applicant was arrested on a charge of murder.
On 11 January 2005 the Bács-Kiskun County Regional Court convicted the applicant, a multiple recidivist, of attempted grave bodily assault and of aggravated murder committed with special cruelty. The court established that the applicant had first severely beaten up his common-law wife. Three days later, while they were collecting firewood in a forest, he had again beaten and kicked her, tied her up, hanged her on a tree and then cut her loose, wrapped her face and head with adhesive tape, and finally killed her with a minimum of nine stabs with a knife. The crime was committed out of jealousy.
The court imposed a life sentence on the applicant, with eligibility for release on parole after 40 years, i.e. on 25 July 2044. The period spent in pre-trial detention after 5 December 2004 was credited towards the prison term. When imposing the sentence, the court took into account the applicant’s previous convictions for violent crimes, as well as the fact that his victim was his common-law wife and the mother of their two minor children.
On appeal, on 16 June 2005 the Szeged Court of Appeal upheld this sentence at a public hearing. This judgment was served on 30 June 2005.
On 5 September 2005 the Supreme Court dismissed, without an examination on the merits, the applicant’s petition for review as inadmissible, since it was incompatible ratione materiae with the relevant provisions of the Code of Criminal Procedure. On 15 December 2005 his request for re-trial was dismissed.
The Constitution provides as follows:
“(1) The President of the Republic shall ... exercise the right to grant individual pardon.
(2) The counter-signature of the Prime Minister or the responsible Minister is required for all the measures ... of the President of the Republic listed in paragraph (1) ...”
Act No. IV of 1978 on the Criminal Code provides:
“The enforcement of the punishment is precluded by ...
c) a pardon ...”
Act No. XIX of 1998 on the Code of Criminal Procedure provides as relevant:
“(1) Motions for pardon ... in respect of suppressing or reducing sanctions not yet executed ... shall be submitted – ex officio or on request – to the President of the Republic – by the minister in charge of justice.
(2) [Such a r]equest may be introduced by the defendant, his/her lawyer or ... relative. ...
(4) A [pardon] request ... concerning a sanction not yet executed must be introduced to the first-instance trial court.
(5) In the course of the pardon procedure, the court shall obtain ... such personal particulars of the defendant as necessary for the decision on pardon.”
“(1) The court ... shall forward the case documents and the request to the minister in charge of justice. ...
(3) The minister in charge of justice shall forward the request to the President of the Republic even if s/he does not endorse it.”


ITEMID: 001-57640
LANGUAGEISOCODE: ENG
RESPONDENT: GBR
BRANCH: CHAMBER
DATE: 1990
DOCNAME: CASE OF McCALLUM v. THE UNITED KINGDOM
IMPORTANCE: 2
CONCLUSION: Violation of Article 8 - Right to respect for private and family life (Article 8-1 - Respect for correspondence);Non-pecuniary damage - finding of violation sufficient (Article 41 - Non-pecuniary damage;Just satisfaction)
TEXT: 8. On 11 March 1980 Mr Michael Peter McCallum, who had previously been dealt with by the courts and served sentences of imprisonment on a number of occasions, was convicted by the High Court of Justiciary at Glasgow of assault and robbery. He was sentenced to six years’ imprisonment, to run from 26 November 1979.
Following his conviction, he was initially allocated to Peterhead Prison. In July 1982 he was transferred to Barlinnie Prison, because of the serious disruptive effect which he was having on other prisoners. Whilst in custody he lost 509 days’ remission of sentence for a series of offences against prison discipline. He was released from prison on 18 April 1985.
9. During the course of his sentence, Mr McCallum spent two periods in the Segregation Unit at Inverness Prison (see paragraphs 13-20 below), the first from 22 November 1980 to 27 January 1981 and the second from 30 June to 15 October 1981. The second period exceeded the usual three months’ maximum in view of his particularly uncooperative attitude whilst he was there.
Both transfers to the Unit followed periods of bad behaviour on the part of the applicant, involving notably assaults on and abuse of staff. In each case it was considered that the transfer could benefit both him and the general situation in Peterhead Prison.
10. During 1981 and 1982, the prison authorities imposed the following particular restrictions on the applicant’s correspondence.
(a) Two letters from the applicant, one to his solicitor and one to a Member of Parliament and each dated 24 June 1981, were stopped in accordance with Standing Order Ic 1(3)(d) and Standing Order Ic 3(6)(a), respectively (prohibitions on complaints about prison treatment; see paragraph 22 (a) and (b) below).
(b) A letter of 5 October 1981 from the applicant to the editor of the Daily Record, asking for a copy of an article in that newspaper concerning the applicant ("Cage Man Euro Court Plea") and enquiring if two previous letters had been received, was stopped. The prison authorities considered that the letter did not conform to Standing Orders, but there is no record of the grounds for this view.
(c) A letter dated 18 December 1981 from the applicant to the Procurator Fiscal was stopped because it contained allegations of assault on other prisoners, who had not themselves complained through any internal or external channel. The letter was regarded as objectionable in terms of Standing Order Ic 1(3)(d); the authorities also considered that to allow letters complaining on behalf of other prisoners would be contrary to good order and discipline. Mr McCallum was allowed to write another letter containing allegations of assault concerning himself alone.
(d) A letter dated 19 January 1982 from the applicant to Miss Hampson of Dundee University was stopped on the grounds that she was not a previous correspondent of his, nor a legal adviser for the purposes of his petition to the Commission (Standing Orders Ic 4(12) and Ic 3(10)(g)(i); see paragraph 22 (d) and (c) below).
(e) Letters dated 20 and 23 February 1982 from the applicant to his representative Mr Godwin were delayed and eventually posted on 18 March 1982. The Government had agreed that Mr McCallum could, pursuant to Standing Order Ic 3(10)(g)(i), correspond with Mr Godwin in relation to his application to the Commission, on the understanding that Mr Godwin would abide by the Commission’s rules of confidentiality. Some particulars of the applicant’s complaints had appeared in the press and the Scottish Home and Health Department was unwilling to allow further letters without an assurance from Mr Godwin that he would comply with the rules in the future. After the Department had received such an assurance, the letters in question were posted.
(f) Copies of letters written by Mr Godwin to the Prison Service Headquarters on 4 June 1982 and to the Secretary of State on 22 June 1982 were withheld from the applicant under Standing Order Ic 4(12)(b) (see paragraph 22 (d) below). The letters suggested that there had been a breakdown of discipline on the part of the staff at Peterhead Prison and predicted disturbances among prisoners; the second letter also implied that staff might have been responsible for causing a fire in the applicant’s cell. The prison Governor considered the letters objectionable on the grounds of good order and discipline, fearing in particular that prisoners might be encouraged to make the disturbances predicted if the letters came into their hands.
11. On 22 December 1982 the Visiting Committee of Barlinnie Prison imposed on the applicant a disciplinary award which included an absolute prohibition for 28 days on all correspondence, pursuant to Rule 74(2) of the Prison (Scotland) Rules 1952 (see paragraph 21 below). On 11 January 1983 the Secretary of State for Scotland, to whose attention the terms of this prohibition had been drawn, ruled that it was not to affect Mr McCallum’s correspondence relating to his application to the Commission or his correspondence with his Member of Parliament, the Procurator Fiscal or his legal adviser.
12. At the relevant time the prison system in Scotland was governed by the Prisons (Scotland) Act 1952 ("the 1952 Act"), sections 1 and 3 of which vested general control and superintendance over prisons in Scotland in the Secretary of State for Scotland. He was empowered, by section 9, to commit prisoners to such prison as might be appointed by rules made under the Act and to transfer prisoners from one prison to another and, by section 35(1), to "make [by statutory instrument] rules for the regulation and management of prisons ... and for the classification, treatment, employment, discipline and control of persons required to be detained therein".
In exercise of his powers under section 35(1), the Secretary of State made the Prison (Scotland) Rules 1952 ("the Prison Rules"), which have been amended from time to time. He also, in supplement of the Prison Rules and by virtue of his general jurisdiction over prisons and of various powers conferred by the Prison Rules themselves, issues instructions to the Governors of prisons in the form of Standing Orders and administrative circulars.
The 1952 Act and the Prison Rules apply to the Segregation Unit at Inverness Prison, as do most of the Standing Orders and administrative circulars. There are also administrative instructions particular to the Unit.
13. Rule 6 of the Prison Rules empowers the Secretary of State to "set aside particular prisons or parts of prisons for particular classes of prisoners or for particular purposes".
The Segregation Unit at Inverness Prison was set up in 1966 to provide a secure place of segregation for those prisoners who, through their violent or subversive behaviour, seriously disrupt the establishments in which they are accommodated, who had not responded to the forms of treatment available there and who flagrantly refuse to cooperate in the normal prison routine. The Unit also offers a special level of protection for staff.
Transfer to the Unit, which is not employed as a punishment, is intended to remove a threat to the good order and discipline of the transferring prison, to provide relief for staff there and to achieve an improvement in the prisoner’s attitude.
14. The Unit is used sparingly, prisoners being transferred there only when the facilities available elsewhere are considered ineffective. It is not used to capacity and has lain empty on a number of occasions. It was closed in 1972 but re-opened in 1979.
Authority to transfer prisoners to the Unit is given personally by the Secretary of State for Scotland or another Scottish Office Minister, upon the recommendation of both the Governor of the transferring prison and the prison administration division of the Scottish Office and after consultation of the Standing Committee on Difficult Prisoners. Except in case of crisis or emergency, transfers are normally effected only after thorough consideration of the particular circumstances.
No prisoner will be detained in the Unit longer than is considered necessary. No minimum period is prescribed; the maximum will not exceed three months, save in exceptional circumstances.
15. The progress of each prisoner detained in the Unit is constantly monitored by its staff, who report weekly to the prison administration division of the Scottish Office. Each case is also examined monthly by the Inverness Unit Review Board, which may make recommendations to the Secretary of State for the individual’s transfer out of the Unit.
16. The Unit comprises five single cells of 14 square metres in total area, to which prisoners are confined except for exercise periods, toileting, visits and authorised interviews. They are not permitted to associate with other prisoners.
The area in which the prisoner is confined, measuring 3 metres by 2½ metres, is separated from the cell’s entrance lobby by a security grille, designed to protect staff. The area in question is larger than the minimum recommended for a single cell in a security prison. The lighting, heating and ventilation of cells in the Unit are comparable or superior to those in separate cell areas in other prisons and to those in many ordinary cells in other prisons.
17. Letters and visits are allowed on the basis normal in prisons in accordance with the Prison Rules and Standing Orders. Unit visits normally take place at weekends and can be extended up to two hours.
18. Library books and newspapers are provided on the normal prison basis, prisoners being free to purchase additional materials out of their own funds. Piped radio facilities are provided in each cell and notebooks are made available in accordance with Standing Orders. Prisoners already taking correspondence courses are encouraged to continue.
19. Meals are taken and paid work, when available, is carried out by Unit inmates in their cells. Exercise is provided for them for two half-hour periods daily, but not in association with other prisoners.
20. In addition to visits from friends and relatives, prisoners in the Unit are visited by the Governor and the Chief Officer of Inverness Prison daily, by the Prison chaplain and a psychiatrist weekly and by the Prison Medical Officer on request.
21. Rule 74 of the Prison Rules provides, inter alia:
"(2) Every prisoner shall be allowed to write and to receive a letter on his admission, and shall thereafter be allowed to write and receive letters and to receive visits at intervals laid down by the Secretary of State. The intervals so prescribed may be extended as a punishment for misconduct, but shall not be extended so as to preclude a prisoner from writing and receiving a letter, and receiving a visit, every eight weeks.
...
(4) Subject to the provisions of Rule 50(4) every letter to or from a prisoner shall be read by the Governor or by an officer deputed by him for that purpose and it shall be within the discretion of the Governor to stop any letter if he considers that the contents are objectionable."
22. At the relevant time, these provisions were supplemented by various Standing Orders, of which the following were pertinent in the present case.
(a) Standing Order Ic 1(3) dealt with the exercise of the Governor’s discretion under Rule 74(4) to stop "objectionable" letters. It stated:
"All ordinary matter, including news of public events, should be passed. Comment by a prisoner on his own conviction and sentence is not objectionable if expressed in proper terms. Objectionable matter falls within narrow limits, viz.-
...
(d) Complaints of prison treatment. These should be addressed to the Secretary of State or the Visiting Committee by petition.
...
..."
(b) Standing Order Ic 3(6)(a) dealt with the conditions governing the contents of letters to Members of Parliament. It provided that such letters should be sent, after being read, "except where they include a complaint or request concerning prison treatment, including allegations against prison staff, which has not completed the prescribed procedure for remedying the grievance i.e. by petition to the Secretary of State or other appropriate official means".
(c) Standing Order Ic 3(10) related to petitions by inmates to the Commission and included the following passage:
"(g) If the question of legal advice arises it will be dealt with as under:
(i) a prisoner may correspond with his legal adviser and with other persons in connection with the preparation of the petition to the Commission on the same basis as if he were an appellant.
..."
(d) Standing Order Ic 4(12) provided, with certain savings, that prisoners would be allowed to correspond with "close relations" and normally also with "other relatives and existing friends". The Order also contained the following passages:
"(b) ... Governors have discretion to forbid [letters in the second category] ... on the grounds of security or good order and discipline or in the interests of the prevention or discouragement of crime.
(c) Governors have discretion to allow communication with other persons not personally known to the prisoner before he came into custody. ..."
23. In addition to a complaint to the Governor of the prison, a prisoner in Scotland who is aggrieved by his treatment has available to him various remedies. They fall into the following three categories:
(a) internal channels of complaint, namely:
(i) a petition to the Secretary of State for Scotland; (ii) a complaint to the Visiting Committee; (iii) a complaint to a Sheriff or Justice of the Peace; (iv) representations to the Inverness Unit Review Board; (v) representations to the Standing Committee on Difficult Prisoners;
(b) an investigation by the Parliamentary Commissioner for Administration;
(c) judicial remedies.
Particulars concerning the remedies listed at (a) (i) and (ii) and (b) appear in the Court’s Boyle and Rice judgment of 27 April 1988, Series A no. 131, at pp. 17-19, paras. 36-39. An indication of those referred to at (a) (iii)-(v) is given at paragraph 26 of the Commission’s report in the present case. Judicial remedies are of the following two kinds.
24. A prisoner aggrieved by prison conditions may challenge them by the ordinary remedies of private law as an infringement of his civil rights.
It was emphasised by the House of Lords in Raymond v. Honey ([1983] Appeal Cases 1 and [1982] 1 All England Law Reports 759) that "a convicted prisoner, in spite of his imprisonment, retains all civil rights which are not taken away expressly or by necessary implication". Thus, the general principle of Scots law that a person has a right not to be subjected, deliberately or negligently, to physical or mental harm remains applicable to a prisoner. For example, he can bring an action against the Secretary of State seeking declarator and damages in respect of an alleged assault by prison staff or in respect of harm to his physical or mental health allegedly suffered as a result of unduly rigorous or inhumane conditions (see, inter alia, Middleweek v. Chief Constable of Merseyside (1985), The Times Law Reports, 1 August 1985).
The Government cited a number of authorities in support of the proposition that treatment of prisoners which is so inhuman or degrading that it cannot be regarded as having been authorised by Parliament will be unlawful and actionable as a civil wrong. In the context of correspondence, they stated that a restriction that infringed a right retained by a prisoner, such as his right of access to a legal adviser relating to possible civil proceedings, would be considered to be unlawful (R. v. Home Secretary, ex parte Anderson [1984] Queen’s Bench Division Reports 778).
25. The exercise by public authorities of statutory powers and duties is subject to judicial review. The grounds on which such review may be open are in substance the same in Scotland as in England and Wales (see Brown v. Hamilton District Council, 1983 Scottish Law Times 397, per Lord Fraser at 414). In particular, an exercise of discretionary power may be challenged on the grounds that the authority concerned has acted arbitrarily, in bad faith, unreasonably, for an improper purpose or otherwise outside its statutory powers (see, for example, the speech of Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service [1985] Appeal Cases 374 at 410 and [1984] 3 All England Law Reports 935 at 950-951, as quoted in the Weeks judgment of 2 March 1987, Series A no. 114, p. 18, para. 30). In Scotland, the supervisory jurisdiction over public authorities is exercised by the Court of Session, which can grant a wide range of remedies, including the annulment of any unlawful decision and the award of damages in appropriate conditions.
A prisoner aggrieved by prison conditions can in principle bring an application to the supervisory jurisdiction to establish that the Secretary of State had failed to perform the duties incumbent on him or that his decision to institute or maintain those conditions was unreasonable. Thus in R. v. Home Secretary, ex parte McAvoy [1984] 1 Weekly Law Reports 1408 and Thomson v. Secretary of State for Scotland 1989 Scottish Law Times 343 applications for judicial review were brought by prisoners aggrieved by conditions in prisons to which they had been transferred. Likewise, a prisoner may challenge a restriction upon his correspondence as ultra vires in that it infringed his civil rights or as unreasonable, and such a challenge can be brought whether the restriction has been imposed by the Secretary of State (R. v. Home Secretary, ex parte Anderson, cited above), the prisoner Governor (Leech v. Deputy Governor of Parkhurst Prison [1988] Appeal Cases 533) or a Visiting Committee in the exercise of disciplinary powers (R. v. Board of Visitors of Hull Prison, ex parte St. Germain [1979] Queen’s Bench Division Reports 425).
VIOLATED_ARTICLES: 8
VIOLATED_PARAGRAPHS: 8-1


ITEMID: 001-81875
LANGUAGEISOCODE: ENG
RESPONDENT: DEU
BRANCH: ADMISSIBILITY
DATE: 2007
DOCNAME: GAIDA v. GERMANY
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Peer Lorenzen
TEXT: The applicant, Mr Hans Gaida, is a German national who was born in 1940 and lives in Neuhäusel in Germany. He is represented before the Court by Mr W. Krahn-Zembol, a lawyer practising in Wendisch Evern, Germany. The respondent Government are represented by Mrs A. Wittling-Vogel, Ministerialdirigentin, of the German Ministry of Justice.
The facts of the case, as submitted by the parties, may be summarised as follows.
The applicant is the owner of a plot of land. He lives on these premises and has been using his property to run an amateur poultry farm since 1984.
On 5 July 1995 the Westerwaldkreis Regional Authority (Landrat) issued a building license to Deutsche Telekom AG (“T-AG”), a shareholding company with the German Federal State as its majority shareholder. The building licence entitled the T-AG to expand an existing and legally erected antenna on the plot of land adjacent to the applicant’s premises and to install a mobile phone base station at a distance of approximately twenty metres from the applicant’s house.
On 13 September 1995 the applicant filed an objection (Widerspruch) with the Regional Authority with the aim to have the licence revoked. He alleged that the radiation emanating from the base station caused him insomnia and serious health problems including tinnitus and cardiac arrhythmia. Furthermore, the breeding of his poultry had been seriously disturbed with the fledglings not hatching at all or with serious deformations. He finally complained that the adjacent base station reduced the commercial value of his own plot of land.
On 28 June 2000 the Regional Authority rejected the applicant’s objection. It noted that the radiation emanating from the base station complied with the standards prescribed by the relevant safety guidelines for exposure of the public to radio-frequency energy issued by the Federal Government in December 1996 (26. Verordnung zur Durchführung des Bundes-Immissionsschutzgesetzes, see relevant domestic law below). In the absence of conclusive scientific evidence to the contrary, it had to be assumed that no health damages could be expected.
On 25 July 2000 the applicant lodged a motion with the Koblenz Administrative Court (Verwaltungsgericht). Submitting several medical attestations, he alleged that his health problems as well as the breeding anomalies of his poultry had been caused by radiation emanating from the base station. For lack of conclusive scientific evidence, it was impossible to evaluate the risks emanating from base stations, in particular with respect to so-called “non-thermal effects” (effects which have not been caused by warming up biological tissues). Accordingly, a number of experts regarded the relevant safety guidelines to be insufficient. In order to prove the existence of a broad scientific discussion on health risks caused by base stations, the applicant submitted several scientific reports. He requested the Administrative Court to hear expert opinion on the question as to whether there existed a causal link between his diseases, those of his poultry and the radiation emanating from the base station and as to whether the pertinent safety guidelines were sufficient to protect neighbours from harmful effects of radiation.
On 30 January 2001 the Koblenz Administrative Court rejected the applicant’s claim, finding that the base station complied with the relevant legal provisions. The Administrative Court noted, firstly, that the radiation emanating from the base station was in accordance with the safety guidelines for exposure of the public to radio-frequency energy. According to an attestation issued by the Regulatory Authority for Telecommunication and Mail on 31 January 1995, the safety distance to be observed amounted to 2.35 metres, while the applicant’s house was removed some twenty meters from the base-station.
With regard to the applicant’s right to the protection of his health as guaranteed by Article 2 § 2 of the Basic Law the Administrative Court held that the Government, when drafting the safety guidelines, had considered all relevant scientific information and stayed well within its margin of appreciation. With regard to the scientific reports submitted by the applicant, the Court found as follows:
“According to the current state of scientific research, there exists no unambiguous theory of causation which would allow proving non-thermal effects of electromagnetic fields. Taking into account the reports and publications submitted by the plaintiff, in particular the publication on the international conference on mobile phone base stations held in Salzburg on 7-8 June 2000, the necessity of preventive measures with regard to non-thermal effects remains controversial within the scientific community. The positive obligation under Article 2 § 2 of the Basic Law does not require to take into account unconfirmed scientific findings.”
The Administrative Court saw no need to obtain further evidence, as the courts were not required to raise data on scientifically unconfirmed issues.
On 20 August 2001 the Rheinland-Pfalz Court of Appeal (Oberverwaltungsgericht) refused to grant the applicant leave to appeal. Mainly confirming the Administrative Court’s reasoning, it found that in the absence of any substantial scientific confirmation that the safety guidelines were completely inadequate (völlig unzulänglich), there was no reason to take the requested evidence. With regard to the applicant’s alleged health problems, the Court of Appeal found as follows:
“The medical attestation by the general practitioner St. dated 2 October 2000, submitted by the applicant in the administrative proceedings, does not confirm that the unspecified health problems which are listed therein have been caused by the mobile phone base station. The same applies to the medical opinion of Dr Sch. dated 19 January 2000, who merely described the plaintiff’s health problems on the basis of earlier medical reports – apparently without having examined him personally – as typical health problems of persons who lived in the direct vicinity of mobile phone stations and referred to earlier scientific reports dealing with the effects of high frequency radiation. This medical opinion is couched in such general terms that it does not allow assuming a possible causation in the specific case. In the absence of any conclusive, precise indications, but only based on assumptions regarding a causal connection between the phone station and the plaintiff’s health problems, there was no reason to take the requested evidence by hearing expert opinion, having regard to the limits set in the safety guidelines and the present state of scientific research; the more so, as the distance between the plaintiff’s house and the phone station exceeds the safety distance prescribed in the safety guidelines by far.”
On 27 September 2001 the applicant raised a constitutional complaint, alleging a violation of his right to life and physical integrity as guaranteed by Article 2 § 2 of the Basic Law.
On 28 February 2002 the Federal Constitutional Court, sitting as a panel of three judges, refused to entertain the applicant’s complaint as being ill-founded.
It noted that the relevant safety guidelines were based on the concurring recommendations issued by the International Commission on Radiological Protection (ICRP), the International Commission on Non-Ionizing Radiation Protection (ICNIRP) and the German Commission on Radiological Protection (Strahlenschutzkommission, SSK). They were based on verified health risks caused by the warming up of biological tissues. The Government had refused to adopt further security measures for lack of conclusive scientific evidence. The Federal Council (Bundesrat) had put the Government under an obligation to submit a report whenever new research results on the evaluation of possible long-term health risks caused by radio-frequency energy appeared.
The Federal Constitutional Court found that the Government was not obliged to tighten the safety guidelines as long as there was no reliable knowledge as to the dangerousness of high frequency radiation. When fulfilling its obligations under Article 2 § 2 of the Basic Law, the Government disposed of a wide margin of appreciation, which allowed to consider the competing public and private interests. The positive obligation under the constitution did not stipulate that any possible security measure had to be taken. A violation of that obligation could only be established if the public authority did not provide for any security measures at all or if the measures taken were completely inadequate or completely insufficient to provide the required protection. There was no obligation to take precautions against merely hypothetical dangers.
With regard to the lower courts’ alleged obligation to take evidence on the current standard of scientific knowledge on the dangerousness of high-frequency radiation, the Federal Constitutional Court found as follows:
“In areas of complex situation of danger (komplexe Gefährdungslagen) such as the present one, where no conclusive scientific evidence exists, the Government in their function as a secondary lawmaker (Verordnungsgeber) enjoy an appropriate margin of appreciation. In such a situation of uncertainty the State’s positive obligations require the courts neither to verify inconclusive scientific findings by means of the procedural law, nor to control the Government’s decision by evaluating the relevant safety limits according to the latest state of research. It is primarily up to the Government to constantly observe and evaluate the scientific progress in order to take further security measures if this appears to be necessary. A violation of the Government’s duty to adjust the guidelines can only be established if it becomes clear that a regulation aimed at the protection of health which had once been in accordance with the law becomes unconstitutional because of new scientific findings or a change of the factual situation. The Court of Appeal respected this limited scope of judicial review by refusing to make an independent risk assessment on the basis of evidence taken in court as long as there existed no research results of considerable scientific value regarding the inadequacy of the present safety limits.”
The Federal Constitutional Court further considered that this distribution of the burden of responsibility between the executive power and the courts duly took into account their different capacities to assess the relevant facts. With a view to the broad international research in this area, which had not yet rendered any definite results, it was currently impossible to evaluate the situation by merely examining solitary expert reports. An adequate evaluation was only possible by constant observation of all research results in the different scientific areas. This task was carried out by several international and national scientific commissions. The Constitutional Court found that the necessary overall examination could not be attained by taking evidence in individual court proceedings. The general scientific progress was not sufficiently advanced to enable the lower courts to independently evaluate such risks.
The Constitutional Court finally found that the lower courts had not been obliged to hear expert opinion on the applicant’s allegations that his own health had been damaged by radiation. In the absence of a scientifically confirmed examination method, the applicant had failed to submit sufficient evidence that an examination of his state of health could render any new results.
The establishment and operation of installations which may have harmful effects on the environment are regulated by the Federal Immission Control Act (Bundes-Immissionsschutzgesetz). The installation in the present case was not subject to licensing under this act. However, the Regional Authority, when deciding on the building licence, was under an obligation to examine whether the base station was compatible with the regulations of the Immission Control Act, the relevant provisions of which read as follows:
Article 22
Obligations of Operators of Installations not Subject to Licensing
“(1) Installations not subject to licensing shall be established and operated in such a way that
1. harmful effects on the environment which are avoidable according to the state of the art are prevented,
2. harmful effects on the environment which are unavoidable according to the state of the art are kept to a minimum, and
3. wastes produced during the operation of such installations can be duly disposed of.”
Article 23
Requirements Concerning the Establishment, Nature and Operation of Installations not Subject to Licensing
“(1) The Federal Government is authorised, after hearing the parties concerned, to provide by ordinance, with the consent of the Federal Council (Bundesrat), that the establishment, nature and operation of installations not subject to licensing satisfies specific requirements with a view to protecting the general public and the neighbourhood from harmful effects on the environment ... as well as taking precautions against such harmful effects on the environment, which means in particular that
1. ...
2. the emissions released from such installations shall not exceed specified limits”
On 16 December 1996 the Federal Government iussed an ordinance under Article 23 § 1 of the Immissions Control Act (26. Verordnung zur Durchführung des Bundes-Immissionsschutzgesetzes). In its first appendix, the Government set specified limits which must not be exceeded by high-frequency installations.
The proceedings before the Administrative Courts are governed by the Code of Administrative Procedure (Verwaltunsgerichtsordnung), Article 86 § 1 of which reads as follows:
Article 86
“(1) The Court examines the facts of the case ex officio. It is not bound by the parties’ submissions or by their requests to take evidence.”