ITEMID: 001-83068
LANGUAGEISOCODE: ENG
RESPONDENT: SRB
BRANCH: CHAMBER
DATE: 2007
DOCNAME: CASE OF LEPOJIC v. SERBIA
IMPORTANCE: 3
CONCLUSION: Violation of Art. 10;No separate issue under Art. 6;Non-pecuniary damage - financial award;Costs and expenses (domestic proceedings) - claim dismissed;Costs and expenses partial award - Convention proceedings
TEXT: 5. The applicant was born in 1975 and currently lives in Babušnica. On 25 April 2005 he was formally certified as unemployed by the respondent State's authorities.
6. The applicant was the President of the Babušnica branch of the Demo-Christian Party of Serbia (Demohrišćanska stranka Srbije) and a member of the Central Board (Glavni odbor) of the same political party.
7. In August of 2002, during an election campaign, an article written by the applicant, entitled “A Despotic Mayor” (Nasilnički predsednik), appeared in issue no. 1, page 10, of a newsletter called Narodne lužnicke novine. In the relevant part, this piece read as follows:
“The citizens of the Municipality of Babušnica have not had a Mayor for quite some time now because the former Mayor [P.J.] has been expelled from JUL [a political party] and has thus lost his mandate by virtue of law ... Despite the official Opinion of the Ministry of Justice and Local Self-Government that he cannot continue being the Mayor in accordance with the Local Government Act ... [P.J.] ... considers it no sin to stay on ... [in this capacity] ... because he is ... indispensable for ... [the Municipality's] ... future development and prosperity ...
Why is [P.J.] pushing so hard to remain as the fictitious Mayor of Babušnica, committing at the same time, as he is, legal infractions amounting to crimes ... Perhaps he needs the position of Mayor to defend his personal integrity which has been seriously threatened by the criminal complaints filed against him, indicating that he had abused his authority as the Director of a State-owned company called Lisca in order to acquire enormous material gain? ... [P.J.] ... well knows that ... [as a former Mayor] ... his position as the Director of ... Lisca, where he is suspected of having committed certain criminal offences, would also be seriously jeopardised. He understands that ... [as an ordinary citizen] ... he would no longer ... [carry any weight] ... with the local [police chiefs and others] ...
Therefore, ... in his 'JUL euphoria', in line with the slogan “money talks” [para vrti gde burgija neće] and for his own existential needs, [P.J.] has continued with his near-insane spending of the money belonging to the citizens of the Municipality [sumanuto troši novac građana Opštine] on ... sponsorships ... [and] ... gala luncheons ... not understanding that his time is up and that his place is in the political dustbin ...”
8. In response to the publication of this article, on 12 September 2002, the Mayor filed a private criminal action (privatna krivična tužba) against the applicant with the Municipal Court in Babušnica (“the Municipal Court”).
9. On 11 June 2003 the Municipal Court found the applicant guilty of criminal defamation (kleveta) and ordered him to pay a fine in the amount of 15,000 dinars (“CSD”) plus CSD 11,000 for costs, which was at that time equivalent to approximately 400 euros (“EUR”) in all. The fine, however, was suspended and was not to be enforced unless the applicant committed another crime within a year of the judgment becoming final.
10. In the operative part of this decision (u izreci presude) only the following text was found to amount to defamation, namely to be “untrue” and, as such, “harmful to the honour and reputation” of the Mayor (Mr P.J.):
“Therefore, ... in his 'JUL euphoria', in line with the slogan “money talks” [para vrti gde burgija neće] and for his own existential needs, [P.J.] has continued with his near-insane spending of the money belonging to the citizens of the Municipality [sumanuto troši novac građana Opštine] on ... sponsorships ... [and] ... gala luncheons ...”
11. In its reasoning, the court explained that the applicant had failed to prove the veracity of this statement or even that he had reasonable grounds to believe that it was true. Further, the use of the term “near-insane” (sumanuto) was deemed to imply the Mayor's mental illness. The court therefore held that the applicant's intent was not to inform the public but to belittle the Mayor. In conclusion, it noted that politicians have a special duty to communicate with each other and the public appropriately and stressed that a suspended sentence should “educationally influence the defendant so as to avoid committing ... similar crimes” in the future.
12. Concerning the remainder of the impugned article, however, the court ruled that it was not written with intent to disparage the Mayor and was thus a legitimate way of expressing one's political opinion, in accordance with Article 96 of the Criminal Code (see paragraph 27 below).
13. On 8 October 2004 the judgment of the Municipal Court was upheld on appeal by the District Court in Pirot (“the District Court”) and thereby became final. The District Court fully accepted the reasons given by the Municipal Court and added that, below the article at issue, there had been only the applicant's name and surname and no indication that it had been written by the President of the local branch of the Demo-Christian Party of Serbia.
14. On 8 February 2005 the Mayor filed a separate civil complaint for damages with the Municipal Court, alleging that he had suffered mental anguish as a result of the publication of the impugned article. The Mayor sought CSD 500,000 in compensation, which was at that time equivalent to approximately EUR 6,252.
15. On 18 March 2005 the Municipal Court ruled partly in favour of the Mayor and ordered the applicant to pay CSD 120,000 in compensation, together with default interest plus costs in the amount of CSD 39,000, which was at that time equivalent to approximately EUR 1,970 in all.
16. The applicant's argument that the Mayor, being an elected politician, had to accept criticism and display a greater degree of tolerance was dismissed, as was his reference to the relevant international standards (see paragraph 39 below). In so doing, the Municipal Court found: (i) that the applicant had already been convicted of defamation within the criminal proceedings; (ii) that the Mayor could be criticised but that such criticism had to be “constructive, argued and within the limits of decency”; (iii) that, in any event, criticism could not consist of untrue statements which “deeply offend” one's “honour, reputation and dignity”; and (iv) that the honour, reputation and dignity of the Mayor, as an elected official and Director of a very successful local company, “had more significance than ... [the honour, reputation and dignity] ... of an ordinary citizen”.
17. On 24 May 2005 the District Court rejected the applicant's appeal, except for the part concerning costs, which were reduced to CSD 24,200, at that time equivalent to approximately EUR 295. This court, further, noted that the applicant had relied on, inter alia, Article 10 of the Convention but then went on to repeat, in substance, the detailed reasoning of the Municipal Court, as described above. Finally, the District Court, added, as in the earlier criminal proceedings, that below the published article there had only been the applicant's name and surname and no indication that it had been written by the President of the local branch of the Demo-Christian Party of Serbia. In any event, the statements made by the applicant were untrue and his intent was to belittle the Mayor, rather than to inform the public or draw the attention of the authorities “to their obligations”. The compensation as well as the costs awarded would appear not to have been paid as yet.
18. Page 1 contained a statement by Mr M.L., at that time a candidate in the presidential elections supported by a number of allied political parties, including the Democratic Party and the Demo-Christian Party of Serbia. Page 1 also contained Mr M.L.'s short biography.
19. Page 2 contained an appeal by the Democratic Party. It invited the public to support the newsletter which was needed, inter alia, in order to counter the Mayor's self-promotion in other locally printed media.
20. Page 5 contained an open letter, addressed to the Babušnica police department, signed by the applicant in his capacity as the President of the municipal branch of the Demo-Christian Party of Serbia.
21. Page 6 contained photographs and campaign slogans in support of Mr M.L.
22. Most other pages also carried articles concerning various political issues and the newsletter itself was handed out free of charge.
23. On 23 May 2002 the Ministry of Justice and Local Self-Government informed the Municipality of Babušnica that, in accordance with the relevant legislation, a councillor's mandate in the Municipal Assembly (odbornički mandat) must be terminated if the councillor in question is expelled from the political party on whose list he was elected. The Ministry explained that the same provisions should also be applied in the Mayor's case.
24. On 16 September 2002, in a letter sent to the applicant, the Ministry of Internal Affairs stated that, as of 1996, they had been looking into a number of complaints indicating that the Mayor had abused his authority as the Director of a State-owned company called Lisca. Additional investigation had also been undertaken in response to the criminal complaints filed by the tax authorities (finansijska policija) and reports concerning each of these have since been forwarded to the competent public prosecutors.
25. On 18 December 2002 the Office of the Public Prosecutor of the Republic of Serbia sent a letter to the applicant's political party. Therein it stated that in 2000, 2001 and 2002 several criminal complaints, all of which concerned Lisca, were filed against the Mayor. Those lodged with the District Public Prosecutor's Office in Pirot were still being investigated by the local police while the Municipal Public Prosecutor's Office in Babušnica, having initially dismissed the criminal complaint, had also subsequently decided to reopen the investigation into the Mayor's conduct.
26. Finally, on 19 June 2003 the Ministry of Internal Affairs informed the applicant's political party, that all of their findings concerning Lisca had been sent to the District Public Prosecutor's Office in Pirot.
27. The relevant provisions of this Code read as follows:
“Whoever, in relation to another, asserts or disseminates a falsehood which can damage his [or her] honour or reputation shall be fined or punished by imprisonment not exceeding six months.
If an act described in [the above] paragraph has been committed through the press, via radio or television ... [or otherwise through the mass media] ... or at a public meeting, the perpetrator shall be punished by imprisonment not exceeding one year. ...
If the defendant proves his [or her] claims to be true or if he [or she] proves that there were reasonable grounds to believe in the veracity of the claims which he [or she] had made or disseminated, he [or she] shall not be punished for defamation, but may be punished for the offence of insult ... or the offence of reproaching someone for the commission of a criminal offence...
Whoever, in relation to another, falsely claims or disseminates claims to the effect that he [or she] has committed a crime prosecuted ex officio, shall be punished for defamation even if there were reasonable grounds to believe in their veracity, unless such claims have been made or disseminated pursuant to Article 96 § 2 of this Code. The veracity of the claim that someone has committed a crime prosecuted ex officio may be proved only by means of a final court judgment and through other means of proof only if criminal prosecution or a trial are not possible or are legally precluded.”
“... [No one] ... shall ... be punished for insulting another person if he [or she] so does in a scientific, literary or artistic work, a serious critique, in the performance of his [or her] official duties, his [or her] journalistic profession, as part of a political or other social activity or in defence of a right or of a justified interest, if from the manner of his [or her] expression or other circumstances it transpires that there was no [underlying] intent to disparage.
In situations referred to above, ... [the defendant] ... shall not be punished for claiming or disseminating claims that another person has committed a criminal offence prosecuted ex officio, even though there is no final judgment to that effect ... , if he [or she] proves that there were reasonable grounds to believe in the veracity of ... [those claims] ...”
28. The relevant provisions of this Code read as follows:
“If the fine cannot be collected, the court shall order a day of imprisonment for each 200 dinars of the fine, providing that the overall term of imprisonment may not exceed six months.
If the convicted person pays only a part of the fine [imposed], the rest shall accordingly be converted into imprisonment, and if the convicted person [subsequently] pays the remainder of the fine, his [or her] imprisonment shall be discontinued.”
“... [T]he purpose of a suspended sentence ... is that punishment ... for socially less dangerous acts not be imposed ... when ... it can be expected that an admonition with a threat of punishment (suspended sentence) ... will ... [be sufficient to deter the offender] ... from committing any [other] criminal acts.”
“In handing down a suspended sentence, the court shall impose punishment on the person who had committed a criminal act and at the same time order that this punishment shall not be enforced if the convicted person does not commit another criminal act for a ... [specified] ... period of time which cannot be less than one nor more than five years in all (period of suspension) ...”
“In deciding whether to impose a suspended sentence, the court shall take into account the purpose of [this] sentence, the personality of the offender, his [or her] conduct prior to and following the commission of the criminal act, the degree of his [or her] criminal liability, as well as other circumstances under which the act has been committed.”
“The court shall revoke the suspended sentence if, during the period of suspension, the convicted person commits one or more criminal acts for which he or she is sentenced to imprisonment for a term of or exceeding two years.
If, during the period of suspension, the convicted person commits one or more criminal acts and is sentenced to imprisonment for a term of less than two years or to a fine, the court shall, upon consideration of all the circumstances ... including the similarity of the crimes committed ... decide whether to revoke the suspended sentence ...”
“A suspended sentence shall be expunged one year following the date of expiry of the period of suspension, if the convicted person does not commit another criminal act during this time.”
“When a conviction has been expunged, information about the conviction may ... be given ... [only] ... to the courts, the public prosecution service and the police in connection with an ongoing criminal case against the person ... [concerned] ... ”
29. Article 3 § 1 enshrines the defendant's right to be presumed innocent until proved guilty by a final decision of a court of law.
30. Article 419 provides, inter alia, that the competent public prosecutor “may” (može) file a Request for the Protection of Legality (zahtev za zaštitu zakonitosti) against a “final judicial decision”, on behalf of or against the defendant, if the relevant substantive and/or procedural “law has been breached” (ako je povređen zakon).
31. On the basis of the above request, under Articles 420, 425 and 426, the Supreme Court may uphold the conviction at issue or reverse it. It may also quash the impugned judgment, in its entirety or partly, and order a re-trial before the lower courts. If the Supreme Court, however, finds that there has been a violation of the law in favour of the defendant, it shall only be authorised to declare so but shall leave the final judgment standing.
32. Under Articles 199 and 200, inter alia, anyone who has suffered mental anguish as a consequence of a breach of his or her honour or reputation may, depending on its duration and intensity, sue for financial compensation before the civil courts and, in addition, request other forms of redress “which may be capable” of affording adequate non-pecuniary satisfaction.
33. Articles 35-40 provided general rules as regards the means of establishing the value of a plaintiff's civil claim.
34. Article 382 § 2 provided, specifically, that an appeal on points of law (revizija) was “not admissible” in pecuniary disputes where the “value of the part of the final judgment being contested” did “not exceed 300,000 ... dinars ...”.
35. In accordance with Articles 383 and 394-397, inter alia, the Supreme Court could have, had it accepted an appeal on points of law lodged by one of the parties concerned, overturned the impugned judgment or quashed it and ordered a re-trial before the lower courts.
36. Article 13 provides that a civil court is bound by a final decision of a criminal court in respect of whether a crime was committed, as well as concerning the criminal liability of the person convicted.
37. This Act entered into force on 23 February 2005, thereby repealing the Civil Procedure Act 1977. Article 491 § 4 of the Civil Procedure Act 2004, however, states that an appeal on points of law (revizija) shall be considered in accordance with the relevant provisions of the Civil Procedure Act 1977, if the proceedings at issue were instituted prior to 23 February 2005.
38. The relevant provisions concerning the Court of Serbia and Montenegro and the status of the State Union of Serbia and Montenegro are set out in the Matijašević v. Serbia judgment (no. 23037/04, §§ 12, 13 and 16-25, 19 September 2006).
39. The relevant provisions of this Declaration read as follows:
“Political figures have decided to appeal to the confidence of the public and accepted to subject themselves to public political debate and are therefore subject to close public scrutiny and potentially robust and strong public criticism through the media over the way in which they have carried out or carry out their functions.”
“Political figures should not enjoy greater protection of their reputation and other rights than other individuals, and thus more severe sanctions should not be pronounced under domestic law against the media where the latter criticise political figures. This principle also applies to public officials; derogations should only be permissible where they are strictly necessary to enable public officials to exercise their functions in a proper manner.”
40. Paragraph 22 of these Observations reads as follows:
“The Committee is concerned at the high number of proceedings initiated against journalists for media-related offences, in particular as a result of complaints filed by political personalities who feel that they have been subject to defamation because of their functions.
The State party, in its application of the law on criminal defamation, should take into consideration on the one hand the principle that the limits for acceptable criticism for public figures are wider than for private individuals, and on the other hand the provisions ... which do not allow restrictions to freedom of expression for political purposes.”
VIOLATED_ARTICLES: 10


ITEMID: 001-87882
LANGUAGEISOCODE: ENG
RESPONDENT: CZE
BRANCH: CHAMBER
DATE: 2008
DOCNAME: CASE OF DRUŽSTEVNÍ ZÁLOŽNA PRIA AND OTHERS v. THE CZECH REPUBLIC
IMPORTANCE: 3
CONCLUSION: Violation of P1-1;Violation of Art. 6-1;Reminder inadmissible;Damage - reserved
JUDGES: Isabelle Berro-Lefèvre;Karel Jungwiert;Mark Villiger;Peer Lorenzen;Rait Maruste;Renate Jaeger;Zdravka Kalaydjieva
TEXT: 6. On 11 January 2000 the Office for the Supervision of Credit Unions (Úřad pro dohled nad družstevními záložnami) (“the OSCU”) placed the applicant credit union in receivership (nucená správa) for a period of six months under section 28(3)(c) of the Act, on the ground that it had contravened the legislation in question, having engaged in activities outside its remit without authorisation. A receiver (nucený správce) was appointed to replace the applicant credit union’s decision-making bodies. The OSCU was acting under section 27(1) of the Act read in conjunction with section 26(2) of the Banks Act (zákon o bankách).
7. Referring to an audit of the applicant credit union’s activities, the OSCU noted that the applicant credit union had on 6 May 1999 concluded three contracts with S7, a limited liability company, under the terms of which the latter had assigned to the applicant credit union receivables due to it from two debtor companies, amounting to CZK 126,235,132 (EUR 3,366,582) in total, for an agreed price of CZK 14,431,000 (EUR 384,862). The OSCU ruled that the applicant credit union had thereby purchased the receivables of a third party by effectively covering the latter’s debt. It qualified the transaction as a loan to a third party. Since section 3 of the Act prohibited credit unions from providing loans to non-members, the OSCU concluded that the applicant credit union had acted in flagrant breach of the Act.
8. The OSCU further noted that the auditors had discovered that the applicant credit union had entered into a contract on 2 and 5 August 1999 to grant a loan of CZK 22,000,000 (EUR 586,721) to a limited liability company, MLM Brno, and had signed two contracts on 25 June 1999 with OPES, a joint stock company, for the purchase of securities (cenné papíry) at a total price of CZK 41,200,056 (EUR 1,098,770). The OSCU ruled that these transactions were also illegal, as section 1(6) read in conjunction with section 3 of the Act did not allow credit unions to acquire securities other than public bonds (dluhopisy), municipal bonds (komunální obligace) or mortgage bonds (hypoteční zástavní listy).
9. The receivership became effective on 12 January 2000, when the applicant credit union was notified of the OSCU’s decision.
10. On 26 March 2000 the applicant credit union lodged a constitutional appeal (ústavní stížnost) with the Constitutional Court (Ústavní soud) against the receivership order and applied at the same time for an order striking down certain provisions of the Act. It relied, inter alia, on section 75(2)(a) of the Constitutional Court Act, which enables the Constitutional Court to hear a constitutional appeal even if domestic remedies have not been exhausted, if it substantially affects the appellant’s personal interests.
11. On 7 April 2000, following an administrative appeal by the applicant credit union, the Ministry of Finance upheld the receivership order of 11 January 2000.
12. On the same date a petition to adjudge the applicant credit union bankrupt (konkusní řízení) was filed with the Brno Regional Court (krajský soud). During 2001 a large number of creditors joined the proceedings.
13. On an unspecified date the applicant credit union applied for judicial review (správní žaloba) of the imposition of receivership under Article 247 et seq. of the Code of Civil Procedure, asserting that the statutory conditions for such a step on the part of the OSCU had not been met.
14. On 1 May 2000 Act no. 100/2000 entered into force, extensively amending the Act (hereinafter “the amended Act”). The powers of supervisory boards of credit unions were confined to the right to appeal decisions adopted by the OSCU.
15. On 21 June 2000 the OSCU granted the receiver permission to suspend withdrawals from deposit accounts held with the applicant credit union in view of its precarious financial situation. According to its findings, the sum owed by the applicant credit union on outstanding term deposits amounted to at least CZK 83,000,000 (EUR 2,213,539), while the cash available in its current accounts was only CZK 21,500,000 (EUR 573,386).
16. On 12 July 2000 the OSCU renewed the receivership order under the amended Act as the previously identified deficiencies remained. It referred, inter alia, to the first receivership order and to three decisions by which it had prohibited or restricted the applicant credit union’s activities, including withdrawals from deposit accounts (decision nos. 322/2000/II of 20 January 2000, 1217/2000/II of 9 March 2000 and 2407/2000/II of 25 April 2000).
17. On 9 November 2000 the Ministry of Finance upheld that decision.
18. On 12 December 2000 the Constitutional Court dismissed the applicant credit union’s constitutional appeal for non-exhaustion of ordinary remedies under section 75(1) of the Constitutional Court Act. It reiterated that the principle requiring the exhaustion of ordinary remedies could be derogated from in exceptional circumstances if the effective protection of constitutionally guaranteed fundamental rights and freedoms was endangered. It found that, contrary to section 72(1) of the Constitutional Court Act, which provides, inter alia, that “a constitutional appeal may be introduced by any natural person who claims to be the victim of a breach of the fundamental rights or freedoms recognised in a constitutional law or an international treaty by a valid decision taken in proceedings to which he was a party”, the applicant credit union had lodged its constitutional appeal before the receivership order had become effective.
19. On 15 January 2001 the applicant credit union, represented by the president of its supervisory board, applied for judicial review, challenging the Ministry of Finance’s decision of 9 November 2000.
20. On 10 and 25 January, 2 February, 4 April and 3 May 2001 respectively (decisions nos. 114/2001, 369/2001, 838/2001, 1645/2001 and 2134/2001), the OSCU allowed the receiver to suspend withdrawals from deposit accounts held with the applicant credit union.
21. According to the Government, on 6 June 2001 the OSCU granted the receiver permission to file on its own a petition with a court to adjudge the credit union bankrupt, which he did on 18 June 2001.
22. On 9 July 2001 the Regional Court appointed an interim trustee (předběžný správce).
23. On 12 July 2001 the OSCU again placed the applicant credit union in receivership. It based its decision on the applicant credit union’s report of 3 July 2001 which included a statement of its outstanding debts and available funds. It was noted in the report that the applicant credit union was insolvent, as it had only CZK 59,257,000 (EUR 1,580,333) at its disposal, which was insufficient to enable it to honour its outstanding debts of at least CZK 218,000,000 (EUR 5,813,872). Moreover, because of its lack of liquid assets the applicant credit union had omitted to pay an annual contribution to the OSCU that had fallen due on 30 April 2001. The OSCU further noted that the applicant credit union’s financial statements as of 31 December 2000 disclosed negative equity to the tune of CZK 222,949,000 (EUR 5,945,858).
24. On 4 October 2001 the Ministry of Finance upheld the third receivership order.
25. On 21 March 2002 the applicant credit union, represented by the president of its supervisory board, filed an application for judicial review of the Ministry’s decision.
26. On 17 April 2002 the applicant credit union filed a claim for damages with the Ministry of Finance under the State Liability Act (Act no. 82/1998).
27. On 19 April 2002 the OSCU withdrew the applicant credit union’s licence (povolení působit jako družstevní a úvěrní záložna). It found irregularities in the way the applicant credit union had conducted its affairs, as attested by its inability to meet its liabilities, and considered that no improvement could be expected. It observed that by 15 March 2002, the applicant credit union had recorded overdue liabilities totalling at least CZK 200,000,000 (EUR 5,333,828), while having at its disposal only CZK 56,006,000 (EUR 1,493,632). The cumulative value of the ratios reflecting the balance between assets and liabilities was just under 28%, whereas section 7(1) of Ministry of Finance Decree no. 387/2001 on the liquidity and solvency requirements for credit unions required a cumulative value from 31 December 2001 onwards of at least 45%.
28. The OSCU found that as of 15 March 2002 the applicant credit union had disclosed a negative capital value of CZK 243,705,000 (EUR 6,499,403), whereas under section 10(1) of Ministry of Finance Decree no. 386/2001 on the capital adequacy requirements for credit unions, cooperative savings associations were obliged to have achieved by 31 December 2001, and to maintain thereafter, a capital adequacy of at least 0.1%. The OSCU further stated that on 17 April 2002 the applicant credit union had submitted a report on its financial management results which showed that the irregularities in the applicant credit union’s affairs, including its failure to comply with the capital adequacy, liquidity and solvency requirements, were so serious that there was no reasonable prospect of their being remedied.
29. By a letter of 22 May 2002 the Ministry of Finance dismissed the applicant credit union’s claim for damages. On 28 May 2002 the applicant credit union, through its legal representative empowered by the presidents of the board of directors and the supervisory board, brought an action for damages against the Ministry of Finance.
30. In a judgment of 21 June 2002 the Prague High Court (Vrchní soud) dismissed the applicant credit union’s first request for judicial review as being unsubstantiated, finding that the applicant credit union had been placed in receivership in accordance with the national legislation then in force and that the OSCU had not decided outside its discretionary power (volné uvážení). The court held, inter alia, that:
“Placing a credit union in receivership is one of the measures which the [OSCU] may apply in addition to or instead of other sanctions specified in section 28(2) of [the Act]. ...
Admittedly, the [OSCU] chose the strictest measure. However, [it] did not breach the [Act] and did not proceed contrary to the [Act’s] aims, which are the only grounds on which [the OSCU’s] decision may be quashed (Article 245(2) of the Code of Civil Procedure)... If the [OSCU] found ... that the amount of available assets reserved for direct payments to members of [the applicant credit union] within three months had decreased to 6.77% of deposits (the Act lays down a minimum of 15%) ... as a consequence of ... a number of ... financial transactions entered into by the [applicant credit union], and if the [OSCU] discovered other breaches of the [Act] and the applicant credit union’s articles of association, then there is no ground for this court to find that the OSCU, when imposing the receivership, decided outside its discretionary powers.”
31. On 3 July 2002 the OSCU appointed its liquidator (likvidátor). On 31 October 2002, following an appeal by the applicant credit union, the Ministry of Finance upheld the appointment.
32. In the meantime, on 12 September 2002, the applicant credit union had lodged a constitutional appeal against the High Court’s judgment, alleging a violation of Article 11 § 4 and Articles 36 and 38 of the Charter of Fundamental Rights and Freedoms (Listina základních práv a svobod), as well as Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1.
33. On 5 December 2002 the High Court upheld the Regional Court’s decision of 9 July 2001 concerning the appointment of the interim receiver.
34. On 30 January 2003 the Constitutional Court rejected the constitutional appeal of 12 September 2002 as manifestly unfounded.
35. On 10 April 2003 two shareholders of the applicant credit union joined the proceedings concerning its action for damages.
36. On 23 April 2003 the Prague 1 District Court (obvodní soud) dismissed the applicant credit union’s action for damages on the ground that it had been lodged by an unauthorised person. It stated, inter alia, that members of the board of directors and of the supervisory board were not entitled to bring the action on behalf of the applicant credit union. At the same time, the court severed the two shareholders’ claims, ruling that they should be heard separately.
37. On 20 May 2003 the applicant credit union appealed. However, on 5 September 2003 the District Court discontinued the proceedings, stating in particular:
“Section 28(d)(1) of [the Act] grants the supervisory board of a credit union the right to challenge the conduct of receivership, but an action for damages sustained as a result of the receivership cannot be equated with the right of the supervisory board to appeal against decisions of [the OSCU] under section 28(d)(1) of [the Act].”
38. On 9 February 2004 the Supreme Administrative Court (Nejvyšší správní soud) rejected the second application for judicial review, lodged by the applicant credit union on 15 January 2001 against the Ministry of Finance’s decision of 9 November 2000 upholding the second receivership order. The court, referring to section 28(d) of the amended Act, found that the application had been lodged by an unauthorised person, as only the receiver had authority to lodge such an appeal.
39. On 23 April 2004 the applicant credit union lodged a constitutional appeal against the decision of the Supreme Administrative Court.
40. On 26 April 2004 the Prague Municipal Court (městský soud) upheld the District Court’s decision of 5 September 2003.
41. On 28 April 2004 the Regional Court, on a petition filed by 217 creditors, shareholders of the applicant credit union, declared the applicant credit union to be insolvent. A trustee (správce konkurzní podstaty) was appointed, accordingly.
42. On 13 October 2004 a creditors’ meeting (schůze věřitelů) was held, at which the creditors’ committee (věřitelský výbor) was elected. On 8 December 2004, 7 November 2005 and 18 January 2006 respectively, three review meetings took place.
43. In the meantime, on 7 March 2005, the Constitutional Court had dismissed the applicant credit union’s latest constitutional appeal.
44. On 8 March 2006 the Regional Court received a list of the applicant credit union’s assets. The realisation of the assets included in the list is, according to the Government, under way. In connection with this insolvency dispute, the Regional Court has registered 35 judicial disputes.
45. It would appear that the third application for judicial review filed by the applicant credit union is still pending before the Supreme Court.
According to the Commercial Register as it stands, the applicant credit union is still the subject of insolvency proceedings.
46. Article 11 § 4 provides that expropriation or other forcible limitation of ownership rights is possible only in the public interest and on the basis of law, and against compensation.
47. Under Article 36 § 1 anyone may assert his or her rights under a set procedure before an independent and impartial tribunal, and in specified cases before another organ. Under paragraph 2, anybody who claims that his or her rights have been violated by a decision of a public administrative organ may apply to a court for a review of the legality of that decision, unless the law provides otherwise. However, the review of decisions affecting the fundamental rights and freedoms listed in the Charter may not be excluded from the jurisdiction of the courts. Paragraph 3 provides that everybody is entitled to compensation for damage caused to him or her by an unlawful decision of a court, another organ of the State or the public authorities, or by maladministration. Under paragraph 4, the conditions and detailed provisions in this respect are determined by statute.
48. Under Article 38 § 1 nobody may be denied access to his lawful judge. The jurisdiction of the court and the competence of the judge are determined by statute. Paragraph 2 provides that everybody is entitled to have his or her case considered in public without unnecessary delay and in his or her presence, and to comment on all submitted evidence. The public may be excluded only in cases specified by law.
49. Section 1 provided that a credit union is a legal entity governed by the provisions of the Commercial Code on cooperatives unless the Act provides otherwise.
50. Section 3 stipulated, inter alia, that credit unions may provide loans to and receive deposits from their members, other credit unions and banks.
51. Section 24(1) and (2) provided that the head of the OSCU is appointed and removed from office by the Minister of Finance and that he is empowered, subject to the Minister’s approval, to decide on the status, remit and policy of the OSCU.
52. Under section 27(1) the OSCU must have exercised its powers with due diligence and efficiently while respecting the interests of credit union shareholders.
53. In accordance with section 28(2) the OSCU may have imposed sanctions for any breach of the Act or other statute by a credit union or its organs or members.
54. Under section 28(3)(c) the OSCU was empowered, inter alia, to impose receivership for a period of six months instead of or together with the sanctions provided for in the preceding subsection.
55. In accordance with section 28(3) the OSCU may have issued repeated receivership orders.
56. Under section 28(6) receivership was governed by the Banks Act, which applies mutatis mutandis.
57. Section 28(10) provided that a decision on receivership may have been appealed before the Ministry of Finance within 15 days of its service.
58. Section 28(11) stipulated that proceedings before the OSCU are governed by the Code of Administrative Procedure unless the Act provides otherwise.
59. The newly inserted section 28(d)(1) provides that the powers of all the organs of a credit union, with the exception of its supervisory board, are suspended on service of a receivership order and are assumed by the appointed receiver. The supervisory board is entitled to appeal the OSCU’s decisions.
60. Section 28c(1) provides that a receiver is appointed, removed and employed by the OSCU, which decides on his or her remuneration.
61. Section 26(2) provided that a bank may be placed in receivership by the Czech National Bank without any prior notice or invitation to remedy deficiencies identified in its business.
62. Section 26(3) stipulated, inter alia, that business transactions to the detriment of a bank’s clients or transactions which constitute a risk to the stability and security of the banking sector of the financial market; infringements of the Banks Act or other statutes or secondary legislation adopted by the Czech National Bank; and a situation where the total volume of reserves and provisions set aside by the bank is not sufficient to cover the risks arising from the volume of classified assets recorded by it, are considered to be deficiencies within the meaning of the Act.
63. Under section 26(4) proceedings on receivership were governed by the administrative procedure legislation unless the Banks Act provides otherwise.
64. According to section 30 the Czech National Bank may have imposed receivership where deficiencies in a bank’s activities endangered the stability of the banking system and the shareholders had not taken the necessary steps to eliminate them.
65. Article 245(2) provided that a court, while reviewing a decision adopted by an administrative authority within its discretionary power granted by a statute, may have examined only whether such a decision had been taken in conformity with rules laid down by a statute.
66. Article 247 et seq. entitled individuals or legal entities claiming that their rights had been curtailed by a decision of an administrative authority to apply for judicial review to determine the legality of that decision.
67. Under Article 250i § 1 the court, when reviewing the legality of the decision, must have relied on the facts as they stood at the time of delivery of the impugned decision; no evidence was taken.
68. The Code entered into force on 1 January 2003, replacing Part V of the Code of Civil Procedure.
69. Article 71 § 1(d) and (e) provides that a plaintiff is obliged to substantiate the relevant factual and legal grounds on which the action is based and to identify evidence in its support.
70. Under Article 75 § 2 the administrative court bases its decision on the facts and the law as they stood at the time of the impugned ruling. It may take evidence in this respect under Article 77 § 1.
71. Under Article 59 § 1 an appellate authority has full jurisdiction to examine a contested decision. If need be, it may complete the proceedings in question and remedy any shortcomings identified.
72. Article 244 § 6 provides that the supervisory board of a cooperative is entitled to request from the board of directors any information concerning the financial situation of the cooperative. The board of directors is obliged to inform the supervisory board without delay of any fact which might have serious consequences for the financial situation of the cooperative or the status of the cooperative or its shareholders.
I. State Control Act
Section 17 provides that an audit made by a controlling authority may be contested by objections which have to be raised within five days from the service of the audit on a controlled person.
Under Section 18 an employee of a controlling authority is empowered to decide on raised objections. A controlled person may appeal that decision before the head of that authority within 15 days from that decision. The decision on the appeal is irrevocable.
According to Section 26 the Code of Administrative Procedure is not applicable on proceedings under Section 18.
J. Judgment of the Constitutional Court’s Plenary of 27 June 2001 (no. 276/2001)
73. Articles 244 – 250s [Part V] of the Code of Civil Procedure, in so far as they governed procedure of administrative courts, were repealed as of 31 December 2002 by this ruling. In its reasoning the Constitutional Court found these provisions contrary to Article 6 of the Convention as they, inter alia, limited jurisdiction of administrative courts to review administrative acts to issues of legality. It found that that the legislation in question empowered administrative courts to quash merely illegal decisions, not those embodying errors in fact. In other words, as the Constitutional Court put it, deliberation of administrative authorities could not be replaced, according to those provisions, by that of independent courts.
VIOLATED_ARTICLES: 6
VIOLATED_PARAGRAPHS: 6-1


ITEMID: 001-91956
LANGUAGEISOCODE: ENG
RESPONDENT: MKD
BRANCH: ADMISSIBILITY
DATE: 2009
DOCNAME: MIRCESKI v. "THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA"
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Isabelle Berro-Lefèvre;Karel Jungwiert;Mark Villiger;Mirjana Lazarova Trajkovska;Rait Maruste;Renate Jaeger;Zdravka Kalaydjieva
TEXT: The applicant, Mr Orde Mirceski, is a Macedonian national who was born in 1970 and lives in Skopje. He was represented before the Court by Mr Z. Gavriloski, a lawyer practising in Skopje.
On 5 February 2004 the applicant applied to the Skopje Court of First Instance seeking dissolution of his marriage to Ms N. due to marital problems.
On 29 September 2004 Ms N. gave birth to a daughter. That fact was brought to the applicant's attention on 1 October 2004. At the meeting of 1 November 2004 scheduled before the Social Care Centre for reconciliation of the spouses, the applicant denied that the child was his. He claimed to have been separated from his wife since she left the house (7 January 2004) and not to have been intimate for some months before that date. He confirmed that statement at the next meeting dated 15 November 2004. In the meantime, the applicant was recorded in the birth register as the child's father. In his submissions of 24 February 2005, the applicant reiterated his doubts that he was the child's biological father. In support, he stated that he had not been intimate with Ms N. for over 300 days before the child was born.
On 29 March 2005 the Skopje Court of First Instance accepted the applicant's action and declared the marriage dissolved. It also ordered the applicant to pay 25% of his monthly salary as child maintenance. The court addressed the applicant's denial of being the child's biological father and confirmed that he had not still brought an action contesting the paternity, but that he had applied to the Supreme Court requesting a new time-limit to do so. It concluded accordingly that money paid in child maintenance might be recovered by the applicant if he successfully challenged his paternity in separate proceedings, if any.
On 7 September 2005 the Skopje Court of Appeal upheld that decision.
On 6 December 2005 the public prosecutor informed the applicant that there were no grounds for lodging with the Supreme Court a request for the protection of legality.
On 4 February 2005 the applicant requested, under section 68 of the Family Act (see “Relevant domestic law”, below), the Supreme Court to determine a new time-limit to disavow the paternity of the child. He reiterated his earlier observations made in the divorce proceedings and added that on 12 and 17 January 2005 he had undergone two sperm tests, which indicated that it was of poor quality. He further stated that that evidence had not existed within the time-limit set forth in section 67 § 2 of the Family Act (see “Relevant domestic law”, below). That request was communicated to Ms N. for comments.
On 23 March 2005 the Supreme Court dismissed the applicant's request as having been based on the sperm tests only. It stated that no diagnosis had been provided that would attest the applicant's infertility. It therefore concluded that there was no indication that the applicant was not the child's father.
On 27 May 2005 the applicant made a fresh request to the Supreme Court. He referred to the reconciliation proceedings before the Social Care Centre in which he had contested his paternity. In addition to the earlier sperm tests, the applicant provided three fresh sperm tests made between 22 March and 22 April 2005 and two analyses. The diagnosis indicated in the medical reports of 25 and 26 April 2005 issued by two different medical institutions was “asthenozoospermia” and “sterilitas”. In vitro fertilisation was suggested to the applicant. Ms N. was invited to present her arguments in reply.
On 14 September 2005 the Supreme Court dismissed the applicant's request, finding that it was based on the same evidence as his earlier request. It ruled that the medical reports and diagnosis did not sufficiently support the applicant's request. The applicant stated that he was served with this decision on 20 October 2005.
According to section 53 of the Family Act (“the Act”, consolidated version of 12 November 2004) a husband is regarded as the father of a child born to his wife during wedlock or within 300 days of a divorce.
Under section 67 §§ 1 and 2 of the Act, the husband can contest the paternity of a child born to his wife during wedlock or within 300 days of a divorce. In this connection, an action can be submitted within three months of the day when the husband learned of the child's birth.
Section 68 § 1 of the Act provides that the husband can request the Supreme Court to specify a new time-limit for disclaiming of the paternity if new facts or evidence are discovered after the expiration of the time-limit specified in section 67 § 2 of the Act which cast doubts that he is the father of a child born to his wife.


ITEMID: 001-61651
LANGUAGEISOCODE: ENG
RESPONDENT: AUT
BRANCH: CHAMBER
DATE: 2004
DOCNAME: CASE OF LOFFLER v. AUSTRIA (No. 2)
IMPORTANCE: 4
CONCLUSION: Violation of Art. 6-1 with regard to the length of the proceedings;Inadmissible under Art. 6-1 with regard to the fairness of the proceedings;Non-pecuniary damage - financial award;Costs and expenses partial award - Convention proceedings
JUDGES: Georg Ress;Mark Villiger
TEXT: 4. The applicant was born in 1944 and lives in Linz.
5. On 10 April 1986 the Linz Regional Court instituted preliminary investigations on the suspicion of murder against the applicant and remanded him in custody. On 31 March 1987 a Court of Assizes (Geschworenengericht) at the Linz Regional Court (Landesgericht) convicted the applicant of murder and sentenced him to eighteen years' imprisonment. On 15 September 1987 the Supreme Court (Oberster Gerichtshof) dismissed the applicant's plea of nullity and appeal against sentence.
6. On 6 September 1990 the applicant requested the re-opening of the criminal proceedings against him. On an unspecified date the Linz Regional Court dismissed this request. On 15 June 1992 the Linz Court of Appeal (Oberlandesgericht) granted the applicant's appeal and reopened the criminal proceedings against him. On 23 June 1992 the applicant was released. New preliminary investigations were instituted against him.
7. On 10 May 1993 the applicant instituted official liability proceedings (Amtshaftung) against the Republic of Austria. He claimed compensation for damages caused by his conviction, which had been annulled, and his detention which lasted approximately six years and two months. He further filed a request for legal aid.
8. On 6 June 1993 the case was transferred to the Steyr Regional Court. The Republic of Austria subsequently filed an appeal against the decision ordering the delegation. On 12 July 1993 the Republic of Austria withdrew their appeal.
9. On 19 August 1993 the Republic of Austria filed a statement of defence.
10. On 6 September 1993 the Presiding Judge (Vorsitzender) of the Steyr Regional Court dismissed the applicant's request for legal aid.
11. Upon the applicant's appeal, the Linz Court of Appeal quashed this decision.
12. On 12 October 1993 the Steyr Regional Court granted the applicant's request for legal aid.
13. In the meantime, on 27 September 1993, the Regional Court had rejected submissions filed by the applicant. The applicant's appeal was to no avail.
14. A hearing scheduled for 13 December 1993 had to be cancelled due to illness of the Presiding Judge.
15. On 15 March 1994 the Steyr Regional Court held a hearing and suspended the official liability proceedings, as the criminal proceedings against the applicant were still pending. The applicant appealed against this decision. On 10 August 1994 the Court of Appeal dismissed this appeal.
16. On 29 August 1996 the Assize Court acquitted the applicant of the charge of murder, but dismissed his application for compensation for detention (Haftentschädigung) under the Criminal Proceedings Compensation Act (Strafrechtliches Entschädigungsgesetz).
17. On 6 November 1996 the Court of Appeal allowed the applicant's appeal and stated that the applicant was entitled to a compensation under Section 2 § 1(b) and 1(c) of the Criminal Proceedings Compensation Act.
18. On 4 September 1996 the Steyr Regional Court decided to continue the official liability proceedings.
19. In the meantime, on 11 March 1996 the applicant instituted further official liability proceedings. On 28 June 1996 the Linz Court of Appeal transferred the case to the Steyr Regional Court. On 3 October 1996 the Supreme Court dismissed the Republic of Austria's appeal.
20. On 7 December 1996 the Steyr Regional Court decided to join the official liability proceedings.
21. On 11 March 1997 the Steyr Regional Court found that the competent presiding judge was biased and allocated the case to another judge.
22. On 25 June, 8 October 1997 and 15 October 1998 the Steyr Regional Civil Court held hearings. At the hearing of 25 June 1997 the applicant submitted that his claim was also based on the Criminal Proceedings Compensation Act.
23. On 14 September 1998 the applicant extended his claim.
24. On 11 March 1999 the Steyr Regional Court partly allowed the applicant's claim and granted him compensation of ATS 42,912. The applicant and the Republic of Austria appealed against this decision.
25. On 9 July 1999 the Supreme Court delegated the case to the Vienna Court of Appeal.
26. On 18 October 1999 the Vienna Court of Appeal allowed the applicant's appeal for procedural deficiencies and remitted the case to the court of first instance.
27. On 18 November 1999 the Supreme Court transferred the case to the Vienna Regional Court.
28. On 28 February 2000 the applicant requested the Supreme Court to transfer the case back to the Steyr Regional Court. On 10 March 2000 the Supreme Court dismissed the applicant's request.
29. On 24 May 2000 the Vienna Regional Court held a hearing and decided to appoint an expert in order to assess the applicant's loss of earnings. It further ordered the applicant to submit the relevant documents concerning his loss of earnings. The applicant submitted the documents on 15 June 2000.
30. On 1 October 2000 the Vienna Regional Court appointed an expert to assess the applicant's loss of earnings and ordered her to submit the expert opinion within three months.
31. On 22 February 2001 the expert requested the Regional Court for an extension of the time-limit. The Regional Court granted the request on the same day.
32. On 25 May 2001 the applicant filed a request under Section 91 of the Court Act (Gerichtsorganisationsgesetz) for a time-limit to be fixed for the delivery of the expert opinion and a hearing to be held.
33. On 29 May 2001 the expert submitted her opinion.
34. On 25 June 2001 the Vienna Court of Appeal dismissed the applicant's request under Section 91 of the Court Act.
35. On 11 December 2001 the Regional Court held a hearing. Upon the applicant's request it ordered the expert to supplement the expert opinion within three months.
36. On 20 March 2002 the applicant filed again a request under Section 91 of the Court Act for a time-limit to be fixed for the delivery of the expert opinion.
37. On 29 March and on 4 April 2002 the Regional Court requested the expert to submit her opinion. On 10 April 2002 the expert filed her opinion.
38. On 5 June 2002 the Vienna Court of Appeal dismissed the applicant's application under Section 91 of the Court Act.
39. Upon the applicant's request the Regional Court, on 10 July 2002, appointed another expert to assess the applicant's loss of earnings within three months. On 10 December 2002 the new expert submitted her opinion.
40. On 10 March 2003 the Regional Court held a hearing.
41. On 29 July 2003 the Regional Court gave a partial decision (Teilurteil) and granted the applicant compensation in the amount of approximately 236 000 € as well as a monthly annuity. On an unspecified date it decided upon the applicant's further claims.
42. Appeal proceedings before the Vienna Court of Appeal are still pending.
VIOLATED_ARTICLES: 6
VIOLATED_PARAGRAPHS: 6-1


ITEMID: 001-84607
LANGUAGEISOCODE: ENG
RESPONDENT: HUN
BRANCH: ADMISSIBILITY
DATE: 2008
DOCNAME: PINCZE v. HUNGARY
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: András Baka;Antonella Mularoni;Françoise Tulkens;Ireneu Cabral Barreto;Vladimiro Zagrebelsky
TEXT: The applicant, Ms Mária Pincze, is a Hungarian national who was born in 1958 and lives in Budapest. The Hungarian Government (“the Government”) are represented by Mr L. Höltzl, Agent, Ministry of Justice and Law Enforcement.
The facts of the case, as submitted by the parties, may be summarised as follows.
On 29 August 1999 the applicant signed a contract for the purchase of the flat of Cs.Z. and paid the first instalment of the price. The applicant was aware of the fact that a third individual, S.T., enjoyed the beneficial ownership of the flat and that Cs.Z. had obtained ownership by virtue of a life annuity contracted with S.T. Since S.T. was mentally disabled and permanently placed in a mental hospital, he did not actually live in the flat.
In order to finance the transaction, the applicant sold her own flat and requested a loan from her employer.
In October 1999 the applicant requested the Budapest IX District Guardianship Authority to approve the transaction.
In December 1999 the Guardianship Authority refused her request and informed her that the Budapest IX District Government had sued Cs.Z. before the Pest Central District Court because of the breach of the life annuity contract. On 21 December 1999 the applicant, being of the view that it was no longer possible to obtain ownership of the flat, signed a lease with S.T. and moved into the flat with her two children. She received the Guardianship Authority’s approval for the lease on 17 February 2000.
(On 24 May 2002 the District Court established that S.T. had died on 4 February 2000, and that the Hungarian State had inherited ownership of the flat.)
In the meantime, following S.T.’s death, the applicant appealed against the Guardianship Authority’s decision of 17 February 2000, requesting the Authority to approve her original purchase of the flat instead of the lease. The Budapest Administrative Office, acting as a second administrative level, terminated the proceedings on 6 March 2000 in view of the death of S.T. The applicant did not seek judicial review of this decision.
Subsequently, the applicant, considering that the death of S.T. had removed any obstacles to the purchase of the flat, paid the second instalment of the purchase price to Cs.Z.
On 11 May 2000 Cs.Z. forced the applicant to leave the flat, since she had been unable to pay the final instalment of the purchase price. The applicant did not initiate any proceedings in order to challenge Cs.Z.’s action. Since then she has been renting another flat, being unable to buy a new one.
On 20 October 2000 the applicant brought an action in compensation before the Pest Central District Court against the individuals, lawyers and State officials who had been a party to, or otherwise involved in, the abovementioned proceedings. The District Court transferred the case to the competent Budapest Regional Court.
On 19 June 2001 the Regional Court held a hearing.
On 28 October 2002 the Regional Court partly found for the applicant and awarded her 1,862,009 Hungarian forints (approximately 7,385 euros) plus accrued interest in compensation. The Regional Court relied on documentary evidence and the testimony of the parties.
On appeal, on 17 September 2003 the Budapest Appellate Court upheld the first-instance decision in substance. This decision was served on the applicant in January 2004.
On 10 February 2004 the applicant requested the execution of the final decision. On 19 July 2004 the Budapest Regional Court ordered the enforcement. On 27 May 2005 the bailiff informed the applicant of the suspension of the proceedings since the debtor did not possess any executable property. However, on 5 October 2005 the sum awarded was paid to the applicant.
“(1) Those who have been deprived of their possessions without justified reason or are being disturbed therein (illicit power), are entitled to the protection of possession.”
“(1) Those who have been deprived of their possessions or are being disturbed in their enjoyment thereof may request the restoration of the original state of possession, or the termination of the disturbance, from a Notary within one year.”


ITEMID: 001-78470
LANGUAGEISOCODE: ENG
RESPONDENT: BGR
BRANCH: ADMISSIBILITY
DATE: 2006
DOCNAME: PORYAZOV v. BULGARIA
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Peer Lorenzen
TEXT: The applicant, Mr Blagoi Ivanov Poryazov, is a Bulgarian national who was born in 1955 and lives in Plovdiv. He was represented before the Court by Mr M. Ekimdjiev, a lawyer practising in Plovdiv.
The respondent Government were represented by their Agent, Ms M. Karadjova, of the Ministry of Justice.
The facts of the case, as submitted by the parties, may be summarised as follows.
On an unspecified date, the applicant was registered as a sole trader with the trade name “Rita-Blagoi Poryazov” and obtained a value-added tax (VAT) registration also on an unspecified date.
On 1 June 1992 the applicant’s wife was registered as a sole trader with the Plovdiv Regional Court with the trade name “Rita-29-Margarita Poryazova” (the “sole trader”).
On 18 May 1993 the applicant was authorised to represent the sole trader under a power of attorney, which granted him, inter alia, the following powers:
“...to represent [the sole trader] before all bodies, organisations, firms, companies, traders, juridical and private persons in connection with all legal relationships of my [sole trader], as well as to negotiate, send and receive offers, draft and sign contracts on my behalf, whereby for the purposes of the present power of attorney he has the power to sign on my behalf [whatever] is necessary...”
On 16 March 1994 the sole trader obtained a VAT registration.
On 13 January 1998 the applicant filed the sole trader’s VAT return for the year 1997 with the tax authorities. At the time of making the filing he was verbally informed that the VAT return was incomplete, that following an amendment of the VAT Act the sole trader’s VAT registration was subject to termination and that he had to make additional filings in order to complete that procedure. The applicant did not make an additional filing or a correction of the tax return.
On an unspecified date he was invited by the tax authorities to present the additional documents and to make the necessary filings in order to terminate the VAT registration of the sole trader.
The applicant made those filings on 12 May 1998 and the VAT registration of the sole trader was terminated on the same day. At the same time, the tax authorities made a preliminary finding of a tax filing violation in respect of the applicant’s failure to comply with the VAT filing requirements in respect of the sole trader.
On the basis of the preliminary finding of 12 May 1998, the Plovdiv Regional Tax Office issued a penal decree of 4 November 1998 against the applicant in the capacity of “manager of the sole trader”. It found that, in respect of the sole trader, he had failed (1) to inform the tax authorities that as a result of its activities and turnover during 1997 the sole trader no longer met the prerequisites for having a VAT registration, (2) to make an accurate VAT filing for the tax period ending on 31 December 1997 and (3) to return the VAT registration certificate of the sole trader. A fine of 5,000,000 old Bulgarian levs [BGL: approximately 2,564 euros (EUR)] was imposed on the applicant. He was served with a copy of the penal decree on 24 March 1999.
The applicant, using the title of “manager of the sole trader”, appealed against the penal decree on 25 March 1999. He claimed that the sole trader’s business activities had been in decline for some time and that they had ceased after 30 April 1997. Nevertheless, the applicant noted that he had continued to file, on behalf of the sole trader, the required monthly VAT statements with the tax authorities for the remaining months of that year. Considering that he had made adequate attempts to comply with the sole trader’s VAT filing requirements and arguing that no losses had resulted for the State budget from his alleged filing infraction, the applicant claimed that the fine imposed was excessive. He also considered that it was imposed in reference to the wrong provision of the VAT Act, namely that it referred to paragraph 18 of the VAT Act, while it should have referred to Article 16.
A hearing was conducted before the Plovdiv District Court on 9 June 1999. The applicant was represented by counsel who stated that he maintained the grounds of the appeal as filed on 25 March 1999. In disputing the grounds and merits of imposing the fine on the applicant his counsel referred to him as the “manager of the sole trader”.
In a judgment of the same day, 9 June 1999, the Plovdiv District Court dismissed the applicant’s appeal. It found the actions of the applicant, as “manager of the sole trader”, to have violated the provisions of the VAT Act and the regulations for its implementations by having failed to file all the required documents and statements in order to terminate the VAT registration, that the Tax Office had correctly classified the offence of the applicant. It also considered that the size of the fine was properly set, insofar as the relevant provisions did not provide for an adjustment of the amount.
The applicant appealed against the judgment on 29 June 1999, referring to himself as the “manager” of the sole trader. He argued that he was wrongly fined BGL 5,000,000 when for the offence in question the applicable fine was allegedly BGL 250,000 (approximately EUR 128). He also claimed that the Plovdiv District Court had allegedly been confused between the provisions of the VAT Act and the regulations for its interpretation, that it had wrongly examined the grounds for his appeal and had therefore come to the wrong conclusions.
At a hearing on 7 December 1999, at which a prosecutor took part, the applicant reiterated his previous arguments and claimed that the VAT Act envisaged that the registered entities should be fined but not their representatives. The applicant did not claim nor argue that he was not a legal representative of the sole trader.
By final judgment of 23 December 1999 the Plovdiv Regional Court dismissed the applicant’s appeal and upheld the lower court’s judgment. It found that the applicant, in his capacity of “manager of the sole trader”, had not complied with the tax filings requirements under the VAT Act and had not presented all the required documents for the termination of the VAT registration of the trader. It also found that the fine was correctly determined because its size was in reference to an offence committed in respect of the tax period ending on 31 December 1997.
By amendment of 27 June 1997 the prerequisites for maintaining a registration under the VAT Act were amended. Accordingly, special provisions were introduced for those persons and entities which no longer met the new requirements (§§ 16-18 of the Final Provisions of the Act) detailing the procedure, deadlines and filing requirements for terminating their registrations and for returning their VAT registration certificates. For non-compliance with these requirements, Paragraph 19 of the Final Provisions of the Act envisaged a fixed fine of BGL 5,000,000 (approximately EUR 2,564) for the offenders.
The imposing of fines under the VAT Act by way of penal decree and the appeals against them followed the procedure under the Administrative Offences and Penalties Act (section 52).
The VAT Act (1994) was abolished with the entry into force, as of 1 January 1999, of the new VAT Act (1999).
Section 132 (1), as in force at the end of 1999, envisaged a sanction applied directly on the sole trader or entity for failing to register or de-register under the Act or to inform the tax authorities of any changes affecting such registration. The sanction was in the range from 250 to 2,500 new Bulgarian levs (approximately from EUR 128 to EUR 1,282).
Section 24 (2) of the Act provides that for offences perpetrated in the course of commercial activities the persons liable to be penalised under the Act are the employees or officers who perpetrated them or the managers who ordered them or allowed the offences to be committed.


ITEMID: 001-108352
LANGUAGEISOCODE: ENG
RESPONDENT: LVA
BRANCH: ADMISSIBILITY
DATE: 2011
DOCNAME: SULCS v. LATVIA AND OTHER APPLICATIONS
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Corneliu Bîrsan;Egbert Myjer;Ineta Ziemele;Ján Šikuta;Josep Casadevall;Kristina Pardalos;Nona Tsotsoria
TEXT: 1. The applicants are Latvian nationals, except the applicant Aleksandrs Ļebedevs (application no. 52525/10) who is a non-citizen of the Republic of Latvia. Their names, dates of birth, places of residence and the dates of introduction of applications are listed in the appendix to this decision.
2. According to the amendments to the Law on Maternity and Sickness Insurance (“Par maternitātes un slimības apdrošināšanu”), from 1 January 2008 the parental benefit (vecāku pabalsts) was allocated to socially insured persons (to one of the parents or a guardian) who either did not gain income because s/he was on parental leave or, on the contrary, did not use the parental leave and continued working. The benefit was paid until the child reached the age of one.
3. The applicants’ children were born in the period between December 2008 and June 2009, except three applicants whose children were born shortly afterwards (see the appended list).
4. By virtue of a decision of the State Social Insurance Agency (“VSAA”) the applicants, whose children were born before June 2009, were entitled to a parental benefit in the amount of 70% of the average salary calculated for the purposes of social insurance deductions. Until June 2009 the applicants received the parental benefit in full amount and continued working.
5. On 16 June 2009 the Parliament of Latvia introduced changes to the Law on Maternity and Sickness Insurance which came into force on 1 July 2009 and deleted, inter alia, the provision according to which the parental benefit could be allocated to a parent or a guardian who was not on a parental leave but continued working. Section 5 of the Law on Payment of State Pensions and Benefits during the Period from 2009 to 2012 (thereinafter – Law on Payments) (Par valsts pensiju un valsts pabalstu izmaksu laika periodā no. 2009. gada līdz 2012. gadam), which was adopted on the same day, provided for a transitional period of the aforementioned amendments. In particular, it provided that starting from 1 July 2009 to 2 May 2010 the parents (guardians) who gained income during the maternity period should receive 50% of the parental benefit allocated to them.
6. Each applicant submitted a constitutional complaint seeking the Constitutional Court to find that provision 5 of the Law on Payments run contrary to Articles 1, 91 and 110 of the Constitution. They argued that by virtue of the decision of the VSAA they were entitled to a parental benefit, and that, therefore, the legislative changes infringed their legitimate expectations to receive the parental benefit in full amount until the child reached the age of one. The applicants whose children were born after June 2009 argued that they had the same legitimate expectations arising from the law in force at the time when they planned their family.
7. The Constitutional Court on 15 March 2010 found that the contested provision was constitutional. Firstly, it concluded that the employed and unemployed parents were not in a comparable situation, therefore differentiated benefit rates did not lead to unequal treatment. Secondly, the Constitutional Court recognised that even if the parents had had legitimate expectation to receive the parental benefit in full amount, the contested measure in the particular economic situation in Latvia had a legitimate aim and it did strike a fair balance between the general interests and the applicants’ rights:
“9.7 ... [The amendments to the social insurance benefits in force as from 1 January 2008] caused a situation that families could choose to attribute parental benefit to the parent who received higher remuneration before the birth of a child. For instance, in a family where one of the parents was unemployed before the birth of a child, whilst the other parent was employed, the benefit was allocated to the one who was employed and received a wage ... rather than the one who was not employed and was on a parental leave. However, in cases when both parents were employed before the birth of the child, the family asked to allocate the parental benefit to the one who received a higher salary, even thought de fact it was the other parent who was on the parental leave.... .
Such application of the parental benefit was in conflict with the conclusions made in the judgment no. 2006-07-01 by the Constitutional Court regarding the effective social insurance system of the State because in the result of this a group of persons was formed who were not socially insured during the childcare period. For instance, if parental benefit was allocated to an employed parent who had a higher wage, social insurance payments were made from the wage of this particular person. However, the other parent who was on childcare leave and did not receive parental benefit, was not socially insured since he or she received neither benefit, nor wage. Therefore persons could not receive any other social insurance services because they have not made social insurance payments for almost a year.
Moreover, the newly established type of insurance, i.e. parental insurance did not provide for an additional social insurance payment rate, therefore it deteriorated the situation in the State social insurance budget. One of the reasons of such a huge deficit in the social insurance budget was inconsiderate definition of parenting benefit as a type of social insurance. In 2008, approximately 66.7 million lats were spent for the disbursement of this benefit (when introducing this benefit, it was planned to use about 26 million lats), and already 43 million lats were used for this purpose in the first half of 2009 before the contested provision was adopted.
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20. The contested provision was adopted during economic recession in Latvia .... In the second quarter of 2009, Latvia underwent the most rapid reduction of economic activities in the entire European Union. ... During this period, the financial deficit of the state consolidated budget reached 449.9 million lats or approximately 3.5 percent from the Gross Domestic Product, and it was estimated that the deficit may reach 1.3 milliard lats or approximately 9.5 percent from the Gross Domestic Product by the end of 2009. As a result, both the functioning of the State and economic growth in the foreseeable future would be endangered...
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24. If amendment of legal regulatory framework serves for the benefit of the society, then restriction of the legal trust of persons is permitted. The contested norm has been adopted with the purpose to balance revenues and expenses of the State special budget of social insurance. Economic recession denied the possibility for the State to guarantee such amount of social security that was established during the period of economic growth of the State. If no measures were taken to solve the situation, this would have influenced the possibility of the State to ensure the right of persons to social security and to guarantee sustainability of social security system. This would not comply with the principle of a socially responsible State.
Consequently, restriction of the right of employed parents to receive parental benefit at full extent during the transitional period has been established with a view to ensure substantial interests of the society. In the result of this, a fair balance between restriction of legal security of a person and the right of the society to a sustainable State social insurance system and balanced State budget was ensured”.
8. Finally, the court recognised that the reduced amount of the benefit to employed parents in the transitional period was a proportional measure in that the employed parents still continued to receive both the salary and 50% of the reduced parental benefit. Consequently, their family income increased in comparison to the unemployed parents who received only the benefit.
9. The dissenting opinion to the aforementioned judgment of the Constitutional Court stated:
“It has been concluded in the Judgment that a transitional period of 306 days has been observed, which guarantees protection of legitimate expectations, whilst the amount of benefit to be disbursed has only been reduced (see: Para 19 – 23 of the Judgment). I do not share this point of view. Even based on the strictest criteria for assessing legitimate expectations, the above mentioned transitional period could only be applied to those persons who have not been calculated and allocated the benefit before coming into force of the Contested Norm. It would be more appropriate for a socially responsible State not to change the amount of the benefit regarding all children who were incepted before coming into force of the Contested Norm.
However, the amount of benefit for persons, to whom it has already been granted, was reduced in half within the term of two weeks (the contested norm was adopted on 16 June 2009 and came into force on 1 July of the same year). In that short time, no one could change their life. For instance, those person who decided to take a child care leave because of the amendments to the legal regulatory framework, could not implement their intention because, pursuant to Section 156 (2) of the Labour Law, an employee has a duty to notify the employer in writing one month in advance of the beginning and the length of the parental leave or parts thereof”.
10. Pursuant to Article 91 of the Constitution (Satversme), all human beings in Latvia shall be equal before the law and the courts. Human rights shall be realised without discrimination of any kind.
11. Article 110 provides that the State shall protect and support marriage – a union between a man and a woman, the family, the rights of parents and rights of the child. The State shall provide special support to disabled children, children left without parental care or who have suffered from violence.
12. The law defines the state social benefit as a State monetary support, such as, for instance, child-care benefit, to individuals belonging to certain categories in situations when they bear additional expenditures or when those individuals do not gain income, and the compensation is not provided from State social insurance scheme. It is paid from the State budget.
13. Section 10 provided that parental benefits were allocated to socially insured persons (to one of the parent or a guardian) who either did not gain income because s/he was on parental leave or, did not use the parental leave and continued working. The benefit was paid until the child reached the age of one.
14. The travaux préparatoires to the Law on State Social Insurance, which introduced the aforementioned amendments of 1 January 2008 (see paragraph 12, above) highlighted certain threats to the sustainability of the proposed model (as cited by the Constitutional Court in the judgment of 15 March 2010):
“.... [With the amendment] it was planned to disburse parental benefit to employed persons without restrictions and at full extent, these persons also receiving labour incomes; however this does not comply with the essence of social insurance. Second, introduction of parental benefit would be ensured in the frameworks of the present social insurance payment rate; therefore this would negatively influence social insurance special budget in the long term. Consequently, according to the prognosis of the social insurance budget model, the reserve accumulated in the social insurance special budget would be used 10 years earlier, i.e. already in 2032 after introduction of parental benefit and disbursing it from the state social insurance budget in the frameworks of the actual social insurance payment rate”.
15. Paragraph 1 of section 5 provides that an employed or a self-employed person who was granted a parental benefit with respect to a child born until 2 May 2010 shall receive the parental benefit in the amount of 50% of the amount of the benefit granted.
16. The travaux préparatoires to the aforementioned law provided that it shall ensure functioning of the fundamental principle of state social insurance. Namely, the State social insurance substitutes certain income in a situation when a person loses earning from labour. If a person takes care for a child aged up to one year and at the same time continues working, s/he does not lose the income from labour. Moreover, persons who receive both a wage and a parental benefit enjoy better circumstances when compared to those parents who are on a childcare leave and receive parental benefit only.
17. The ILO Maternity Protection Convention (revised) of 15 June 2000 (ratified by Latvia on 14 April 2006 and came into force on 9 February 2009) with respect to maternity benefits provides:
Article 6
1. Cash benefits shall be provided, in accordance with national laws and regulations, or in any other manner consistent with national practice, to women who are absent from work on leave referred to in Articles 4 or 5.
2. Cash benefits shall be at a level which ensures that the woman can maintain herself and her child in proper conditions of health and with a suitable standard of living.
3. Where, under national law or practice, cash benefits paid with respect to leave referred to in Article 4 are based on previous earnings, the amount of such benefits shall not be less than two-thirds of the woman’s previous earnings or of such of those earnings as are taken into account for the purpose of computing benefits.
4. Where, under national law or practice, other methods are used to determine the cash benefits paid with respect to leave referred to in Article 4, the amount of such benefits shall be comparable to the amount resulting on average from the application of the preceding paragraph.
5. Each Member shall ensure that the conditions to qualify for cash benefits can be satisfied by a large majority of the women to whom this Convention applies.
6. Where a woman does not meet the conditions to qualify for cash benefits under national laws and regulations or in any other manner consistent with national practice, she shall be entitled to adequate benefits out of social assistance funds, subject to the means test required for such assistance.
7. Medical benefits shall be provided for the woman and her child in accordance with national laws and regulations or in any other manner consistent with national practice. Medical benefits shall include prenatal, childbirth and postnatal care, as well as hospitalization care when necessary.
8. In order to protect the situation of women in the labour market, benefits in respect of the leave referred to in Articles 4 and 5 shall be provided through compulsory social insurance or public funds, or in a manner determined by national law and practice...