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yassine-thlija

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try-echr

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3648007_14032018

Announcer

UNK

La Cour!

[('15.26', '15.98')]

['fr']

['La Cour!']

3648007_14032018

JudgeP

Guido Raimondi

Please be seated. I declare open the public hearing on the merits in the case of Lekic versus Slovenia. The application was lodged with the court on 4 August 2007 on the Article 34 of the convention by a Slovenian national, Mr. Ljubomir Lekic. The application was allocated to the fourth section of the court pursuant to Rule 52, paragraph 1 of the rules of the court. On 14 February 2017, a chamber constituted within that section delivered a judgment in the case. On 12 May 2017, the applicant requested that the case be referred to the Grand Chamber in accordance with Article 43 of the convention. And the panel of the Grand Chamber accepted the request on 18 September 2017. On 15 December 2017, the president of the Grand Chamber granted the civil initiatives against forcefully erased companies and the Malta Institute of Management leave under Rule 44, paragraph 3 of the rules of the court to submit written comments at third parties. The government are represented by their agents, Mrs. Bojana Jovin Hrastnik and Mrs. Nataša Pintar Gosenca. The applicant is represented by Mr. Andrea Saccucci, Mrs. Giulia Borgna and Mr. Matteo Zamboni, counsel, assisted by Mr. Davor Lekić, advisor. The applicant is also present. I welcome the representatives in the name of the court. I would also like to welcome a group of visiting judges and prosecutors from the European Judicial Training Network and a group of visiting judges from the East African Court of Justice and ECOWAS Community Court of Justice. I would explain that in addition to interpreting in the two official languages of the court, English and French, interpreting into Albanian has been authorized for the benefit of a delegation from Albania. That interpreting is not arranged by the court, and no transcription of the oral translation will be included in the official record of the proceedings. Having consulted the agents of the government and the representatives of the applicant, I have determined the order of addresses as follows. Mr. Saccucci, Mrs. Borgna, and Mr. Zamboni for the applicant will speak first, and then Mrs. Jovin Hrastnik for the government. I call Mr. Saccucci, please.

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['Please be seated.', 'I declare open the public hearing on the merits in the case of Lekic versus Slovenia.', 'The application was lodged with the court on 4 August 2007 on the Article 34 of the convention by a Slovenian national, Mr. Ljubomir Lekic.', 'The application was allocated to the fourth section of the court pursuant to Rule 52, paragraph 1 of the rules of the court.', 'On 14 February 2017, a chamber constituted within that section delivered a judgment in the case.', 'On 12 May 2017, the applicant requested that the case be referred to the Grand Chamber in accordance with Article 43 of the convention.', 'And the panel of the Grand Chamber accepted the request on 18 September 2017.', 'On 15 December 2017, the president of the Grand Chamber granted the civil initiatives against forcefully erased companies and the Malta Institute of Management leave under Rule 44, paragraph 3 of the rules of the court to submit written comments at third parties.', 'The government are represented by their agents, Mrs. Bojana Jovin Hrastnik and Mrs. Nataša Pintar Gosenca.', 'The applicant is represented by Mr. Andrea Saccucci, Mrs. Giulia Borgna and Mr. Matteo Zamboni, counsel, assisted by Mr. Davor Lekić, advisor.', 'The applicant is also present.', 'I welcome the representatives in the name of the court.', 'I would also like to welcome a group of visiting judges and prosecutors from the European Judicial Training Network and a group of visiting judges from the East African Court of Justice and ECOWAS Community Court of Justice.', 'I would explain that in addition to interpreting in the two official languages of the court, English and French, interpreting into Albanian has been authorized for the benefit of a delegation from Albania.', 'That interpreting is not arranged by the court, and no transcription of the oral translation will be included in the official record of the proceedings.', 'Having consulted the agents of the government and the representatives of the applicant, I have determined the order of addresses as follows.', 'Mr. Saccucci, Mrs. Borgna, and Mr. Zamboni for the applicant will speak first, and then Mrs. Jovin Hrastnik for the government.', 'I call Mr. Saccucci, please.']

3648007_14032018

Applicant

AP3

Mr. President, distinguished judges of the court, the main issues raised by the present case transcends the personal interests of the applicant. They originate in a domestic legislation that has no precedent in the European legal landscape and that give rise to important questions of general interest not only for Slovenia, but also for other states' parties to the convention. Following the enactment in 1999 of the Financial Operations of Companies Act, the so-called FOCA, over 24,000 companies incorporated under Slovenian law was struck off ex officio from the court's register of companies. And the shareholders were automatically exposed to personal and unlimited liability for any outstanding debt of the struck off company. Without any prior notice, the personal assets were seized by creditors, their business ruined, the families destroyed. The present case is not just about piercing the corporate veil in exceptional circumstances. It is about a massive and outright erasure of companies literally blowing to pieces the life of tens of thousands of individual shareholders irrespective of their role in the companies and of any established abuse of corporate veil. The government will argue that these measure was absolutely necessary in order to tackle the problem of inactive companies and to ensure an adequate protection to the company's creditors. However, this problem is no different in any other European state. And yet, none of them has ever resorted to such a draconian measure so profoundly offending the life and property of around 2.5 of the national population. The truth is, as the government conceded, that it would have been particularly burdensome for the judicial system to open bankruptcy proceedings against thousands of allegedly inactive companies. Their massive erasure was then a much easier arrangement. And the need to protect the company's creditor became just a convenient camouflage. The facts of the case as established in the chamber's judgment are not in dispute between the parties. I will briefly recall them for the court's assistance. In 1992, Mr. Lakic acquired a share of 11.11% in the company LE, which at that time was in full operation. In 1993, the Railway of Slovenia initiated enforcement proceedings against the company for collecting an alleged pre-existing claim relating to transportation services. While the enforcement proceedings were pending, the applicant and the other shareholders applied for voluntary bankruptcy in order to wind up the company. But their application was rejected. Therefore, they decided to wait for the opening of ex officio bankruptcy proceedings, which as accepted by the government, should have been initiated by the District Court of Ljubljana on its own motion under the 1993 Companies Act, then in force. However, such proceedings were never opened. It was only in 2001, after the entry into force of the FOCA, that the District Court instituted on its own motion the new striking of proceedings against the company. At that time, the applicant did not hold any position in the company, as he had resigned as managing director nearly five years before. The striking of proceedings were conducted swiftly without the applicant and the other shareholders being aware of it. As a result, on 25 September 2001, the company, LE, ceased to exist as a legal entity. Meanwhile, on 22 November 2000, the District Court of Ljubljana granted the Railways of Slovenia's application for enforcement against the company. But after its striking off, the Railways of Slovenia sought to enforce its claims against the applicant and the other former shareholders in person, according to Article 27, Paragraph 4 of the FOCA. The applicant challenged this provision up to the Constitutional Court, alleging that it was unforeseeable and disproportionate. However, that was to no avail. And ultimately, he was forced to enter into an out-of-court settlement with the Railways of Slovenia. Those bare facts give rise to the injustice that Mr. Leckage brings to this court. When the fourth section looked at the matter, it did not have the benefit of the comparative law analysis, and it failed to consider four major factors which carry particular weight, both in terms of foreseeability and proportionality. First, the excessive burden imposed on the applicant as a minority shareholder. Second, the unprecedented character of the contested legislation. Third, the influence of the repeated changes of the legislative framework. Fourth, the massive and devastating effects of the measure on the Slovenian population. When pondered together against the public interest allegedly pursued, these four factors warrant a complete reversal of the findings made by the chamber. My colleagues will address the applicant's complaint in Article 6 and Article 1, Protocol 1, while I will briefly deal with these four factors. It is our first submission that the chamber failed to consider that the Foka regime of shareholders liability caused the applicant to bear the entire burden of the company's erasure to the advantage of its creditors. When Mr. Lekic acquired a share in the company in 1992, the Railway of Slovenia had already a claim against that company. The applicant had no influence in the making of such claim, and the creditor had no legitimate expectation to be entitled to collect their claims against company's individual shareholders. 18 years later, in 2011, the applicant was held personally liable for the outstanding debt of the company, and ultimately forced it to pay entirely out of his pocket. A shift of liability from the company to the applicant in person was the result of the swift implementation of the Chapter 3 of the Foka. The new legislation was therefore applied in a retroactive fashion to the applicant's detriment when the enforcement proceedings instituted by the Railway of Slovenia were still pending. We therefore submit that the applicant's convention rights have been breached because the new legislation has been applied with retroactive effect, and even in proceedings that were already pending, as this court already found in the case of Presto's Companhia Naviera versus Belgium. As my colleagues will explain in detail, the shareholders' personal and unlimited liability is the automatic effect of a pure legal fiction introduced by the Foka. And its implementation in the applicant's case is the result of a chain of presumptions which runs counter the convention requirements. Turning to my second point, it is to be noted that the draconian measuring question does not find an equivalent in any of the legal system of the other contracting states. This factor weighs strongly against the government attempt to justify the interference as being proportionate to the general interest pursuit. In Pockisch versus Latvia, this court stated that, and I quote, it has always been mindful of the separate legal personality of companies authorizing the piercing of corporate bail only in exceptional circumstances, end of quote. And since agrotexting and others, such principle has been consistently reiterated in numerous judgments to which we referred in our written submissions. The court's position is perfectly consonant with the well-established state's practice and international jurisprudence on the matter. As highlighted by most authoritative scholars, the firm distinction between the separate entity of the company and that of the shareholder is a universal principle of company law. As such, it has been recognized by the International Court of Justice in Barcelona Traction and more recently by the European Court of Justice in the preliminary ruling delivered in 2010 in the case C81-09. As pointed out by the advocate general of the ECJ, this principle reflects one of the common features of companies incorporated with limited liability in different member states. According to the advocate general, and I quote, the national legal orders prescribe a limitation of liability for companies which share capital. And although the formulations differ, the idea always is that the members are not liable vis-a-vis the company's creditors, end of quote. The comparative law analysis of the University of Maribor that we have submitted upon requests of the judge rapporteur points to the same conclusion. In no former Yugoslav Republic other than Slovenia, the striking off of inactive companies ever resulted in the automatic shifting of liability from the company to the shareholders. The same holds true for other European states, such as Austria, Germany, and Italy. This conclusion is reinforced by the comparative analysis submitted by the responding government with regard to Czech Republic, the Netherlands, Poland, Romania, Estonia, and Russia, and also by the third party brief of the Malta Institute of Management with regard to Malta. According to the well-established case law of this court, the so-called common ground factor plays a crucial role in the assessment of proportionality, which is relevant under both Article 6 and Article 1, Protocol 1. And the comparative law analysis provided by the parties clearly show that all legal systems of the Council of Europe member states do not allow personal and unlimited liability of shareholders, save in extreme cases where they have provably abused corporate vay. This leads me to my third point. Slovenia had been in line with this common standard ever since the 1993 Companies Act. Then change came abroad in 1999. And after that, the regulation of shareholders' liability was repeatedly amended by the Parliament and by the Constitutional Court. Ultimately, it was repealed in 2011, and the principle of the corporate veil was fully reinstated. In our written submissions, we have set out in detail the discriminatory effects of these subsequent changes of legislation and the great weight that these carries in the assessment of the proportionality issue. It is thus rather surprising to hear from the government that this chain of modifications of the legal framework had no influence on the applicant case. Mr. President, this is precisely our claim. As in Pine Valley, to quote but an example, the subsequent changes in the law did not avail the applicant, although they could have done so. For instance, the 2008 amendment excluding the personal liability of shareholder holding less than 25% share did not benefit the applicant, nor could it benefit from the 2011 reform that eventually cancelled the shareholder personal liability. This shows that the measure complained of does not satisfy the test of proportionality and cannot be deemed in accordance with the general interest. Turning to my last point, it must be underlined that the applicant's case is not an isolated incident. As mentioned earlier, his fate is shared by tens of thousands of former shareholders who have been held personally liable based on the same legal fiction introduced by the FOCA. The main argument on which the chamber relied in order to justify the interference, namely an alleged lack of due diligence of the liable shareholders, is then clearly contradicted by the actual reach of the measure in question. We are not saying that this lack of diligence has not been assessed in a fair manner. What we say is that he has not been assessed at all. It has not been assessed in the applicant's case. It has not been assessed in respect of the other thousands of shareholders concerned. After all, had such an assessment been carried out, the FOCA would have just missed its main objective, which, according to the government, was to relieve domestic court from the flawed bankruptcy proceedings that should have been undertaken under the Companies Act. Mr. President, there are faces behind numbers and there are families behind each shareholder. As noted in the amicus curia of the civil initiative, these families strive to get through while their basic income, being a salary or pension, is being seized by creditors of strong struck-off company. It is also on behalf of all the victims of the company's erasure that the applicant pleads for the Green Chamber to reverse the chamber's finding on the basis of a more careful and thorough assessment of the factors outlined above. Thank you very much, Mr. President.

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['Mr. President, distinguished judges of the court,', 'the main issues raised by the present case transcends the personal interests of the applicant.', "They originate in a domestic legislation that has no precedent in the European legal landscape and that give rise to important questions of general interest not only for Slovenia, but also for other states' parties to the convention.", "Following the enactment in 1999 of the Financial Operations of Companies Act, the so-called FOCA, over 24,000 companies incorporated under Slovenian law was struck off ex officio from the court's register of companies.", 'And the shareholders were automatically exposed to personal and unlimited liability for any outstanding debt of the struck off company.', 'Without any prior notice, the personal assets were seized by creditors, their business ruined, the families destroyed.', 'The present case is not just about piercing the corporate veil in exceptional circumstances.', 'It is about a massive and outright erasure of companies literally blowing to pieces the life of tens of thousands of individual shareholders irrespective of their role in the companies and of any established abuse of corporate veil.', "The government will argue that these measure was absolutely necessary in order to tackle the problem of inactive companies and to ensure an adequate protection to the company's creditors.", 'However, this problem is no different in any other European state.', 'And yet, none of them has ever resorted to such a draconian measure so profoundly offending the life and property of around 2.5', 'of the national population.', 'The truth is, as the government conceded, that it would have been particularly burdensome for the judicial system to open bankruptcy proceedings against thousands of allegedly inactive companies.', 'Their massive erasure was then a much easier arrangement.', "And the need to protect the company's creditor became just a convenient camouflage.", "The facts of the case as established in the chamber's judgment are not in dispute between the parties.", "I will briefly recall them for the court's assistance.", 'In 1992, Mr. Lakic acquired a share of 11.11%', 'in the company LE, which at that time was in full operation.', 'In 1993, the Railway of Slovenia initiated enforcement proceedings against the company for collecting an alleged pre-existing claim relating to transportation services.', 'While the enforcement proceedings were pending, the applicant and the other shareholders applied for voluntary bankruptcy in order to wind up the company.', 'But their application was rejected.', 'Therefore, they decided to wait for the opening of ex officio bankruptcy proceedings, which as accepted by the government, should have been initiated by the District Court of Ljubljana on its own motion under the 1993 Companies Act, then in force.', 'However, such proceedings were never opened.', 'It was only in 2001, after the entry into force of the FOCA, that the District Court instituted on its own motion the new striking of proceedings against the company.', 'At that time, the applicant did not hold any position in the company, as he had resigned as managing director nearly five years before.', 'The striking of proceedings were conducted swiftly without the applicant and the other shareholders being aware of it.', 'As a result, on 25 September 2001, the company, LE, ceased to exist as a legal entity.', "Meanwhile, on 22 November 2000, the District Court of Ljubljana granted the Railways of Slovenia's application for enforcement against the company.", 'But after its striking off, the Railways of Slovenia sought to enforce its claims against the applicant and the other former shareholders in person, according to Article 27, Paragraph 4 of the FOCA.', 'The applicant challenged this provision up to the Constitutional Court, alleging that it was unforeseeable and disproportionate.', 'However, that was to no avail.', 'And ultimately, he was forced to enter into an out-of-court settlement with the Railways of Slovenia.', 'Those bare facts give rise to the injustice that Mr. Leckage brings to this court.', 'When the fourth section looked at the matter, it did not have the benefit of the comparative law analysis, and it failed to consider four major factors which carry particular weight, both in terms of foreseeability and proportionality.', 'First, the excessive burden imposed on the applicant as a minority shareholder.', 'Second, the unprecedented character of the contested legislation.', 'Third, the influence of the repeated changes of the legislative framework.', 'Fourth, the massive and devastating effects of the measure on the Slovenian population.', 'When pondered together against the public interest allegedly pursued, these four factors warrant a complete reversal of the findings made by the chamber.', "My colleagues will address the applicant's complaint in Article 6 and Article 1, Protocol 1, while I will briefly deal with these four factors.", "It is our first submission that the chamber failed to consider that the Foka regime of shareholders liability caused the applicant to bear the entire burden of the company's erasure to the advantage of its creditors.", 'When Mr. Lekic acquired a share in the company in 1992,', 'the Railway of Slovenia had already a claim against that company.', "The applicant had no influence in the making of such claim, and the creditor had no legitimate expectation to be entitled to collect their claims against company's individual shareholders.", '18 years later, in 2011, the applicant was held personally liable for the outstanding debt of the company, and ultimately forced it to pay entirely out of his pocket.', 'A shift of liability from the company to the applicant in person was the result of the swift implementation of the Chapter 3 of the Foka.', "The new legislation was therefore applied in a retroactive fashion to the applicant's detriment when the enforcement proceedings instituted by the Railway of Slovenia were still pending.", "We therefore submit that the applicant's convention rights have been breached because the new legislation has been applied with retroactive effect, and even in proceedings that were already pending, as this court already found in the case of Presto's Companhia Naviera versus Belgium.", "As my colleagues will explain in detail, the shareholders' personal and unlimited liability is the automatic effect of a pure legal fiction introduced by the Foka.", "And its implementation in the applicant's case is the result of a chain of presumptions which runs counter the convention requirements.", 'Turning to my second point, it is to be noted that the draconian measuring question does not find an equivalent in any of the legal system of the other contracting states.', 'This factor weighs strongly against the government attempt to justify the interference as being proportionate to the general interest pursuit.', 'In Pockisch versus Latvia, this court stated that, and I quote, it has always been mindful of the separate legal personality of companies authorizing the piercing of corporate bail only in exceptional circumstances, end of quote.', 'And since agrotexting and others, such principle has been consistently reiterated in numerous judgments to which we referred in our written submissions.', "The court's position is perfectly consonant with the well-established state's practice and international jurisprudence on the matter.", 'As highlighted by most authoritative scholars, the firm distinction between the separate entity of the company and that of the shareholder is a universal principle of company law.', 'As such, it has been recognized by the International Court of Justice in Barcelona Traction and more recently by the European Court of Justice in the preliminary ruling delivered in 2010 in the case C81-09.', 'As pointed out by the advocate general of the ECJ, this principle reflects one of the common features of companies incorporated with limited liability in different member states.', 'According to the advocate general, and I quote, the national legal orders prescribe a limitation of liability for companies which share capital.', "And although the formulations differ, the idea always is that the members are not liable vis-a-vis the company's creditors, end of quote.", 'The comparative law analysis of the University of Maribor that we have submitted upon requests of the judge rapporteur points to the same conclusion.', 'In no former Yugoslav Republic other than Slovenia, the striking off of inactive companies ever resulted in the automatic shifting of liability from the company to the shareholders.', 'The same holds true for other European states, such as Austria, Germany, and Italy.', 'This conclusion is reinforced by the comparative analysis submitted by the responding government with regard to Czech Republic, the Netherlands, Poland, Romania, Estonia, and Russia, and also by the third party brief of the Malta Institute of Management with regard to Malta.', 'According to the well-established case law of this court, the so-called common ground factor plays a crucial role in the assessment of proportionality, which is relevant under both Article 6 and Article 1, Protocol 1.', 'And the comparative law analysis provided by the parties clearly show that all legal systems of the Council of Europe member states do not allow personal and unlimited liability of shareholders, save in extreme cases where they have provably abused corporate vay.', 'This leads me to my third point.', 'Slovenia had been in line with this common standard ever since the 1993 Companies Act.', 'Then change came abroad in 1999.', "And after that, the regulation of shareholders' liability was repeatedly amended by the Parliament and by the Constitutional Court.", 'Ultimately, it was repealed in 2011, and the principle of the corporate veil was fully reinstated.', 'In our written submissions, we have set out in detail the discriminatory effects of these subsequent changes of legislation and the great weight that these carries in the assessment of the proportionality issue.', 'It is thus rather surprising to hear from the government that this chain of modifications of the legal framework had no influence on the applicant case.', 'Mr. President, this is precisely our claim.', 'As in Pine Valley, to quote but an example, the subsequent changes in the law did not avail the applicant, although they could have done so.', 'For instance, the 2008 amendment excluding the personal liability of shareholder holding less than 25% share did not benefit the applicant, nor could it benefit from the 2011 reform that eventually cancelled the shareholder personal liability.', 'This shows that the measure complained of does not satisfy the test of proportionality and cannot be deemed in accordance with the general interest.', "Turning to my last point, it must be underlined that the applicant's case is not an isolated incident.", 'As mentioned earlier, his fate is shared by tens of thousands of former shareholders who have been held personally liable based on the same legal fiction introduced by the FOCA.', 'The main argument on which the chamber relied in order to justify the interference, namely an alleged lack of due diligence of the liable shareholders, is then clearly contradicted by the actual reach of the measure in question.', 'We are not saying that this lack of diligence has not been assessed in a fair manner.', 'What we say is that he has not been assessed at all.', "It has not been assessed in the applicant's case.", 'It has not been assessed in respect of the other thousands of shareholders concerned.', 'After all, had such an assessment been carried out, the FOCA would have just missed its main objective, which, according to the government, was to relieve domestic court from the flawed bankruptcy proceedings that should have been undertaken under the Companies Act.', 'Mr. President, there are faces behind numbers', 'and there are families behind each shareholder.', 'As noted in the amicus curia of the civil initiative, these families strive to get through while their basic income, being a salary or pension, is being seized by creditors of strong struck-off company.', "It is also on behalf of all the victims of the company's erasure that the applicant pleads for the Green Chamber to reverse the chamber's finding on the basis of a more careful and thorough assessment of the factors outlined above.", 'Thank you very much, Mr. President.']

3648007_14032018

Applicant

AP2

Mr. President, distinguished judges of the court, I will address the applicant's complaint concerning the failure to personally serve on him the strike-off decisions issued by the District Court of Ljubljana against the company in which he held a minority share. Admittedly, the applicant had no actual or constructive knowledge of the strike-off proceedings. Yet it is precisely the striking-off decision that resulted in the applicant's personal and unlimited liability for the company's debts. The chamber overlooked this procedural aspect by holding that the matter was absorbed in the complaint under Article 1 of Protocol Number 1. However, there are strong arguments warranting a separate examination under the head of Article 6 or Article 13, and ultimately a different conclusion on the merits. The underlying facts are clear-cut. It is undisputed that both the decision to initiate the striking-off proceedings and the final decision's strike-off have been served at the company's premises rather than on the applicant in person as a liable shareholder. It is likewise undisputed that no service occurred since the company had ceased to operate at its premises years before, and accordingly, both decisions were returned to the District Court of Ljubljana. Therefore, the applicant was not made aware of the strike-off proceedings. It is our contention that Slovenia fell short of its positive obligation under Article 6 to ensure that litigants are fully informed and can take part in the proceedings in which their civil rights are at stake. It is precisely the lack of personal service that deprived the applicant of the opportunity to challenge the decision to initiate the proceedings and to appeal against the strike-off decision within the prescribed time limit. Now, it is true that the two decisions were entered into the Court Registry's notice board and that the final decision on strike-off was also published on the official gazette. But this is no substitute for personal service. As pointed out by this Court, the general concept of a fair trial presupposes that the person against whom proceedings have been initiated should be informed of that fact. If court documents are not served in person, then an applicant might be prevented from defending himself in the proceedings. In this respect, the chamber upheld the government's argument that a pragmatic approach to the method of service was necessary because it would otherwise be excessively time-consuming or even impossible to attempt to serve the documents on individual members of the companies. We cannot see the relevance of this argument, which is in any way belied by the facts of the case. First, the applicant's name and address were mentioned in the Court Register and in a number of documents of the proceedings, including the decision to initiate strike-off proceedings and the actual strike-off decision. Second, the applicant had been summoned in person in the framework of the proceedings instituted by the Railway of Slovenia. And this was just two months before the service of the decision to initiate the strike-off proceedings. These two circumstances utterly prove that personal service was not excessively time-consuming, let alone impossible, as the government contend. Like in the case of Diaz-Ochoa versus Spain of 2006, the authorities were aware of the applicant's address, and yet they failed to personally serve on him the relevant decisions. As a matter of fact, the focus system was based on the assumption that service on the company's premises would have sufficed to ensure knowledge of the proceedings. However, this Court already held that service affected by means of a public notice affixed on the gate of a company's premises does not measure up to Article VI. And I refer to SC Carbochim and others versus Romania of 2017 as a recent example. On a different note, it cannot be said that the applicant had constructive knowledge of the strike-off proceedings by means of publication of the relevant decisions on the Court Registry's notice board and or the official gazette. In Zavotnik versus Slovenia of 2015, this Court has already voiced criticism concerning this matter of service. It held that, and I quote, it would be unrealistic to expect the applicant to regularly consult the notice board of a court or to gain access to every issue of the official gazette, end of quote. The case of Mr. Lekic is an all fours with these presidents. The formalistic implementation of the manner of service under the FOCA undermine the very essence of his right to access to a court. This is further compounded by the fact that the District Court of Ljubljana failed to examine whether the applicant had been duly summoned and to adjourn the examination of the case as required by the settled case law of this court. Against this background, it is hard to avoid the conclusion that the erasure was carried out automatically and without prior notification and that the applicant was not given the opportunity to challenge it before the competent domestic authorities. Mr. President, these are the precise words of the Grand Chamber in the Kudic judgment. History repeats itself. Slovenia had to deal with over 25,000 former Yugoslav citizens, and they simply erased them from the register of permanent residence. They had to deal with some 24,000 allegedly inactive companies, and they simply erased them from the company's register. Well, it seems that when dealing with complex situations, Slovenia tends to resort to massive erasures, obliterating any and all procedural guarantees. In the instant case, it was a lack of personal service that allowed the striking off proceedings to be conducted so swiftly and that ultimately triggered the personal and unlimited liability of the applicant. Moreover, in the subsequent enforcement proceedings, he cannot raise any objection relating to the striking off owing to the final character of the decision, a decision about which he had been quite simply kept in the dark. This plainly offsets the basic requirements of Article 6 and 13 of the convention, making the applicant's right of access to a court merely illusory. Thank you, Mr. President.

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['Mr. President, distinguished judges of the court,', "I will address the applicant's complaint concerning the failure to personally serve on him the strike-off decisions issued by the District Court of Ljubljana against the company in which he held a minority share.", 'Admittedly, the applicant had no actual or constructive knowledge of the strike-off proceedings.', "Yet it is precisely the striking-off decision that resulted in the applicant's personal and unlimited liability for the company's debts.", 'The chamber overlooked this procedural aspect by holding that the matter was absorbed in the complaint under Article 1 of Protocol Number 1.', 'However, there are strong arguments warranting a separate examination under the head of Article 6 or Article 13, and ultimately a different conclusion on the merits.', 'The underlying facts are clear-cut.', "It is undisputed that both the decision to initiate the striking-off proceedings and the final decision's strike-off have been served at the company's premises rather than on the applicant in person as a liable shareholder.", 'It is likewise undisputed that no service occurred since the company had ceased to operate at its premises years before, and accordingly, both decisions were returned to the District Court of Ljubljana.', 'Therefore, the applicant was not made aware of the strike-off proceedings.', 'It is our contention that Slovenia fell short of its positive obligation under Article 6 to ensure that litigants are fully informed and can take part in the proceedings in which their civil rights are at stake.', 'It is precisely the lack of personal service that deprived the applicant of the opportunity to challenge the decision to initiate the proceedings and to appeal against the strike-off decision within the prescribed time limit.', "Now, it is true that the two decisions were entered into the Court Registry's notice board and that the final decision on strike-off was also published on the official gazette.", 'But this is no substitute for personal service.', 'As pointed out by this Court, the general concept of a fair trial presupposes that the person against whom proceedings have been initiated should be informed of that fact.', 'If court documents are not served in person, then an applicant might be prevented from defending himself in the proceedings.', "In this respect, the chamber upheld the government's argument that a pragmatic approach to the method of service was necessary because it would otherwise be excessively time-consuming or even impossible to attempt to serve the documents on individual members of the companies.", 'We cannot see the relevance of this argument, which is in any way belied by the facts of the case.', "First, the applicant's name and address were mentioned in the Court Register and in a number of documents of the proceedings, including the decision to initiate strike-off proceedings and the actual strike-off decision.", 'Second, the applicant had been summoned in person in the framework of the proceedings instituted by the Railway of Slovenia.', 'And this was just two months before the service of the decision to initiate the strike-off proceedings.', 'These two circumstances utterly prove that personal service was not excessively time-consuming, let alone impossible, as the government contend.', "Like in the case of Diaz-Ochoa versus Spain of 2006, the authorities were aware of the applicant's address, and yet they failed to personally serve on him the relevant decisions.", "As a matter of fact, the focus system was based on the assumption that service on the company's premises would have sufficed to ensure knowledge of the proceedings.", "However, this Court already held that service affected by means of a public notice affixed on the gate of a company's premises does not measure up to Article VI.", 'And I refer to SC Carbochim and others versus Romania of 2017 as a recent example.', "On a different note, it cannot be said that the applicant had constructive knowledge of the strike-off proceedings by means of publication of the relevant decisions on the Court Registry's notice board and or the official gazette.", 'In Zavotnik versus Slovenia of 2015, this Court has already voiced criticism concerning this matter of service.', 'It held that, and I quote, it would be unrealistic to expect the applicant to regularly consult the notice board of a court or to gain access to every issue of the official gazette, end of quote.', 'The case of Mr. Lekic is an all fours with these presidents.', 'The formalistic implementation of the manner of service under the FOCA undermine the very essence of his right to access to a court.', 'This is further compounded by the fact that the District Court of Ljubljana failed to examine whether the applicant had been duly summoned and to adjourn the examination of the case as required by the settled case law of this court.', 'Against this background, it is hard to avoid the conclusion that the erasure was carried out automatically and without prior notification and that the applicant was not given the opportunity to challenge it before the competent domestic authorities.', 'Mr. President, these are the precise words', 'of the Grand Chamber in the Kudic judgment.', 'History repeats itself.', 'Slovenia had to deal with over 25,000 former Yugoslav citizens, and they simply erased them from the register of permanent residence.', "They had to deal with some 24,000 allegedly inactive companies, and they simply erased them from the company's register.", 'Well, it seems that when dealing with complex situations, Slovenia tends to resort to massive erasures, obliterating any and all procedural guarantees.', 'In the instant case, it was a lack of personal service that allowed the striking off proceedings to be conducted so swiftly and that ultimately triggered the personal and unlimited liability of the applicant.', 'Moreover, in the subsequent enforcement proceedings, he cannot raise any objection relating to the striking off owing to the final character of the decision, a decision about which he had been quite simply kept in the dark.', "This plainly offsets the basic requirements of Article 6 and 13 of the convention, making the applicant's right of access to a court merely illusory.", 'Thank you, Mr. President.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much, Mrs. Borgna. And I call Mr. Zamboni. Please, you have the floor.

[('1532.67', '1535.07'), ('1535.07', '1537.03'), ('1537.03', '1537.03')]

['en', 'en', 'en']

['Thank you very much, Mrs. Borgna.', 'And I call Mr. Zamboni.', 'Please, you have the floor.']

3648007_14032018

Applicant

AP1

Thank you Mr. President, distinguished judges of the court. It is our submission that the striking off of the company from the court register and the automatic, personal, and unlimited liability of the applicant for the company's debt amount to an interference with the rights guaranteed by Article 1 of Protocol 1. This interference is not foreseeable and it is not proportionate to the public interest. I'm going to deal with the following three points. First, the unfettered character of Article 27, paragraph 4 of the FOCA, which provides for the shareholders' liability as an automatic consequence of the striking off of the company. Second, the vague distinction between active and passive shareholders established by the Constitutional Court decision number 135 of 2002. And third, the lack of the required guarantees in the enforcement proceedings against the applicant. These three points will lead me to the conclusion that as in Jokila versus Finland, the combined effect of the striking off and of the applicant's ensuing liability breached his general right to peaceful enjoyment of possessions as guaranteed by the first sentence of the first paragraph of Article 1, and that the Constitutional Court decision of 2002, as applied in the applicant's case, did not remedy the shortcomings of the contested legislation. My first point focuses on the letter of Article 27, paragraph 4 of the FOCA. This article does not contain an express provision on personal liability. It simply states that shareholders are deemed to have filed a certified statement provided by Article 394, paragraph 1 of the Companies Act of 1993, that is to say, the statement that they accept personal and unlimited liability for the debt of the struck-off company. Under Article 394, however, the statement was a precondition for the opening of voluntary striking off proceedings at the request of the shareholders. As such, it reflected their actual will to accept personal liability and the full knowledge of its consequences. Moreover, the Slovenian Parliament passed the FOCA through summary procedure. In that context, personal and unlimited liability was never discussed and eventually came as a surprise. This is confirmed by the minutes of parliamentary hearings and even by the Constitutional Court decision of 2002. This is further confirmed by the introductory notes to the FOCA that the government has now submitted. These notes do refer to the protection of creditors and the legal consequences of striking off, but they completely omit to set out what these consequences would actually be. The truth is, the consequences of the contested measure were all but foreseeable for the applicant and for all the other shareholders concerned. Therefore, the conclusions of the Chamber on this point are to be reviewed with the utmost care. The same goes for the Chamber's assessment of the proportionality of the interference. In fact, Article 27, paragraph 4 does not strike a fair balance between the competing interests of shareholders and companies' creditors, first and foremost because personal liability is an automatic consequence of the law. In Papakellas v. Greece, the Grand Chamber found that a legal presumption taking no account of the diversity of situations is too inflexible to comply with the requirements of Article 1. Strictly speaking, Article 27, paragraph 4 does not even qualify as a presumption. It is pure legal fiction. The question in the present case is not whether or not the shareholders are able to prove that they did not provide the liability statement. There is no such statement. And the government do not deny this obvious fact. After all, the system envisaged by the FOCA would not have worked otherwise. But this system is affected by a fundamental defect in terms of Conventional Standards, a defect which, and I turn to my second point, has not been remedied by the Constitutional Court decision of 2002. Indeed, the distinction between active and passive shareholders is based on criteria which are far from being clear, accessible, and foreseeable within the meaning of this Court's case law. The Constitutional Court decision only contains a non-exhaustive list of miscellaneous considerations which eventually boil down to the shareholders' involvement in the company's management and his influence in making the debt. This list is open, is vague, and does not offer clear and objective guidance. It rather leaves to lower courts to establish the shareholders' personal liability at their ultimate discretion. This leads me to my third point. The enforcement proceedings against the applicant did not measure up to the standards of adversarial proceedings required for an interference to comply with Article 1 of Protocol 1, according to the constant case law of the Court, and I refer to Antrish v. France as an example. In the present case, the enforcement proceedings have been no more than a paper exercise. No public hearing was held before domestic courts, and the decision was taken only on the basis of documents, the main document being, of course, the final decision to strike off the company. Against this background, the vague criteria laid down by the Constitutional Court carried no actual weight in the applicant's case. On the one hand, the domestic courts acknowledged that the contested debt was incurred at a time when the applicant had not yet acquired his share in the company. But this fact was deemed to be completely irrelevant. On the other hand, the domestic court stressed that the applicant had served as acting and then managing director of the company from 1993 to 1996, but they stated that, and I quote from the decision of the higher court of 2006, in the assessment of the member's passivity, it is not legally decisive whether or not the member performed any managerial function at all. End of quote. This means that the applicant's liability would have been established even if he had never performed any managerial function. And as a matter of fact, among the former shareholders of the company, only the deceased ones have been exonerated from personal liability. All the others have been held personally liable, whether they had been managers or not. Rather than on the basis of the criteria laid down by the Constitutional Court, the applicant's liability was established on the basis of yet another presumption, the presumption that a shareholder can influence a company in which he holds 10 percent share or more. This presumption is based on Articles 445 and 446 of the Companies Act, which provide shareholders holding at least 10 percent share in a company with some minority rights, such as the right to require a general meeting and a vote on a particular matter and the right to information. In spite of the limited scope of these rights, the domestic courts presumed that by making use of them, any given minority shareholder could have theoretically ensured the payment of the company's debts. With his 11.11 percent share, the applicant was therefore sanctioned with personal and unlimited liability for having allegedly failed to do so, regardless of his efforts to wind up the company back in 1997. It follows that, far from remaining exceptional, presumptions are rife in this case. They move from the company's purported inactivity and result into the shareholder's personal and unlimited liability. The last and crucial link of this chain of presumptions is neither laid down in the FOCA nor established by the Constitutional Court decision of 2002. This chain of presumptions leads to the automatic imposition of what the domestic courts and the Chamber itself qualified as a sanction. Yet, as conceded by the Constitutional Court at paragraph 73 of its decision, the imposition of this sanction is based on no more than an abstract risk. Mr. President, it is a respectful submission that these are pivotal arguments to reverse the Chamber's findings. The FOCA clearly fails the Convention's standards of foreseeability, proportionality, and procedural safeguards against abuse. This conclusion should not be taken in any way as seeking to minimize or understate the importance of the reasons which are relied by the Government. We do not deny that the State has the power to take legislative action to foster good corporate governance, all the more after a transition to market economy. But this power must be exercised in full compliance with the Convention, and any measure interfering with shareholders' rights must be properly assessed against the Convention's standards. Yet Slovenian courts never assessed whether the FOCA complied with the Convention. Quite simply, in 2002, the Constitutional Court excluded that the shareholders' liability amounted to an interference with Article I of Protocol 1. It therefore never assessed the proportionality of the FOCA from the standpoint of the Convention and never explained why the public interest could not be met by other, less intrusive, available means. This is all the more unjustified, considering that in 2007, the Constitutional Court found that Article I of Protocol 1 did, conversely, protect the legitimate expectations of those who

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['Thank you Mr. President, distinguished judges of the court.', "It is our submission that the striking off of the company from the court register and the automatic, personal, and unlimited liability of the applicant for the company's debt amount to an interference with the rights guaranteed by Article 1 of Protocol 1.", 'This interference is not foreseeable and it is not proportionate to the public interest.', "I'm going to deal with the following three points.", "First, the unfettered character of Article 27, paragraph 4 of the FOCA, which provides for the shareholders' liability as an automatic consequence of the striking off of the company.", 'Second, the vague distinction between active and passive shareholders established by the Constitutional Court decision number 135 of 2002.', 'And third, the lack of the required guarantees in the enforcement proceedings against the applicant.', "These three points will lead me to the conclusion that as in Jokila versus Finland, the combined effect of the striking off and of the applicant's ensuing liability breached his general right to peaceful enjoyment of possessions as guaranteed by the first sentence of the first paragraph of Article 1, and that the Constitutional Court decision of 2002, as applied in the applicant's case, did not remedy the shortcomings of the contested legislation.", 'My first point focuses on the letter of Article 27, paragraph 4 of the FOCA.', 'This article does not contain an express provision on personal liability.', 'It simply states that shareholders are deemed to have filed a certified statement provided by Article 394, paragraph 1 of the Companies Act of 1993, that is to say, the statement that they accept personal and unlimited liability for the debt of the struck-off company.', 'Under Article 394, however, the statement was a precondition for the opening of voluntary striking off proceedings at the request of the shareholders.', 'As such, it reflected their actual will to accept personal liability and the full knowledge of its consequences.', 'Moreover, the Slovenian Parliament passed the FOCA through summary procedure.', 'In that context, personal and unlimited liability was never discussed and eventually came as a surprise.', 'This is confirmed by the minutes of parliamentary hearings and even by the Constitutional Court decision of 2002.', 'This is further confirmed by the introductory notes to the FOCA that the government has now submitted.', 'These notes do refer to the protection of creditors and the legal consequences of striking off, but they completely omit to set out what these consequences would actually be.', 'The truth is, the consequences of the contested measure were all but foreseeable for the applicant and for all the other shareholders concerned.', 'Therefore, the conclusions of the Chamber on this point are to be reviewed with the utmost care.', "The same goes for the Chamber's assessment of the proportionality of the interference.", "In fact, Article 27, paragraph 4 does not strike a fair balance between the competing interests of shareholders and companies' creditors, first and foremost because personal liability is an automatic consequence of the law.", 'In Papakellas v. Greece, the Grand Chamber found that a legal presumption taking no account of the diversity of situations', 'is too inflexible to comply with the requirements of Article 1.', 'Strictly speaking, Article 27, paragraph 4 does not even qualify as a presumption.', 'It is pure legal fiction.', 'The question in the present case is not whether or not the shareholders are able to prove that they did not provide the liability statement.', 'There is no such statement.', 'And the government do not deny this obvious fact.', 'After all, the system envisaged by the FOCA would not have worked otherwise.', 'But this system is affected by a fundamental defect in terms of Conventional Standards, a defect which, and I turn to my second point, has not been remedied by the Constitutional Court decision of 2002.', "Indeed, the distinction between active and passive shareholders is based on criteria which are far from being clear, accessible, and foreseeable within the meaning of this Court's case law.", "The Constitutional Court decision only contains a non-exhaustive list of miscellaneous considerations which eventually boil down to the shareholders' involvement in the company's management and his influence in making the debt.", 'This list is open, is vague, and does not offer clear and objective guidance.', "It rather leaves to lower courts to establish the shareholders' personal liability at their ultimate discretion.", 'This leads me to my third point.', 'The enforcement proceedings against the applicant did not measure up to the standards of adversarial proceedings required for an interference to comply with Article 1 of Protocol 1, according to the constant case law of the Court, and I refer to Antrish v. France as an example.', 'In the present case, the enforcement proceedings have been no more than a paper exercise.', 'No public hearing was held before domestic courts, and the decision was taken only on the basis of documents, the main document being, of course, the final decision to strike off the company.', "Against this background, the vague criteria laid down by the Constitutional Court carried no actual weight in the applicant's case.", 'On the one hand, the domestic courts acknowledged that the contested debt was incurred at a time when the applicant had not yet acquired his share in the company.', 'But this fact was deemed to be completely irrelevant.', "On the other hand, the domestic court stressed that the applicant had served as acting and then managing director of the company from 1993 to 1996, but they stated that, and I quote from the decision of the higher court of 2006, in the assessment of the member's passivity, it is not legally decisive whether or not the member performed any managerial function at all.", 'End of quote.', "This means that the applicant's liability would have been established even if he had never performed any managerial function.", 'And as a matter of fact, among the former shareholders of the company, only the deceased ones have been exonerated from personal liability.', 'All the others have been held personally liable, whether they had been managers or not.', "Rather than on the basis of the criteria laid down by the Constitutional Court, the applicant's liability was established on the basis of yet another presumption, the presumption that a shareholder can influence a company in which he holds 10 percent share or more.", 'This presumption is based on Articles 445 and 446 of the Companies Act, which provide shareholders holding at least 10 percent share in a company with some minority rights, such as the right to require a general meeting and a vote on a particular matter and the right to information.', "In spite of the limited scope of these rights, the domestic courts presumed that by making use of them, any given minority shareholder could have theoretically ensured the payment of the company's debts.", 'With his 11.11 percent share, the applicant was therefore sanctioned with personal and', 'unlimited liability for having allegedly failed to do so, regardless of his efforts to wind up the company back in 1997.', 'It follows that, far from remaining exceptional, presumptions are rife in this case.', "They move from the company's purported inactivity and result into the shareholder's personal and unlimited liability.", 'The last and crucial link of this chain of presumptions is neither laid down in the FOCA nor established by the Constitutional Court decision of 2002.', 'This chain of presumptions leads to the automatic imposition of what the domestic courts and the Chamber itself qualified as a sanction.', 'Yet, as conceded by the Constitutional Court at paragraph 73 of its decision, the imposition of this sanction is based on no more than an abstract risk.', 'Mr. President, it is a respectful submission that these are pivotal arguments to reverse', "the Chamber's findings.", "The FOCA clearly fails the Convention's standards of foreseeability, proportionality, and procedural safeguards against abuse.", 'This conclusion should not be taken in any way as seeking to minimize or understate the importance of the reasons which are relied by the Government.', 'We do not deny that the State has the power to take legislative action to foster good corporate governance, all the more after a transition to market economy.', "But this power must be exercised in full compliance with the Convention, and any measure interfering with shareholders' rights must be properly assessed against the Convention's standards.", 'Yet Slovenian courts never assessed whether the FOCA complied with the Convention.', "Quite simply, in 2002, the Constitutional Court excluded that the shareholders' liability amounted to an interference with Article I of Protocol 1.", 'It therefore never assessed the proportionality of the FOCA from the standpoint of the Convention and never explained why the public interest could not be met by other, less intrusive, available means.', 'This is all the more unjustified, considering that in 2007, the Constitutional Court found that Article I of Protocol 1 did, conversely, protect the legitimate expectations of those who']

3648007_14032018

JudgeP

Guido Raimondi

Mr. Zamboni, I apologize, may I ask you to conclude please?

[('2182.08', '2185.0')]

['en']

['Mr. Zamboni, I apologize, may I ask you to conclude please?']

3648007_14032018

Applicant

AP1

Oh yes, thank you Mr. President, I get to my conclusion. The conclusion is hard indeed to avoid. The state has failed to strike a fair balance between the competing interests of the Railway of Slovenia and Mr. Leckage. The Railway of Slovenia, a big, powerful company, was put in the position to collect its entire claim in both nominal value and interest. Mr. Leckage, a minority shareholder in a limited liability company, has been forced to surrender his personal property to cover the company's debt. We therefore conclude that such an unfair arrangement cannot stand the Grand Chamber's scrutiny. Thank you.

[('2186.21', '2192.21'), ('2192.21', '2195.95'), ('2195.95', '2203.41'), ('2203.41', '2211.89'), ('2211.89', '2217.01'), ('2217.01', '2220.09'), ('2220.09', '2224.73'), ('2224.73', '2224.73')]

['en', 'en', 'en', 'en', 'en', 'en', 'en', 'en']

['Oh yes, thank you Mr. President, I get to my conclusion.', 'The conclusion is hard indeed to avoid.', 'The state has failed to strike a fair balance between the competing interests of the Railway of Slovenia and Mr. Leckage.', 'The Railway of Slovenia, a big, powerful company, was put in the position to collect its entire claim in both nominal value and interest.', 'Mr. Leckage, a minority shareholder in a limited liability company, has been forced to surrender', "his personal property to cover the company's debt.", "We therefore conclude that such an unfair arrangement cannot stand the Grand Chamber's scrutiny.", 'Thank you.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much, Mr. Zamboni. Now I call Mrs. Jovin Hrastnik. Please, you have the floor.

[('2226.59', '2229.35'), ('2229.35', '2231.85'), ('2231.85', '2232.85')]

['en', 'en', 'en']

['Thank you very much, Mr. Zamboni.', 'Now I call Mrs. Jovin Hrastnik.', 'Please, you have the floor.']

3648007_14032018

Government

GR1

Distinguished Court, the applicant lodged two applications. The first application relates to the proceedings of striking off the company LE from the court register. This application has been served on the government. The second application relates, according to the applicant, to the enforcement proceedings in which his personal liability for the debts of strike off company was established. That application has never been served on the government. However, the chamber judgment deals with both aspects, whereas according to the government's view, it should have been limited to the strike off proceedings. The widening of scope in the chamber's judgment has enabled the applicant that he now puts forward new facts and complaints, that is, at the late phase of the proceedings, although proceedings before the grand chamber are not designed for that. During the limited time available at this hearing, the government will now address only part of these complaints. The present case refers only to the applicant leakage and to no one else. This case is not dealt with by the court under the pilot judgment procedure. No similar application has so far been delivered to the Republic of Slovenia. The circumstances relevant for this case and for the decision, therefore, refer only to the applicant leakage. So first, a few words about these circumstances. The applicant had the status of minority member in a private limited liability company, LE. As such, he had rights explicitly defined in the company's act, which allowed him to influence the company's administration and its business operations. He was employed in the company, and he was also a director of the company. He was at some point dismissed from the office of the director. However, a new director was not appointed. In the court register, the applicant remained registered as director until the striking of the company. He was also the last employee of the company. Therefore, it was him who was best acquainted with the company's financial situation. One year after his dismissal from the office of director, he signed the proposal to initiate bankruptcy proceedings for the company, LE. The company members then failed to pay the costs in the amount of 626 euro necessary for initiation of proceedings. The court, therefore, rejected the proposal. During the same period, court proceedings against the company were pending since the Slovenian Railway Company brought an action against the company, LE. In his submission of 15 December 2017, the applicant now wonders why in the year 2000 he had been invited to a hearing in the case of Slovenian Railway Company. So the government examined why and found that the applicant attended all the hearings in that case, with the exception of the last one, which was held in the year 2000. We here refer to the government's enclosures B19 to B30. So first he attended the hearings as a director. After his dismissal from that post, he attended the next hearing on the basis of a power of attorney, which was signed by himself. The applicant continued to act as a representative of the company, also at the subsequent hearings. In 2000, one of the other company members was also invited to the hearing, but he returned the invitation to the court, pointing out that the applicant was the director. Nevertheless, the applicant continued to act as a director, despite his dismissal, and the other company members also still considered him the director. In 2000, he was invited to the final hearing, and he received the opinion of the court expert. The applicant, based on this opinion, most likely came to the conclusion that the judgment would be unfavorable for the company LE. Therefore, he returned the summons and all the remaining documents to the court and did not attend the last hearing. At the end of 2000, the court granted the action of the Slovenian Railway Company, and the company LE never lodged an appeal against this judgment. So in 2001, the company LE was struck off from the court register because it had no assets. Based on the final judgment of 2000, the Slovenian Railway Company demanded that the active company members pay the debt of the struck off company. So now, about the striking off from the court register. Information on similar measures in other European countries indicates that a number of other countries apply the striking off proceedings. This is also noted by the applicant in his comparative legal analysis. The reasons for the striking off under the Financial Operation of Companies Act are comparable with foreign regulations. According to the applicant, he does not contend that the striking off in itself violated his right to the property. The applicant rather complains because of the lack of foreseeability of the act. He also complains because of the method of service in the striking off proceedings. However, his complaints regarding the lack of foreseeability are a novelty in the proceedings before the grand chamber. Firstly, the complaint concerning the type of legislative process is ill-founded. In its decision of 2002, the Constitutional Court found no violation in the process of adopting the act. The applicant points out that the company LE was one of the first companies to be struck off. The government would like to stress that the provisions on the striking off of those companies that had no assets began to apply as late as one year after the entry into force of the act. Striking off proceedings against the company LE were initiated one year and a half after the entry into force of the act. Consequently, there was more than enough time to learn about legislative provisions and hence to take action with a view to preventing the striking off. It is simply not possible to claim that the consequences of the act were introduced overnight. It is not true that the consequences of the act became clear only when the courts started to carry out the striking off proceedings. The government has submitted the English translation of the act. The court will thus be able to examine its clarity and foreseeability. In the applicant's case, one cannot talk about permanent legislative changes that, as alleged, caused the applicant's uncertainty about the consequences of the act. The only relevant change for the applicant was the adoption of the act itself. As the enforcement order issued against the applicant became final in 2006, the amendments to the act enacted as of 2007 on and thereafter had no impact on the applicant's case. The applicant claims that the Financial Operation of Companies Act was adopted in order to regulate the consequences of the 1993 Companies Act. However, this is not true. It was the Yugoslav Undertakings Act of 1988 that enabled the establishment of a number of private companies, including Company LE. The provisions of that act continued to be applied in Slovenia until the adoption of the Companies Act in 1993. The proposal for the Financial Operation of Companies Act refers to data on companies from 1991 onwards, that is, to the period before the adoption of the Companies Act. Furthermore, the applicant believes that it was not necessary for him to be aware of the Financial Operation of Companies Act. He argues that his situation is comparable to that of the applicant in the case of Vaskaric versus Slovenia. He believes himself to be just a natural person without any official duties in the company. However, data on the applicant's status do not support such a view. The applicant was one of the five remaining company members and was the last employee of the company. He acted as its director and the other members considered him the director. May he indeed claim that he did not need to know about the key provisions of company law in the case of Vaskaric versus Slovenia, only ordinary due diligence in taking care of his affairs could be demanded of the applicant Vaskaric. In contrast, the applicant should have acted at least with the due diligence of a good businessman. The Financial Operation of Companies Act defined the measures to be taken upon the occurrence of illiquidity or over-indebtedness. Where liquidity could not be insured within two months of the occurrence of illiquidity, the board of directors was obliged to file a petition for initiating bankruptcy or compulsory settlement proceedings. The company LE had apparently been illiquid for several years before being struck off. However, in the enforcement proceedings, the company members all claimed that none of them had been an active company member. So according to their view, the company was without any member who could have influenced the administration and operations of the company. Well that is absurd. Who else if not the applicant himself was the person most responsible to take action? As regards the applicant's knowledge of the actual proceedings of striking off, the following is important. In the proceedings of striking off, decisions were served on the company and were also made available by public notice. A legal remedy was available against these two decisions and could have been lodged either by the company or by the company members and creditors. In its decision of 2002, the Constitutional Court examined the service of documents in the proceedings of striking off. It found that the method of service used was the most appropriate one. In certain cases, personal service would be impossible since it is only the director who knows precisely who the actual company members are. In the case of the company LE, the data on the company entered in the court register did not reflect the actual situation. It became evident during the enforcement proceedings where the court was faced with difficulties when serving documents. Namely, four company members had died and it is not clear what happened with their shares. The address of one of the company members entered in the court register was incorrect. The applicant considers it unreasonable to serve documents at the address of the inactive company. However, such a view completely ignores the fact that an inactive company is still formally existing and has a head office, business premises, and a director. May such a company not be served with documents at its address as entered in the court register? The information on similar measures in other European countries indicates various approaches to the service of documents in the proceedings of striking off. It appears that everywhere decisions are served on the company and given public notice of, for example, in the country's official gazette or on the website of the court register. In some countries, though not in all, decisions are also served, for example, on the members of the board of directors. In this respect, the government does believe that the Financial Operation of Companies Act does not deviate from other countries' legal regulation. Therefore, the applicant should have been aware of the proceedings of striking off the company LE. If he was not aware, he himself was responsible for that. Now concerning the personal liability of active company members. In his submission of 15 December 2017, the applicant acknowledges that the personal liability is not per se incompatible with the Convention. However, he believes that there is a problem regarding the foreseeability and proportionality of the measures. The government suggests that the court compare the applicant's current complaints with his application, which does not contain even a single word on foreseeability. There the applicant explicitly stated that the measures applied were in the public interest and in the interest of creditors, and that they were legitimate, but according to his view, they were not proportionate. Slovenian legal theory indicates that countries that regulate the piercing of the corporate veil by way of a general and abstract provision are an exception. In Slovenian law, the basic provision on that is contained in the Companies Act. The provision of financial operation of Companies Act on personal liability is also a provision on piercing of the corporate veil. Apart from Slovenia, this concept is legally regulated primarily in other successor states of the former Yugoslavia and in certain other former socialist countries, such as Hungary and Lithuania. In contrast, the statutory regulation of the piercing of the corporate veil is an exception in countries governed by continental law and in the Anglo-American legal system. There this concept is developed primarily by the case law, taking into account the views of legal theory. This is also indicated by the applicant's comparative legal analysis. Different views are found in the legal theory, and differences between theory and practice occur as well. In such a system, it is not always clear whether a court will assess the case on the basis of the piercing of the corporate veil or on some other legal basis. On the other hand, the flexibility of this concept is increased. Part of legal theory objects to the piercing of the corporate veil because of its legal unforeseeability. According to Slovenian legal theory, the reason for the enactment of the piercing of the corporate veil in the former socialist countries was the rapid change of the system in the late 80s and early 90s and the greater risk of defrauding creditors in transition countries. This case law in those countries, the case law in those countries would probably need a considerably longer time to adopt the decision on the piercing of the corporate veil without such statutory referral. Since the explicit statutory regulation is rare, and since even in countries governed by continental law, this concept is frequently created by the prevailing legal theory and case law, the applicant's complaints regarding the lack of foreseeability of Slovenian legislation seem rather odd. The Slovenian legal theory considers that the piercing of corporate veil requires the assessment on a case-by-case basis. In accordance with that, the Constitutional Court in its decision of 2002 defined the criteria pursuant to which the courts were to assess in each particular case the status of active company member. This assessment was not to be carried out in the proceedings of striking off, but in separate court proceedings where the company member had the status of a party to the proceedings and had legal remedies at his disposal. In the applicant's case, the status of active company member was assessed in enforcement proceedings. In these proceedings, the applicant was of course not able to challenge the final decision on the striking off. It's true that part of Slovenian legal theory is critical of the financial operation of Companies Act. For example, a Slovenian author in her book on the piercing of the corporate veil criticizes the measure at hand. However, the same author explicitly allows that exceptionally the liability of company members might apply in the event of non-existence of management. For example, if the term of office of the director has expired or if he has resigned but a new director has not been appointed. That author is of the opinion that this is an exception where the liability of the members of private limited liability company might be justified by the breach of their due diligence in the matters of the company. This is precisely the situation of the company LE and of the applicant leakage. The applicant takes the view that he had no responsibilities in the company. However, the status of a member of a private limited liability company is not only a right but also entails responsibility. Total indifference on the part of company members regarding the fate of their company is not acceptable. In the event of a difficult financial situation of the company, its financial recovery or its termination in accordance with the law must be provided for. So can the applicant in view of the circumstances of the case indeed claim that he was acting in good faith? In the opinion of the government, he cannot. In conclusion, the key question is whether the measure complained of represented an excessive individual burden for the applicant in the particular circumstances of the present case. These circumstances and options of conduct available to the applicant have already been explained in detail by the government. The applicant and the remaining four company members would have easily been able to avoid the striking of and its consequences. When assessing the individual burden for the applicant, the following is also important. Active company members assumed joint and several liability for outstanding debts of the struck of company. It seems that in the case of company LE, only four of the company members paid the debt. In case there were any further active members, the applicant leakage could require that they pay their share too. Consequently, his contribution to the payment of the company's debt would decrease. The government therefore objects to the claim for 32,795 euro in respect of pecuniary damage. Finally, the government reiterates that enforcement proceedings were concluded with an out of court settlement, that is with an agreement. In this agreement, the applicant acknowledged and subsequently fully repaid the debt. The government concludes that in light of all the circumstances, the applicant leakage may not claim that his rights under the convention and its protocols were violated.

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['Distinguished Court, the applicant lodged two applications.', 'The first application relates to the proceedings of striking off the company LE from the court register.', 'This application has been served on the government.', 'The second application relates, according to the applicant, to the enforcement proceedings in which his personal liability for the debts of strike off company was established.', 'That application has never been served on the government.', "However, the chamber judgment deals with both aspects, whereas according to the government's view, it should have been limited to the strike off proceedings.", "The widening of scope in the chamber's judgment has enabled the applicant that he now puts forward new facts and complaints, that is, at the late phase of the proceedings, although proceedings before the grand chamber are not designed for that.", 'During the limited time available at this hearing, the government will now address only part of these complaints.', 'The present case refers only to the applicant leakage and to no one else.', 'This case is not dealt with by the court under the pilot judgment procedure.', 'No similar application has so far been delivered to the Republic of Slovenia.', 'The circumstances relevant for this case and for the decision, therefore, refer only to the applicant leakage.', 'So first, a few words about these circumstances.', 'The applicant had the status of minority member in a private limited liability company, LE.', "As such, he had rights explicitly defined in the company's act, which allowed him to influence the company's administration and its business operations.", 'He was employed in the company, and he was also a director of the company.', 'He was at some point dismissed from the office of the director.', 'However, a new director was not appointed.', 'In the court register, the applicant remained registered as director until the striking of the company.', 'He was also the last employee of the company.', "Therefore, it was him who was best acquainted with the company's financial situation.", 'One year after his dismissal from the office of director, he signed the proposal to initiate bankruptcy proceedings for the company, LE.', 'The company members then failed to pay the costs in the amount of 626 euro necessary for initiation of proceedings.', 'The court, therefore, rejected the proposal.', 'During the same period, court proceedings against the company were pending since the Slovenian Railway Company brought an action against the company, LE.', 'In his submission of 15 December 2017, the applicant now wonders why in the year 2000 he had been invited to a hearing in the case of Slovenian Railway Company.', 'So the government examined why and found that the applicant attended all the hearings in that case, with the exception of the last one, which was held in the year 2000.', "We here refer to the government's enclosures B19 to B30.", 'So first he attended the hearings as a director.', 'After his dismissal from that post, he attended the next hearing on the basis of a power of attorney, which was signed by himself.', 'The applicant continued to act as a representative of the company, also at the subsequent hearings.', 'In 2000, one of the other company members was also invited to the hearing, but he returned the invitation to the court, pointing out that the applicant was the director.', 'Nevertheless, the applicant continued to act as a director, despite his dismissal, and the other company members also still considered him the director.', 'In 2000, he was invited to the final hearing, and he received the opinion of the court expert.', 'The applicant, based on this opinion, most likely came to the conclusion that the judgment would be unfavorable for the company LE.', 'Therefore, he returned the summons and all the remaining documents to the court and did not attend the last hearing.', 'At the end of 2000, the court granted the action of the Slovenian Railway Company, and the company LE never lodged an appeal against this judgment.', 'So in 2001, the company LE was struck off from the court register because it had no assets.', 'Based on the final judgment of 2000, the Slovenian Railway Company demanded that the active company members pay the debt of the struck off company.', 'So now, about the striking off from the court register.', 'Information on similar measures in other European countries indicates that a number of other countries apply the striking off proceedings.', 'This is also noted by the applicant in his comparative legal analysis.', 'The reasons for the striking off under the Financial Operation of Companies Act are comparable with foreign regulations.', 'According to the applicant, he does not contend that the striking off in itself violated his right to the property.', 'The applicant rather complains because of the lack of foreseeability of the act.', 'He also complains because of the method of service in the striking off proceedings.', 'However, his complaints regarding the lack of foreseeability are a novelty in the proceedings before the grand chamber.', 'Firstly, the complaint concerning the type of legislative process is ill-founded.', 'In its decision of 2002, the Constitutional Court found no violation in the process of adopting the act.', 'The applicant points out that the company LE was one of the first companies to be struck off.', 'The government would like to stress that the provisions on the striking off of those companies that had no assets began to apply as late as one year after the entry into force of the act.', 'Striking off proceedings against the company LE were initiated one year and a half after the entry into force of the act.', 'Consequently, there was more than enough time to learn about legislative provisions and hence to take action with a view to preventing the striking off.', 'It is simply not possible to claim that the consequences of the act were introduced overnight.', 'It is not true that the consequences of the act became clear only when the courts started to carry out the striking off proceedings.', 'The government has submitted the English translation of the act.', 'The court will thus be able to examine its clarity and foreseeability.', "In the applicant's case, one cannot talk about permanent legislative changes that, as alleged, caused the applicant's uncertainty about the consequences of the act.", 'The only relevant change for the applicant was the adoption of the act itself.', "As the enforcement order issued against the applicant became final in 2006, the amendments to the act enacted as of 2007 on and thereafter had no impact on the applicant's case.", 'The applicant claims that the Financial Operation of Companies Act was adopted in order to regulate the consequences of the 1993 Companies Act.', 'However, this is not true.', 'It was the Yugoslav Undertakings Act of 1988 that enabled the establishment of a number of private companies, including Company LE.', 'The provisions of that act continued to be applied in Slovenia until the adoption of the Companies Act in 1993.', 'The proposal for the Financial Operation of Companies Act refers to data on companies from 1991 onwards, that is, to the period before the adoption of the Companies Act.', 'Furthermore, the applicant believes that it was not necessary for him to be aware of the Financial Operation of Companies Act.', 'He argues that his situation is comparable to that of the applicant in the case of Vaskaric versus Slovenia.', 'He believes himself to be just a natural person without any official duties in the company.', "However, data on the applicant's status do not support such a view.", 'The applicant was one of the five remaining company members and was the last employee of the company.', 'He acted as its director and the other members considered him the director.', 'May he indeed claim that he did not need to know about the key provisions of company law in the case of Vaskaric versus Slovenia, only ordinary due diligence in taking care of his affairs could be demanded of the applicant Vaskaric.', 'In contrast, the applicant should have acted at least with the due diligence of a good businessman.', 'The Financial Operation of Companies Act defined the measures to be taken upon the occurrence of illiquidity or over-indebtedness.', 'Where liquidity could not be insured within two months of the occurrence of illiquidity, the board of directors was obliged to file a petition for initiating bankruptcy or compulsory settlement proceedings.', 'The company LE had apparently been illiquid for several years before being struck off.', 'However, in the enforcement proceedings, the company members all claimed that none of them had been an active company member.', 'So according to their view, the company was without any member who could have influenced the administration and operations of the company.', 'Well that is absurd.', 'Who else if not the applicant himself was the person most responsible to take action?', "As regards the applicant's knowledge of the actual proceedings of striking off, the following is important.", 'In the proceedings of striking off, decisions were served on the company and were also made available by public notice.', 'A legal remedy was available against these two decisions and could have been lodged either by the company or by the company members and creditors.', 'In its decision of 2002, the Constitutional Court examined the service of documents in the proceedings of striking off.', 'It found that the method of service used was the most appropriate one.', 'In certain cases, personal service would be impossible since it is only the director who knows precisely who the actual company members are.', 'In the case of the company LE, the data on the company entered in the court register did not reflect the actual situation.', 'It became evident during the enforcement proceedings where the court was faced with difficulties when serving documents.', 'Namely, four company members had died and it is not clear what happened with their shares.', 'The address of one of the company members entered in the court register was incorrect.', 'The applicant considers it unreasonable to serve documents at the address of the inactive company.', 'However, such a view completely ignores the fact that an inactive company is still formally existing and has a head office, business premises, and a director.', 'May such a company not be served with documents at its address as entered in the court register?', 'The information on similar measures in other European countries indicates various approaches to the service of documents in the proceedings of striking off.', "It appears that everywhere decisions are served on the company and given public notice of, for example, in the country's official gazette or on the website of the court register.", 'In some countries, though not in all, decisions are also served, for example, on the members of the board of directors.', "In this respect, the government does believe that the Financial Operation of Companies Act does not deviate from other countries' legal regulation.", 'Therefore, the applicant should have been aware of the proceedings of striking off the company LE.', 'If he was not aware, he himself was responsible for that.', 'Now concerning the personal liability of active company members.', 'In his submission of 15 December 2017, the applicant acknowledges that the personal liability is not per se incompatible with the Convention.', 'However, he believes that there is a problem regarding the foreseeability and proportionality of the measures.', "The government suggests that the court compare the applicant's current complaints with his application, which does not contain even a single word on foreseeability.", 'There the applicant explicitly stated that the measures applied were in the public interest and in the interest of creditors, and that they were legitimate, but according to his view, they were not proportionate.', 'Slovenian legal theory indicates that countries that regulate the piercing of the corporate veil by way of a general and abstract provision are an exception.', 'In Slovenian law, the basic provision on that is contained in the Companies Act.', 'The provision of financial operation of Companies Act on personal liability is also a provision on piercing of the corporate veil.', 'Apart from Slovenia, this concept is legally regulated primarily in other successor states of the former Yugoslavia and in certain other former socialist countries, such as Hungary and Lithuania.', 'In contrast, the statutory regulation of the piercing of the corporate veil is an exception in countries governed by continental law and in the Anglo-American legal system.', 'There this concept is developed primarily by the case law, taking into account the views of legal theory.', "This is also indicated by the applicant's comparative legal analysis.", 'Different views are found in the legal theory, and differences between theory and practice occur as well.', 'In such a system, it is not always clear whether a court will assess the case on the basis of the piercing of the corporate veil or on some other legal basis.', 'On the other hand, the flexibility of this concept is increased.', 'Part of legal theory objects to the piercing of the corporate veil because of its legal unforeseeability.', 'According to Slovenian legal theory, the reason for the enactment of the piercing of the corporate veil in the former socialist countries was the rapid change of the system in the late 80s and early 90s and the greater risk of defrauding creditors in transition countries.', 'This case law in those countries, the case law in those countries would probably need a considerably longer time to adopt the decision on the piercing of the corporate veil without such statutory referral.', "Since the explicit statutory regulation is rare, and since even in countries governed by continental law, this concept is frequently created by the prevailing legal theory and case law, the applicant's complaints regarding the lack of foreseeability of Slovenian legislation seem rather odd.", 'The Slovenian legal theory considers that the piercing of corporate veil requires the assessment on a case-by-case basis.', 'In accordance with that, the Constitutional Court in its decision of 2002 defined the criteria pursuant to which the courts were to assess in each particular case the status of active company member.', 'This assessment was not to be carried out in the proceedings of striking off, but in separate court proceedings where the company member had the status of a party to the proceedings and had legal remedies at his disposal.', "In the applicant's case, the status of active company member was assessed in enforcement proceedings.", 'In these proceedings, the applicant was of course not able to challenge the final decision on the striking off.', "It's true that part of Slovenian legal theory is critical of the financial operation of Companies Act.", 'For example, a Slovenian author in her book on the piercing of the corporate veil criticizes the measure at hand.', 'However, the same author explicitly allows that exceptionally the liability of company members might apply in the event of non-existence of management.', 'For example, if the term of office of the director has expired or if he has resigned but a new director has not been appointed.', 'That author is of the opinion that this is an exception where the liability of the members of private limited liability company might be justified by the breach of their due diligence in the matters of the company.', 'This is precisely the situation of the company LE and of the applicant leakage.', 'The applicant takes the view that he had no responsibilities in the company.', 'However, the status of a member of a private limited liability company is not only a right but also entails responsibility.', 'Total indifference on the part of company members regarding the fate of their company is not acceptable.', 'In the event of a difficult financial situation of the company, its financial recovery or its termination in accordance with the law must be provided for.', 'So can the applicant in view of the circumstances of the case indeed claim that he was acting in good faith?', 'In the opinion of the government, he cannot.', 'In conclusion, the key question is whether the measure complained of represented an excessive individual burden for the applicant in the particular circumstances of the present case.', 'These circumstances and options of conduct available to the applicant have already been explained in detail by the government.', 'The applicant and the remaining four company members would have easily been able to avoid the striking of and its consequences.', 'When assessing the individual burden for the applicant, the following is also important.', 'Active company members assumed joint and several liability for outstanding debts of the struck of company.', 'It seems that in the case of company LE, only four of the company members paid the debt.', 'In case there were any further active members, the applicant leakage could require that they pay their share too.', "Consequently, his contribution to the payment of the company's debt would decrease.", 'The government therefore objects to the claim for 32,795 euro in respect of pecuniary damage.', 'Finally, the government reiterates that enforcement proceedings were concluded with an out of court settlement, that is with an agreement.', 'In this agreement, the applicant acknowledged and subsequently fully repaid the debt.', 'The government concludes that in light of all the circumstances, the applicant leakage may not claim that his rights under the convention and its protocols were violated.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much Mrs. Hrastnik. I thank both parties for their submissions and now I invite my colleagues, the judges of the Grand Chamber who wish to do so, to put their questions to the parties. Judge Nußberger, please.

[('3914.01', '3919.61'), ('3919.61', '3931.03'), ('3931.03', '3931.03')]

['en', 'en', 'en']

['Thank you very much Mrs. Hrastnik.', 'I thank both parties for their submissions and now I invite my colleagues, the judges of the Grand Chamber who wish to do so, to put their questions to the parties.', 'Judge Nußberger, please.']

3648007_14032018

Judge

Angelika Nußberger

Thank you very much. I would have one question to the applicants and two questions to the government. The question to the applicants, if I see correctly the timeline, on 19th of July 1997 there was an application for a bankruptcy procedure but it failed because the money was not paid. Two years later on 1st July 1999 the Fokker came into force and after that on 22nd of November 2000 there was a confirmation in court that the claim, that there was a final judgment concerning the claim by the railway company and only one year later there was a strike off. So at the moment when the judgment of the court concerning this claim from the railway company was handed down, what was the expectation of the applicant, what would happen to this final judgment? Because I understand the hope or the expectation that there would be ex-offizio bankruptcy procedures was not possible anymore because Fokker had entered into force at that time. So what was the expectation, what would happen with this final judgment? And now concerning the government, my first question is, you have argued that it was impossible to serve the decision about the striking off to the individual company members. But if it's impossible, the whole system is built on the idea that later on enforcement procedures would be directed against the individual members of the company. So if it's impossible to serve already the striking off, how do you then expect it to function within the enforcement procedure? And my second question to the government is, I understand that you treat in the same way minority shareholders and majority shareholders. So if somebody has 11% as the applicant or has 100%, there would always be this personal liability. So do I understand it correctly that if a company has just one member who has 100%, a creditor would get one debtor? And if the company has, let's say, 10 minority members, then the creditor would immediately get 10 debtors. So is that the system? Have I understood it correctly? Thank you.

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['en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en']

['Thank you very much.', 'I would have one question to the applicants and two questions to the government.', 'The question to the applicants, if I see correctly the timeline, on 19th of July 1997 there was an application for a bankruptcy procedure but it failed because the money was not paid.', 'Two years later on 1st July 1999 the Fokker came into force and after that on 22nd of November 2000 there was a confirmation in court that the claim, that there was a final judgment concerning the claim by the railway company and only one year later there was a strike off.', 'So at the moment when the judgment of the court concerning this claim from the railway company was handed down, what was the expectation of the applicant, what would happen to this final judgment?', 'Because I understand the hope or the expectation that there would be ex-offizio bankruptcy procedures was not possible anymore because Fokker had entered into force at that time.', 'So what was the expectation, what would happen with this final judgment?', 'And now concerning the government, my first question is, you have argued that it was impossible to serve the decision about the striking off to the individual company members.', "But if it's impossible, the whole system is built on the idea that later on enforcement procedures would be directed against the individual members of the company.", "So if it's impossible to serve already the striking off, how do you then expect it to function within the enforcement procedure?", 'And my second question to the government is, I understand that you treat in the same way minority shareholders and majority shareholders.', 'So if somebody has 11% as the applicant or has 100%, there would always be this personal liability.', 'So do I understand it correctly that if a company has just one member who has 100%, a creditor would get one debtor?', "And if the company has, let's say, 10 minority members, then the creditor would immediately get 10 debtors.", 'So is that the system?', 'Have I understood it correctly?', 'Thank you.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. Judge Spano please.

[('4096.58', '4100.1'), ('4100.1', '4101.22')]

['en', 'en']

['Thank you very much.', 'Judge Spano please.']

3648007_14032018

Judge

Robert Spano

Thank you very much, Mr. President. I want to begin with a question to the applicant, and it's prompted by the pleadings by the government here today, where the agent for the government refers to the pleading made at paragraph 100 of your observations, where the applicant says he does not contend that a shareholder's personal liability for the outstanding debts of the company is per se incompatible with the convention. Now, that prompts the question on how would the applicant invite the court to draw the line? What are the parameters for convention compliant application of FOCA and non-convention compliant application of the FOCA? And in particular, is it the applicant's view that member states are precluded for imposing personal liability on shareholders in limited liability companies outside the context of abusive conduct? Could you clarify where you think the line under the convention should be drawn? My second question, if I could just get a clarification, and it goes somewhat to the question just posed by Vice President Nußberger, that is the one year vacatio legis on the facts of this case. Now, it seems undisputed that the applicant could have within that period proceeded with triggering bankruptcy proceedings or the winding up. Could you explain your view on the argument presented by the government on that issue? One question to the government, which is a related one. The government says that paragraph 76 of your observations, and I think here is a crucial point in light of your submissions. The point here is that only persons who had rights to manage or participate in the management of the company at the time when the company was struck off without liquidation could be held liable. What do you mean by rights to manage or participate in the management of the company? Are you limiting this view to those that actually hold board member status or director status like the applicant? Because the issue of who has the rights to manage can be dealt with in different ways. Could you clarify what you mean by this term? And are you including there minority shareholders who indeed have rights, for example, to call a general meeting? But as the constitutional court in your own country states in its judgment of 9 October 2002 at paragraph 43, minority shareholders do not have an obligation to influence or have a view on day-to-day regular operations in limited liability companies. Could you clarify what you mean by rights to manage or participate in the management of a company? Thank you very much.

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['en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en']

['Thank you very much, Mr. President.', "I want to begin with a question to the applicant, and it's prompted by the pleadings by the government here today, where the agent for the government refers to the pleading made at paragraph 100 of your observations, where the applicant says he does not contend that a shareholder's personal liability for the outstanding debts of the company is per se incompatible with the convention.", 'Now, that prompts the question on how would the applicant invite the court to draw the line?', 'What are the parameters for convention compliant application of FOCA and non-convention compliant application of the FOCA?', "And in particular, is it the applicant's view that member states are precluded for imposing personal liability on shareholders in limited liability companies outside the context of abusive conduct?", 'Could you clarify where you think the line under the convention should be drawn?', 'My second question, if I could just get a clarification, and it goes somewhat to the question just posed by Vice President Nußberger, that is the one year vacatio legis on the facts of this case.', 'Now, it seems undisputed that the applicant could have within that period proceeded with triggering bankruptcy proceedings or the winding up.', 'Could you explain your view on the argument presented by the government on that issue?', 'One question to the government, which is a related one.', 'The government says that paragraph 76 of your observations, and I think here is a crucial point in light of your submissions.', 'The point here is that only persons who had rights to manage or participate in the management of the company at the time when the company was struck off without liquidation could be held liable.', 'What do you mean by rights to manage or participate in the management of the company?', 'Are you limiting this view to those that actually hold board member status or director status like the applicant?', 'Because the issue of who has the rights to manage can be dealt with in different ways.', 'Could you clarify what you mean by this term?', 'And are you including there minority shareholders who indeed have rights, for example, to call a general meeting?', 'But as the constitutional court in your own country states in its judgment of 9 October 2002 at paragraph 43, minority shareholders do not have an obligation to influence or have a view on day-to-day regular operations in limited liability companies.', 'Could you clarify what you mean by rights to manage or participate in the management of a company?', 'Thank you very much.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. Judge Ravarani and then Judge Paczolay

[('4312.79', '4315.03'), ('4315.03', '4317.47')]

['en', 'en']

['Thank you very much.', 'Judge Ravarani and then Judge Paczolay']

3648007_14032018

Judge

Georges Ravarani

Merci, M. le Président. J'ai une seule question factuelle qui se pose depuis la plaidoirie de la partie requérante, de son premier intervenant, mais la question s'adresse également au gouvernement. Si j'ai bien compris, l'avocat du requérant a dit que la responsabilité personnelle des associés a été introduite par la loi de 1999 appelée FOCA. Selon mes notes personnelles, mais là, je peux me tromper, et vous pouvez alors me corriger, moi, j'avais noté qu'en 1993, la loi sur les sociétés... Il y a une nouvelle loi sur les sociétés avec une possibilité pour les associés disposant de plus de 10 % des parts de demander la dissolution et la mise en faillite en cas d'insolvabilité avec, en cas d'omission, responsabilité personnelle. Donc est-ce que cette responsabilité personnelle a été introduite en 1999 ou est-ce qu'elle existait déjà dans la loi de 1993? Merci beaucoup. Merci.

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['fr', 'fr', 'fr', 'fr', 'fr', 'fr', 'fr']

['Merci, M. le Président.', "J'ai une seule question factuelle qui se pose depuis la plaidoirie de la partie requérante, de son premier intervenant, mais la question s'adresse également au gouvernement.", "Si j'ai bien compris, l'avocat du requérant a dit que la responsabilité personnelle des associés a été introduite par la loi de 1999 appelée FOCA.", "Selon mes notes personnelles, mais là, je peux me tromper, et vous pouvez alors me corriger, moi, j'avais noté qu'en 1993, la loi sur les sociétés...", "Il y a une nouvelle loi sur les sociétés avec une possibilité pour les associés disposant de plus de 10 % des parts de demander la dissolution et la mise en faillite en cas d'insolvabilité avec, en cas d'omission, responsabilité personnelle.", "Donc est-ce que cette responsabilité personnelle a été introduite en 1999 ou est-ce qu'elle existait déjà dans la loi de 1993?", 'Merci beaucoup. Merci.']

3648007_14032018

JudgeP

Guido Raimondi

Merci beaucoup. Judge Paczolay please.

[('4383.95', '4385.95')]

['en']

['Merci beaucoup. Judge Paczolay please.']

3648007_14032018

Judge

Péter Paczolay

Thank you very much. I have two questions to the applicant and to the applicant's representatives. The first regards the factual background of the personal involvement of the applicant in the outcome of this procedure. First, why did the applicant not himself lodge an action before the competent court to be dissolved under the Companies Act of 1993? Secondly, why did the applicant not withdraw from the company, as provided again by the Companies Act of 1993? Third, why did not he profit from the adversarial procedure by appealing the court procedure? And finally, why did he not lodge a constitutional complaint against the strike of decision immediately after the decision, but only a year later? My second question to the representatives or applicant regards this reference to the two erasure, so to say two erasure procedures in the history of Slovenia. First, the erasure of the former Yugoslav citizenship, and the second, the erasure of the companies. And here, the representative or applicant referred to the Kuric versus Slovenia case. How can you explain to us the difference between the decisions of the Constitutional Court regarding the erasure of citizens and the erasure of the companies? Because basically, at the same time, the same composition of the Constitutional Court found unconstitutional the citizenship law, and also the government acknowledged its illegality. Most at the same time, the Constitutional Court upheld the FOCA law. And so I would like to have an explanation for that. My question is to the government. First, because here we have heard that the 2.5% of the population was affected by the FOCA law. Are there perhaps any statistical data on that? How many persons have been held liable? How many persons have been held liable under this veil of the lifting of the corporate fur for debts of struck-off companies when the FOCA law was in force regarding this issue? My second question to the government would return to an issue that was raised during the deliberation by the applicant's representative, and this is the retroactive application of the FOCA law. If you could elaborate on that question, I would be very curious whether it was retroactive or not. Thank you very much.

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['Thank you very much.', "I have two questions to the applicant and to the applicant's representatives.", 'The first regards the factual background of the personal involvement of the applicant in the outcome of this procedure.', 'First, why did the applicant not himself lodge an action before the competent court to be dissolved under the Companies Act of 1993?', 'Secondly, why did the applicant not withdraw from the company, as provided again by the Companies Act of 1993?', 'Third, why did not he profit from the adversarial procedure by appealing the court procedure?', 'And finally, why did he not lodge a constitutional complaint against the strike of decision immediately after the decision, but only a year later?', 'My second question to the representatives or applicant regards this reference to the two erasure, so to say two erasure procedures in the history of Slovenia.', 'First, the erasure of the former Yugoslav citizenship, and the second, the erasure of the companies.', 'And here, the representative or applicant referred to the Kuric versus Slovenia case.', 'How can you explain to us the difference between the decisions of the Constitutional Court regarding the erasure of citizens and the erasure of the companies?', 'Because basically, at the same time, the same composition of the Constitutional Court found unconstitutional the citizenship law, and also the government acknowledged its illegality.', 'Most at the same time, the Constitutional Court upheld the FOCA law.', 'And so I would like to have an explanation for that.', 'My question is to the government.', 'First, because here we have heard that the 2.5% of the population was affected by the FOCA law.', 'Are there perhaps any statistical data on that?', 'How many persons have been held liable?', 'How many persons have been held liable under this veil of the lifting of the corporate fur for debts of struck-off companies when the FOCA law was in force regarding this issue?', "My second question to the government would return to an issue that was raised during the deliberation by the applicant's representative, and this is the retroactive application of the FOCA law.", 'If you could elaborate on that question, I would be very curious whether it was retroactive or not.', 'Thank you very much.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. Monsieur le juge Lemmens.

[('4569.51', '4572.51')]

['en']

['Thank you very much. Monsieur le juge Lemmens.']

3648007_14032018

Judge

Paul Lemmens

Thank you very much. I would like to ask two questions, one primarily to the applicant. The applicant has argued extensively about the fact that he was not informed of the hearing relating to the strike of proceedings, nor about the decision that had been taken by the court. My question is, what would have been the possibility for the applicant to argue before the court or on appeal? And that has something to do with the text of Article 25 of the FOCA. Is there any possibility for the court, or was there any possibility for the court to come to an other decision, taking into account that for 12 consecutive months, there had not been any payments by the company? That's the first question. The second one relates somewhat to what the government said at the very end of its argument. We know what the situation is of the applicant, but there were also other shareholders who have also been held personally liable in the proceedings against the railway company. Was it possible, is it possible for the applicant to turn to the fellow shareholders or to their heirs and obtain some part from them, the part of what he had to pay to the railway company? And if so, how would then the individual responsibility of each of the shareholders be determined in the proceedings between them? Thank you.

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['en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en']

['Thank you very much.', 'I would like to ask two questions, one primarily to the applicant.', 'The applicant has argued extensively about the fact that he was not informed of the hearing relating to the strike of proceedings, nor about the decision that had been taken by the court.', 'My question is, what would have been the possibility for the applicant to argue before the court or on appeal?', 'And that has something to do with the text of Article 25 of the FOCA.', 'Is there any possibility for the court, or was there any possibility for the court to come to an other decision, taking into account that for 12 consecutive months, there had not been any payments by the company?', "That's the first question.", 'The second one relates somewhat to what the government said at the very end of its argument.', 'We know what the situation is of the applicant, but there were also other shareholders who have also been held personally liable in the proceedings against the railway company.', 'Was it possible, is it possible for the applicant to turn to the fellow shareholders or to their heirs and obtain some part from them, the part of what he had to pay to the railway company?', 'And if so, how would then the individual responsibility of each of the shareholders be determined in the proceedings between them?', 'Thank you.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. Judge Zalar, please.

[('4678.69', '4681.81')]

['en']

['Thank you very much. Judge Zalar, please.']

3648007_14032018

Judge

Boštjan Zalar

Thank you, Mr. President. I would have two questions for both parties and one question just for the government. And the first question concerns the so-called irregularities or respect or disrespect of the principle of good corporate governance. And this is a disputed issue between the parties since the applicant says in his observations of 15 December that the applicant did avoid committing any irregularity under the company law and that he also behaved with the diligence required to a private individual who is a minority shareholder of a limited liability company. In paragraph 197 of the observations, the applicant even says that not even the government claimed that the applicant actually committed any irregularity in the management of the company. But on the other side, the government in its observations of 15 December denies that by saying that it has drawn attention to how the applicant should have and could have acted. Separately from the element of active membership, which is, in my opinion, a relevant element for the assessment of proportionality, eventual irregularities or serious professional misconduct are relevant, too, for the assessment of proportionality of interference in the light of the Institute of Lifting the Corporate Whale. For example, the chamber's judgment in this respect in paragraphs 125 and 126 mentions rather very broad elements, such as inadequate capitalization, failure to observe the law and good business practices, prolonged state of insolvency, inactivity of the part of the company's management, and in much more concrete terms, the chamber's judgment mentioned the failure to institute bankruptcy proceedings. So my question is, what were the concrete specific, although the most important, irregularities or serious professional misconduct caused by the management of the company before the strike-off proceedings were initiated? And my second question, which is related to the first one, is, what could the applicant do in order to avoid liability for the debt of the company? Apart from bankruptcy, missed opportunity for the bankruptcy proceedings, is it correct to say that the applicant could simply have withdrawn from the company? And by doing so, he would have avoided liability, as this is claimed by the government in its observations from 15 December under paragraph 76. In this respect, in the paragraph 76 on page 30 of the government's observation, the government relies on a decision of Ljubljana High Court mentioned in the footnote 86. But this decision relates to a legal situation under the law which was enforced in 2009, while the applicant's company was strike-off in 2001. So my second question is, what could the applicant do to avoid being liable for a company's debt? And this is relevant, in my opinion, from the standpoint of the standard of excessive burden, as this being part of the proportionality test. And finally, I have a very short question only for the government. Was there any particular reason that legislator did not introduced the model of somehow limited liability of the members of the company? Because it seems that the law introduced unlimited liability of the members of the company.

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['Thank you, Mr. President.', 'I would have two questions for both parties and one question just for the government.', 'And the first question concerns the so-called irregularities or respect or disrespect of the principle of good corporate governance.', 'And this is a disputed issue between the parties since the applicant says in his observations of 15 December that the applicant did avoid committing any irregularity under the company law and that he also behaved with the diligence required to a private individual who is a minority shareholder of a limited liability company.', 'In paragraph 197 of the observations, the applicant even says that not even the government claimed that the applicant actually committed any irregularity in the management of the company.', 'But on the other side, the government in its observations of 15 December denies that by saying that it has drawn attention to how the applicant should have and could have acted.', 'Separately from the element of active membership, which is, in my opinion, a relevant element for the assessment of proportionality, eventual irregularities or serious professional misconduct are relevant, too, for the assessment of proportionality of interference in the light of the Institute of Lifting the Corporate Whale.', "For example, the chamber's judgment in this respect in paragraphs 125 and 126 mentions rather very broad elements, such as inadequate capitalization, failure to observe the law and good business practices, prolonged state of insolvency, inactivity of the part of the company's management, and in much more concrete terms, the chamber's judgment mentioned the failure to institute bankruptcy proceedings.", 'So my question is, what were the concrete specific, although the most important, irregularities or serious professional misconduct caused by the management of the company before the strike-off proceedings were initiated?', 'And my second question, which is related to the first one, is, what could the applicant do in order to avoid liability for the debt of the company?', 'Apart from bankruptcy, missed opportunity for the bankruptcy proceedings, is it correct to say that the applicant could simply have withdrawn from the company?', 'And by doing so, he would have avoided liability, as this is claimed by the government in its observations from 15 December under paragraph 76.', "In this respect, in the paragraph 76 on page 30 of the government's observation, the government relies on a decision of Ljubljana High Court mentioned in the footnote 86.", "But this decision relates to a legal situation under the law which was enforced in 2009, while the applicant's company was strike-off in 2001.", "So my second question is, what could the applicant do to avoid being liable for a company's debt?", 'And this is relevant, in my opinion, from the standpoint of the standard of excessive burden, as this being part of the proportionality test.', 'And finally, I have a very short question only for the government.', 'Was there any particular reason that legislator did not introduced the model of somehow limited liability of the members of the company?', 'Because it seems that the law introduced unlimited liability of the members of the company.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. If there are no further questions, the court will now withdraw for 20 minutes, following which the parties will be able to submit brief observations in reply to each other's submissions and reply to the questions from the judges. The hearing is suspended.

[('4931.59', '4933.79'), ('4933.79', '4949.67'), ('4949.67', '4950.67')]

['en', 'en', 'en']

['Thank you very much.', "If there are no further questions, the court will now withdraw for 20 minutes, following which the parties will be able to submit brief observations in reply to each other's submissions and reply to the questions from the judges.", 'The hearing is suspended.']

3648007_14032018

Announcer

UNK

La Cour!

[('5448.19', '5448.83')]

['fr']

['La Cour!']

3648007_14032018

JudgeP

Guido Raimondi

Please be seated. So the hearing is resumed and I call Mr. Saccucci.

[('5485.68', '5486.96'), ('5486.96', '5497.2')]

['en', 'en']

['Please be seated.', 'So the hearing is resumed and I call Mr. Saccucci.']

3648007_14032018

Applicant

AP1

I will address the manager issue, and in so doing, I will try to respond to some of the judges' questions on this point. The government now suggests that the applicant was the actual company's manager up until 2000. But this suggestion, with all due respect, is preposterous. In fact, the applicant has served as acting manager for less than two years, from 1993 to 1995, and as managing director for less than one year and three months, from 1995 to 6 May 1996. The government themselves acknowledge in their pleadings that the applicant resigned on 6 May 1996. That is to say, more than three years before the FOCA was approved, and more than 4 and 1 1 2 years before the striking of proceedings were initiated. Actually, in a letter to the district court of 18 November 2000, the applicant clarified that he was not the manager of the company anymore, and also that he had made efforts to wind up the company through voluntary bankruptcy proceedings in 1997. Besides, even domestic jurisdiction said that the applicant's former managerial position was not decisive in order to establish his personal liability. As a matter of fact, all the other shareholders against whom the Railway of Slovenia brought enforcement proceedings under the FOCA have been held personally liable, even if they had neither served as managers nor been actively involved in the management of the company. The case of one of these shareholders, Mr. Pogorelic, is exemplary in this respect, because Mr. Pogorelic was considered to be an active shareholder only because he owned an 11.11% share in the company. But Mr. Pogorelic was seriously injured in the car accident that occurred in 1993, which caused the death of two key members and managers of the company, so that his actual influence in the company was virtually non-existent. That notwithstanding, he was found to be an active shareholder on the basis of the very same presumption that was applied against the applicant. We have submitted the decision of the Constitutional Court in the case of Mr. Pogorelic. We have also submitted the decisions of the District and Higher Court of Maribor of 2003 and 2013 concerning the case of three former employees of a Strakhov company who received around 12% share each in order to show loyalty to the director who owned 51% of the company. All that notwithstanding, domestic courts found that these three minority shareholders were active within the meaning of the Constitutional Court decision of 2002. And once again, these findings were exclusively based on their theoretical possibility to influence the company making use of their minority rights. Clearly, these rights were useless against a single shareholder holding 51% share. Yet the higher court stated that the shareholders alone were guilty for remaining passive and rather paradoxically maintained that it was precisely their passivity that made them active shareholders under the FOCA. In conclusion, it is the government themselves who say at paragraph 76 of their observation that in order to avoid liability, the applicant could have withdrawn from the company and that case law confirmed that only persons who were company members at the time the company was struck off from the court register were liable for the obligations under the FOCA. So the only fault that can be attributed to the applicant is that he had not given up his shares before striking off. And he didn't do so precisely because he acted in good faith.

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["I will address the manager issue, and in so doing, I will try to respond to some of the judges' questions on this point.", "The government now suggests that the applicant was the actual company's manager up until 2000.", 'But this suggestion, with all due respect, is preposterous.', 'In fact, the applicant has served as acting manager for less than two years, from 1993 to 1995, and as managing director for less than one year and three months, from 1995 to 6 May 1996.', 'The government themselves acknowledge in their pleadings that the applicant resigned on 6 May 1996.', 'That is to say, more than three years before the FOCA was approved, and more than 4 and 1 1 2 years before the striking of proceedings were initiated.', 'Actually, in a letter to the district court of 18 November 2000, the applicant clarified that he was not the manager of the company anymore, and also that he had made efforts to wind up the company through voluntary bankruptcy proceedings in 1997.', "Besides, even domestic jurisdiction said that the applicant's former managerial position was not decisive in order to establish his personal liability.", 'As a matter of fact, all the other shareholders against whom the Railway of Slovenia brought enforcement proceedings under the FOCA have been held personally liable, even if they had neither served as managers nor been actively involved in the management of the company.', 'The case of one of these shareholders, Mr. Pogorelic,', 'is exemplary in this respect, because Mr. Pogorelic', 'was considered to be an active shareholder only because he owned an 11.11% share in the company.', 'But Mr. Pogorelic was seriously injured in the car accident', 'that occurred in 1993, which caused the death of two key members and managers of the company, so that his actual influence in the company was virtually non-existent.', 'That notwithstanding, he was found to be an active shareholder on the basis of the very same presumption that was applied against the applicant.', 'We have submitted the decision of the Constitutional Court in the case of Mr. Pogorelic.', 'We have also submitted the decisions of the District and Higher Court of Maribor of 2003 and 2013 concerning the case of three former employees of a Strakhov company who received around 12% share each in order to show loyalty to the director who owned 51% of the company.', 'All that notwithstanding, domestic courts found that these three minority shareholders were active within the meaning of the Constitutional Court decision of 2002.', 'And once again, these findings were exclusively based on their theoretical possibility to influence the company making use of their minority rights.', 'Clearly, these rights were useless against a single shareholder holding 51% share.', 'Yet the higher court stated that the shareholders alone were guilty for remaining passive and rather paradoxically maintained that it was precisely their passivity that made them active shareholders under the FOCA.', 'In conclusion, it is the government themselves who say at paragraph 76 of their observation that in order to avoid liability, the applicant could have withdrawn from the company and that case law confirmed that only persons who were company members at the time the company was struck off from the court register were liable for the obligations under the FOCA.', 'So the only fault that can be attributed to the applicant is that he had not given up his shares before striking off.', "And he didn't do so precisely because he acted in good faith."]

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much, Mr Zamboni.

[('5758.1', '5761.62')]

['en']

['Thank you very much, Mr Zamboni.']

3648007_14032018

Applicant

AP2

Thank you, Mr. President. I will address some other questions posed by the judges in a joint fashion, and I will start dealing with the entry into force of Chapter 3 of the FOCA. According to Article 41 of the FOCA, the new law entered into force on 23 July 1999. According to Article 25, Paragraph 2 of the FOCA, a company is presumed as having no asset if it makes no payment through its bank account for 12 consecutive months. Therefore, the Chamber's finding and the government's contention that Chapter 3 entered into force after one year by gas alleges, thus providing inactive and solvent companies with sufficient time to institute appropriate proceedings in order to have the company dissolved, is, to say the least, simply wrong. Chapter 3 entered into force on 23 July 1999, as the rest of the FOCA. It was Article 25 itself that stated that the condition for a company to be presumed inactive depended upon the absence of transactions through its bank account for 12 consecutive months. And against this background, it transpires that the company in which the applicant held his minority share was among the first limited liability companies to be struck off pursuant to Chapter 3 of the FOCA. Indeed, the 12 months provided for under Article 25, Paragraph 2 of the FOCA, expired on 23 July 2000. The striking off proceedings of the company in which the applicant held a minority share were initiated on 19 January 2001. That is to say, less than six months from the date Chapter 3 became applicable. And that was even before the beginning of the proceedings that eventually culminated in the Constitutional Court's judgment, number 135 of 2002. And this further corroborates the argument that the applicant could not foresee the consequences of the implementation of the new legislation. And I will also use this short time at my disposal to deal on a separate note with the nature of Article 27, Paragraph 4 of the FOCA. As we pointed out earlier, presumptions are crucial in this case. Both the violation of Article 6 and the violation of Article 1 of Protocol 1 ultimately stem from a chain of legal presumptions introduced by the FOCA. As a matter of fact, Mr. Leckage suffered the effects of a chain of presumptions which virtually deprived him of any opportunity to challenge the measures complained of. First, the company was presumed as having no asset because it did not make any payment through its bank account for 12 consecutive months. Second, the company having no asset was presumed to be inactive and therefore subjected to striking off proceedings. Third, shareholders, including the applicant, were presumed to have knowledge of the striking off proceedings owing to the service of the relevant decisions on the company's premises. Fourth, shareholders were presumed to have filed a certified statement accepting personal liability for the struck off company's debt. And fifth, shareholders were presumed to be active if they held at least a 10 percent share of the company. None of these presumptions was rebuttable in law, nor was the applicant able to effectively challenge them in practice in order to avoid personal liability. Similar situations have already been found to be in breach of the Convention. In Papakellas v. Greece of 1999, the ground chamber held that a legally irrebuttable presumption contravenes Article 1 of Protocol 1. In the subsequent case of Estatillo and Mikailidis v. Greece of 2003, the Court came to the same conclusion, even though the national courts had in the meantime accepted that the presumption in question was no longer irrebuttable. The case of Mr. Leckage is even more serious because we're not talking about just one presumption. We're talking about five combined presumptions leading up to the imposition of a sanction. Thank you, Mr. President.

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['Thank you, Mr. President.', 'I will address some other questions posed by the judges in a joint fashion, and I will start dealing with the entry into force of Chapter 3 of the FOCA.', 'According to Article 41 of the FOCA, the new law entered into force on 23 July 1999.', 'According to Article 25, Paragraph 2 of the FOCA, a company is presumed as having no asset if it makes no payment through its bank account for 12 consecutive months.', "Therefore, the Chamber's finding and the government's contention that Chapter 3 entered into force after one year by gas alleges, thus providing inactive and solvent companies with sufficient time to institute appropriate proceedings in order to have the company dissolved, is, to say the least, simply wrong.", 'Chapter 3 entered into force on 23 July 1999, as the rest of the FOCA.', 'It was Article 25 itself that stated that the condition for a company to be presumed inactive depended upon the absence of transactions through its bank account for 12 consecutive months.', 'And against this background, it transpires that the company in which the applicant held his minority share was among the first limited liability companies to be struck off pursuant to Chapter 3 of the FOCA.', 'Indeed, the 12 months provided for under Article 25, Paragraph 2 of the FOCA, expired on 23 July 2000.', 'The striking off proceedings of the company in which the applicant held a minority share were initiated on 19 January 2001.', 'That is to say, less than six months from the date Chapter 3 became applicable.', "And that was even before the beginning of the proceedings that eventually culminated in the Constitutional Court's judgment, number 135 of 2002.", 'And this further corroborates the argument that the applicant could not foresee the consequences of the implementation of the new legislation.', 'And I will also use this short time at my disposal to deal on a separate note with the nature of Article 27, Paragraph 4 of the FOCA.', 'As we pointed out earlier, presumptions are crucial in this case.', 'Both the violation of Article 6 and the violation of Article 1 of Protocol 1 ultimately stem from a chain of legal presumptions introduced by the FOCA.', 'As a matter of fact, Mr. Leckage suffered the effects of a chain of presumptions which virtually deprived him', 'of any opportunity to challenge the measures complained of.', 'First, the company was presumed as having no asset because it did not make any payment through its bank account for 12 consecutive months.', 'Second, the company having no asset was presumed to be inactive and therefore subjected to striking off proceedings.', "Third, shareholders, including the applicant, were presumed to have knowledge of the striking off proceedings owing to the service of the relevant decisions on the company's premises.", "Fourth, shareholders were presumed to have filed a certified statement accepting personal liability for the struck off company's debt.", 'And fifth, shareholders were presumed to be active if they held at least a 10 percent share of the company.', 'None of these presumptions was rebuttable in law, nor was the applicant able to effectively challenge them in practice in order to avoid personal liability.', 'Similar situations have already been found to be in breach of the Convention.', 'In Papakellas v. Greece of 1999, the ground chamber held that a legally irrebuttable presumption contravenes Article 1 of Protocol 1.', 'In the subsequent case of Estatillo and Mikailidis v. Greece of 2003, the Court came to the same conclusion,', 'even though the national courts had in the meantime accepted that the presumption in question was no longer irrebuttable.', "The case of Mr. Leckage is even more serious because we're not talking about just one presumption.", "We're talking about five combined presumptions leading up to the imposition of a sanction.", 'Thank you, Mr. President.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much. Mr. Saccucci please.

[('6031.57', '6033.49'), ('6033.49', '6034.33')]

['en', 'en']

['Thank you very much.', 'Mr. Saccucci please.']

3648007_14032018

Applicant

AP3

Mr. President, very briefly on the government's procedural objection concerning foreseeability, which also addressed one of the judges' questions, the government argued that the question of foreseeability of the FOCA falls outside the scope of the case, as the applicant allegedly did not claim at all, that he was not familiar with that legislation. This is not true, because even before the chamber, the paragraph 67 of his observation of 2nd May 2013, the applicant did, in fact, complain that he was unable to foresee the criteria for personal liability, since these criteria at the time were not laid down in the law. And even more importantly, in our view, the chamber dove in substance with a question of foreseeability at paragraph 90 to 96 of its judgment. And however unsatisfactory the chamber's assessment on this issue certainly brings it within the scope of the case before the Green Chamber in accordance with the set of case law on this point. About the lack of proportionality, we say that the system envisaged by the FOCA did not strike a fair balance between the public interest to protect creditors and the burden imposed on shareholders' rights. First, the system excessively affected the position of shareholders vis-a-vis the position of the company's creditors. Creditors got it all, while the liable shareholders got a zero. And in Beck versus Finland, these courts said that in order to strike a fair balance between creditors and debtors, an arrangement should take into account such factors as the market value of the claim, the risk of financial loss accepted by the creditor, and the public interest in affording debtors the possibility of seeking a debt adjustment. Now clearly none of these factors has been taken into account in the present case. Second, there were other less afflictive measures available in Slovenian legal system at the material time that could be used in order to tackle the problem of inactive companies and to offer a sufficient degree of protection to companies' creditors, such as the traditional institution of piercing the corporate bail, which was indeed provided by Article VI of the Companies Act of 1993, or the ex officio bankruptcy proceedings, again provided by the Companies Act proceedings which were never opened in the applicant case. Third, the shareholders had no possibility to be exonerated from personal liability once the striking of proceeding had been initiated, because they could not anymore apply for voluntary bankruptcy. And this is particularly troublesome in the applicant's case, as he actually sought to have the company wind up well before the entry into force of the FOCA. Fourth, the provision of shareholders joined in several liability allows the creditors to choose the shareholder against whom to enforce their claims under the FOCA. A minority shareholder can therefore be more attractive for a company's creditor, just because he or she has more assets to foreclose, irrespective of their actual role or influence in the company. And the other shareholders may even go free of any consequence if the creditor freely decides not to enforce his claims against them, as it happened for one of the shareholders of the LE company. Fifth, precisely because it departs from the universal principles of company law, the FOCA system is fundamentally unfair, also for the creditors of struck-off companies. Instead of creating a mechanism for the orderly repayment of companies' outstanding debt based on the principle of the par conditio creditorum, the FOCA gives precedence to the first creditor who takes action against the shareholders. And the consequence is that if the personal assets of individual shareholders are not sufficient to satisfy all the creditors of the company, some of them may be left without any protection at all. About one of the questions that was posed by the judges, we believe that it's not for the court to speculate as to what the outcome of the proceedings would have been if the applicant had been made aware of the striking-off proceedings, or he had been allowed to effectively challenge the final decision on striking off. The applicant repeatedly asked the domestic court to be judged in accordance with Article 6 of the Companies Act. But as we said, no such an assessment was ever made by domestic court. The line to be drawn under the convention is that piercing the corporate vase should be allowed only in extreme cases where abuses have been committed and established by shareholders to the company's creditors' detriment. And the difference with the Courage case, it's very simple. In the Courage case, the Constitutional Court of Slovenia found that the domestic legislation was in breach of fundamental rights. In our case, the Constitution found that the convention standards did not apply to the FOCA. Thank you very much, Mr. President.

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["Mr. President, very briefly on the government's procedural objection", "concerning foreseeability, which also addressed one of the judges' questions, the government argued that the question of foreseeability of the FOCA falls outside the scope of the case, as the applicant allegedly did not claim at all, that he was not familiar with that legislation.", 'This is not true, because even before the chamber, the paragraph 67 of his observation of 2nd May 2013, the applicant did, in fact, complain that he was unable to foresee the criteria for personal liability, since these criteria at the time were not laid down in the law.', 'And even more importantly, in our view, the chamber dove in substance with a question of foreseeability at paragraph 90 to 96 of its judgment.', "And however unsatisfactory the chamber's assessment on this issue certainly brings it within the scope of the case before the Green Chamber in accordance with the set of case law on this point.", "About the lack of proportionality, we say that the system envisaged by the FOCA did not strike a fair balance between the public interest to protect creditors and the burden imposed on shareholders' rights.", "First, the system excessively affected the position of shareholders vis-a-vis the position of the company's creditors.", 'Creditors got it all, while the liable shareholders got a zero.', 'And in Beck versus Finland, these courts said that in order to strike a fair balance between creditors and debtors, an arrangement should take into account such factors as the market value of the claim, the risk of financial loss accepted by the creditor, and the public interest in affording debtors the possibility of seeking a debt adjustment.', 'Now clearly none of these factors has been taken into account in the present case.', "Second, there were other less afflictive measures available in Slovenian legal system at the material time that could be used in order to tackle the problem of inactive companies and to offer a sufficient degree of protection to companies' creditors, such as the traditional institution of piercing the corporate bail, which was indeed provided by Article VI of the Companies Act of 1993, or the ex officio bankruptcy proceedings, again provided by the Companies Act proceedings which were never opened in the applicant case.", 'Third, the shareholders had no possibility to be exonerated from personal liability once the striking of proceeding had been initiated, because they could not anymore apply for voluntary bankruptcy.', "And this is particularly troublesome in the applicant's case, as he actually sought to have the company wind up well before the entry into force of the FOCA.", 'Fourth, the provision of shareholders joined in several liability allows the creditors to choose the shareholder against whom to enforce their claims under the FOCA.', "A minority shareholder can therefore be more attractive for a company's creditor, just because he or she has more assets to foreclose, irrespective of their actual role or influence in the company.", 'And the other shareholders may even go free of any consequence if the creditor freely decides not to enforce his claims against them, as it happened for one of the shareholders of the LE company.', 'Fifth, precisely because it departs from the universal principles of company law, the FOCA system is fundamentally unfair, also for the creditors of struck-off companies.', "Instead of creating a mechanism for the orderly repayment of companies' outstanding debt based on the principle of the par conditio creditorum, the FOCA gives precedence to the first creditor who takes action against the shareholders.", 'And the consequence is that if the personal assets of individual shareholders are not sufficient to satisfy all the creditors of the company, some of them may be left without any protection at all.', "About one of the questions that was posed by the judges, we believe that it's not for the court to speculate as to what the outcome of the proceedings would have been if the applicant had been made aware of the striking-off proceedings, or he had been allowed to effectively challenge the final decision on striking off.", 'The applicant repeatedly asked the domestic court to be judged in accordance with Article 6 of the Companies Act.', 'But as we said, no such an assessment was ever made by domestic court.', "The line to be drawn under the convention is that piercing the corporate vase should be allowed only in extreme cases where abuses have been committed and established by shareholders to the company's creditors' detriment.", "And the difference with the Courage case, it's very simple.", 'In the Courage case, the Constitutional Court of Slovenia found that the domestic legislation was in breach of fundamental rights.', 'In our case, the Constitution found that the convention standards did not apply to the FOCA.', 'Thank you very much, Mr. President.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much, Mr. Saccucci . I call Mrs. Jovin Hrastnik. Please, you have the floor, madam.

[('6372.53', '6375.05'), ('6375.05', '6377.55'), ('6377.55', '6377.55')]

['en', 'en', 'en']

['Thank you very much, Mr. Saccucci .', 'I call Mrs. Jovin Hrastnik.', 'Please, you have the floor, madam.']

3648007_14032018

Government

GR1

First, we would like to comment on the two decisions of Maribor Courts submitted by the applicant before this hearing. These decisions refer to the personal liability of company members for the debts of the struck-off company D. The case of the company D differs from the case of the applicant's company L.E. Both companies were established on the basis of the Yugoslav Undertakings Act. After the adoption of the Slovenian Companies Act in 1993, all existing companies had to be brought into line with the new rules until the end of the following year. So they had to adjust their share capital or to transform into a type of company for which they fulfilled the conditions. While the applicant's company L.E. adjusted itself, the company D did not do so. So the Companies Act determined that in such case, company members became immediately personally liable for the debts of the non-adjusted, but at that time still existing companies. Contrary to that, the applicant became personally liable only when the company L.E. was struck off the court register. Secondly, regarding the value of a share of an individual member, we believe that the value of the share is important only if the member is liable for the debts within the limits of his share. The essence of piercing the corporate whale is, however, precisely that a company member is personally liable with all his assets, so regardless of the value of his share. So it was not the value of the share, but the percentage that was important when considering the applicant's status of an active company member, namely those members whose shareholdings account for at least 10% of the share capital, have the status of minority member, and we believe that they are able to influence the operations of the company. So now we will comment on the submission of the civil initiative. In the proceedings before the Grand Chamber, the civil initiative has presented itself as an initiative that brings together 1,000 entrepreneurs. The following explanation has to be provided in this regard. The civil initiative is an informal association of persons. The contact information on its website lists only one name, that is that of the person who is the president of the civil initiative and who signed the submission file in these proceedings. The civil initiative has no address and no other contact information is to be found on its website. As the civil initiative is an entirely informal association of persons, its representative character may not be verified. Regarding the creditability of its allegations, the memorial filed by the civil initiative is full of false information and allegations. This is regrettable, but not surprising, as the civil initiative has already acted in such a manner in the past. For example, in the proceedings before the Grand Chamber, the applicant submitted the document before, which is a record of the session of two committees of the National Assembly. The session referred to the proposal to abolish the personal liability of active company members for the debts of struck-off companies. At this session, the representative of the civil initiative claimed that the differentiation between active and passive members was invented by a secretary at the Constitutional Court because the judges did not know how to distribute the liability. The government is of the opinion that such statements are completely inappropriate and they show a total lack of respect towards the Constitutional Court. The government proposes that the credibility of the civil initiative be assessed in the light of these and similar inappropriate statements, which are part of the memorials submitted by the civil initiative in these proceedings. About the allegations, first, it is not true that the Financial Operation of Companies Act provided for the striking off of companies without any formal proceedings. The government has already explained in detail how the proceedings were conducted and what legal remedies were available. It is also not true that the debts of the struck-off companies were transferred to company members immediately upon the entry into force of the Act. The transfer of debts is a consequence of striking off and cannot occur before that. It is also not true that the founders who were no longer company members at the time when the company was struck off were also held liable for the debts of the struck-off company. Only those persons who were in fact members at the time of striking off were held liable. In its observations of December 2017, the government cited the case law which confirms that. It is also not true that the Constitutional Court imposed on the legislature the obligation to identify the criteria relevant for determining the status of active company member. Where did the civil initiative find this information? It is also not true that the objection against the enforcement order was not allowed in enforcement proceedings. On the contrary, it is precisely the case of the applicant package that reaffirms the availability of legal remedies to debtor. If the debtor entered the proceedings only after the enforcement order had become final, he nevertheless had the opportunity to object against it. This is evident from the legal opinion of the Supreme Court of the Republic of Slovenia from 2003 and the decision of the Constitutional Court from 2005. Moreover, this is also evident from the two decisions of Maribor Courts submitted by the applicants. Several complaints raised by the civil initiative in the present proceedings have already been addressed and rejected in the Constitutional Court decisions. For example, the misinterpretation that Slovenian court decisions could not be enforced abroad and its complaints about the supposed retroactivity of the act. The civil initiative also claims that debtors suffered due to the publication of their names and stories in the media, while at the same time on its website, the civil initiative itself encourages the debtors to present their stories in media. The government believes that no further comments on the role of, on the memorial of the civil initiative are necessary.

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['en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en', 'en']

['First, we would like to comment on the two decisions of Maribor Courts submitted by the applicant before this hearing.', 'These decisions refer to the personal liability of company members for the debts of the struck-off company D.', "The case of the company D differs from the case of the applicant's company L.E.", 'Both companies were established on the basis of the Yugoslav Undertakings Act.', 'After the adoption of the Slovenian Companies Act in 1993, all existing companies had to be brought into line with the new rules until the end of the following year.', 'So they had to adjust their share capital or to transform into a type of company for which they fulfilled the conditions.', "While the applicant's company L.E. adjusted itself, the company D did not do so.", 'So the Companies Act determined that in such case, company members became immediately personally liable for the debts of the non-adjusted, but at that time still existing companies.', 'Contrary to that, the applicant became personally liable only when the company L.E. was struck off the court register.', 'Secondly, regarding the value of a share of an individual member, we believe that the value of the share is important only if the member is liable for the debts within the limits of his share.', 'The essence of piercing the corporate whale is, however, precisely that a company member is personally liable with all his assets, so regardless of the value of his share.', "So it was not the value of the share, but the percentage that was important when considering the applicant's status of an active company member, namely those members whose shareholdings account for at least 10% of the share capital, have the status of minority member, and we believe that they are able to influence the operations of the company.", 'So now we will comment on the submission of the civil initiative.', 'In the proceedings before the Grand Chamber, the civil initiative has presented itself as an initiative that brings together 1,000 entrepreneurs.', 'The following explanation has to be provided in this regard.', 'The civil initiative is an informal association of persons.', 'The contact information on its website lists only one name, that is that of the person who is the president of the civil initiative and who signed the submission file in these proceedings.', 'The civil initiative has no address and no other contact information is to be found on its website.', 'As the civil initiative is an entirely informal association of persons, its representative character may not be verified.', 'Regarding the creditability of its allegations, the memorial filed by the civil initiative is full of false information and allegations.', 'This is regrettable, but not surprising, as the civil initiative has already acted in such a manner in the past.', 'For example, in the proceedings before the Grand Chamber, the applicant submitted the document before, which is a record of the session of two committees of the National Assembly.', 'The session referred to the proposal to abolish the personal liability of active company members for the debts of struck-off companies.', 'At this session, the representative of the civil initiative claimed that the differentiation between active and passive members was invented by a secretary at the Constitutional Court because the judges did not know how to distribute the liability.', 'The government is of the opinion that such statements are completely inappropriate and they show a total lack of respect towards the Constitutional Court.', 'The government proposes that the credibility of the civil initiative be assessed in the light of these and similar inappropriate statements, which are part of the memorials submitted by the civil initiative in these proceedings.', 'About the allegations, first, it is not true that the Financial Operation of Companies Act provided for the striking off of companies without any formal proceedings.', 'The government has already explained in detail how the proceedings were conducted and what legal remedies were available.', 'It is also not true that the debts of the struck-off companies were transferred to company members immediately upon the entry into force of the Act.', 'The transfer of debts is a consequence of striking off and cannot occur before that.', 'It is also not true that the founders who were no longer company members at the time when the company was struck off were also held liable for the debts of the struck-off company.', 'Only those persons who were in fact members at the time of striking off were held liable.', 'In its observations of December 2017, the government cited the case law which confirms that.', 'It is also not true that the Constitutional Court imposed on the legislature the obligation to identify the criteria relevant for determining the status of active company member.', 'Where did the civil initiative find this information?', 'It is also not true that the objection against the enforcement order was not allowed in enforcement proceedings.', 'On the contrary, it is precisely the case of the applicant package that reaffirms the availability of legal remedies to debtor.', 'If the debtor entered the proceedings only after the enforcement order had become final, he nevertheless had the opportunity to object against it.', 'This is evident from the legal opinion of the Supreme Court of the Republic of Slovenia from 2003 and the decision of the Constitutional Court from 2005.', 'Moreover, this is also evident from the two decisions of Maribor Courts submitted by the applicants.', 'Several complaints raised by the civil initiative in the present proceedings have already been addressed and rejected in the Constitutional Court decisions.', 'For example, the misinterpretation that Slovenian court decisions could not be enforced abroad and its complaints about the supposed retroactivity of the act.', 'The civil initiative also claims that debtors suffered due to the publication of their names and stories in the media, while at the same time on its website, the civil initiative itself encourages the debtors to present their stories in media.', 'The government believes that no further comments on the role of, on the memorial of the civil initiative are necessary.']

3648007_14032018

JudgeP

Guido Raimondi

Thank you very much, Mrs. Jovin Hrastnik. And we have now come to the end of the hearing. I thank the parties for their submissions and their answers to the court's questions. The court will now deliberate on the merits. The judgment will be delivered later and the parties will be informed of the date of delivery. I declare the hearing closed.

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['Thank you very much, Mrs. Jovin Hrastnik.', 'And we have now come to the end of the hearing.', "I thank the parties for their submissions and their answers to the court's questions.", 'The court will now deliberate on the merits.', 'The judgment will be delivered later and the parties will be informed of the date of delivery.', 'I declare the hearing closed.']