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THIRD
SECTION
CASE OF PAYKAR YEV HAGHTANAK LTD v. ARMENIA
(Application
no. 21638/03)
JUDGMENT
STRASBOURG
20
December 2007
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Paykar Yev Haghtanak Ltd v. Armenia,
The
European Court of Human Rights (Third Section), sitting as a Chamber
composed of:
Mr B.M. Zupančič,
President,
Mr C. Bîrsan,
Mrs E.
Fura-Sandström,
Mrs A. Gyulumyan,
Mr E.
Myjer,
Mr David Thór Björgvinsson,
Mrs I.
Berro-Lefèvre, judges,
and Mr S. Quesada, Section
Registrar,
Having
deliberated in private on 29 November 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 21638/03) against the Republic
of Armenia lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a limited liability company Paykar Yev
Haghtanak Ltd (“the applicant company”), on 18 June 2003.
- The applicant company was represented by its manager
and sole employee, Mr R. Ayvazyan. The Armenian Government (“the
Government”) were represented by their Agent, Mr G. Kostanyan,
Representative of the Republic of Armenia at the European Court of
Human Rights.
- On
15 November 2005 the Court decided to give notice of the application
to the Government. Under the provisions of Article 29 § 3 of the
Convention, it decided to examine the merits of the application at
the same time as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant is a private small-scale trading company which has its
registered office in Yerevan.
- On
29 January 2001 the Tax Inspectorate conducted an inspection of the
applicant company's accounts. As a result of this inspection, on
2 April 2001 the Ministry of State Revenue (ՀՀ
պետական եկամուտների
նախարարություն)
made an assessment, according to which the applicant company's tax
arrears amounted to 3,797,281 Armenian drams (AMD) (approx. 5,400
euros (EUR)), including surcharges and fines prescribed by the
relevant tax laws.
- On
an unspecified date, the Yerevan City Prosecutor's Office (Երևան
քաղաքի դատախազություն)
and the Tax Inspectorate of the Myasnikyan District of Yerevan
(Երևանի
Մյասնիկյանի
տարածքային
հարկային տեսչություն)
instituted proceedings against the applicant company, claiming that
it had failed to meet its tax obligations in an appropriate and
timely manner and seeking to recover the above tax arrears.
- On
13 July 2001 the Kentron and Nork-Marash District Court of Yerevan
(Երևան
քաղաքի Կենտրոն
և Նորք-Մարաշ
համայնքների
առաջին ատյանի
դատարան) decided
against the applicant company.
- On
an unspecified date, the applicant company lodged an appeal with the
then Commercial Court of Appeal (ՀՀ
տնտեսական
գործերով վերաքննիչ
դատարան). The
applicant company also requested that payment of the court fee (known
as State fee) be deferred. In his request, the manager of the
applicant company submitted, inter alia, that the company was
experiencing financial problems and that he was the company's sole
employee.
- On
31 August 2001 the Commercial Court of Appeal granted the applicant
company's request for deferral and admitted the appeal.
- Following
the reform of the court system introduced in Armenia on 11 September
2001 which brought about the establishment of the Commercial Court
(ՀՀ տնտեսական
դատարան), the
applicant company's case was transferred to be examined by that
court.
- On
5 November 2001 the Commercial Court decided to leave the
authorities' claim unexamined on the ground that the plaintiffs had
failed to appear. In its decision, the Commercial Court levied a
court fee on the Tax Inspectorate in the amount of AMD 189,864.05
(approx. EUR 370).
- It
appears that the proceedings were resumed on an unspecified date.
- On
24 December 2001 the Commercial Court decided, at the prosecutor's
request, to take measures aimed at securing the claim, freezing the
applicant company's property and monetary assets in the amount of AMD
3,797,281.
- On
an unspecified date, the applicant company lodged a counterclaim with
the Commercial Court, seeking to have the 2 April 2001 assessment
ruled unlawful. The applicant company requested that the payment of
the court fee be deferred on the same grounds as before.
- On
18 January 2002 the Commercial Court granted the applicant company's
request for deferral of payment of the court fee and allowed the
applicant company's counterclaim, referring to Articles 21 (d) and 31
(c) of the Law on State Fees («Պետական
տուրքի մասին»
ՀՀ
օրենք).
- On
3 December 2002 the Commercial Court decided to join both claims and
to examine them together.
- On
20 January 2003 the Commercial Court granted the authorities' claim
and dismissed that of the applicant company. The court decided to
levy on the applicant company a total of AMD 3,797,281 of tax
arrears, including profit tax arrears of AMD 193,400 plus a surcharge
of AMD 11,352.9 (approx. EUR 310 and EUR 18 respectively), Value
Added Tax (VAT) arrears of AMD 132,610 plus a surcharge of AMD
57,839.44 and a fine of AMD 73,080 (approx. EUR 213, EUR 93 and EUR
117 respectively), and simplified tax arrears of AMD 1,919,820 plus a
surcharge of AMD 304,428.66 and a fine of AMD 1,104,750 (approx. EUR
3,096, EUR 491 and EUR 1,781 respectively). In imposing the
surcharges and fines, the Commercial Court referred to Article 43 of
the Law on Value Added Tax («Ավելացված
արժեքի հարկի
մասին» ՀՀ օրենք),
Articles 25 and 28 of the Law on Taxes («Հարկերի
մասին» ՀՀ օրենք)
and the provisions relating to the delayed payment of taxes. The
amount of the unpaid court fee to be paid by the applicant company
was calculated at AMD 79,946 (approx. EUR 129).
- On
3 February 2003 the applicant company lodged a cassation appeal.
Together with the appeal, the applicant company submitted a request
for deferral of payment of the court fee, claiming that the company
was experiencing financial problems: the company had only AMD 770
(approx. EUR 1.2) on its books and in its bank account, both of which
had been frozen.
- By
a letter of 14 February 2003 the Court of Cassation informed the
applicant company that its cassation appeal would be examined on
28 February 2003. The letter also stated that the appeal would
be returned unexamined should the applicant fail to pay the court fee
by 24 February 2003.
- By
a letter of 27 February 2003 the Court of Cassation (ՀՀ
վճռաբեկ դատարան)
returned the applicant company's cassation appeal on the ground that
it had not paid the required court fee. The judgment of the
Commercial Court came into force.
- On
28 February 2003 the applicant company applied to the Chairman of the
Court of Cassation (ՀՀ
վճռաբեկ դատարանի
նախագահ),
requesting that its appeal be examined out of time and claiming that
it was incapable of paying the court fee since the company had almost
no assets and the existing ones were frozen.
- By
a letter of 13 March 2003 the Senior Advisor to the Civil and
Commercial Chamber of the Court of Cassation (ՀՀ
վճռաբեկ դատարանի
քաղաքացիական
և տնտեսական
գործերի պալատի
ավագ խորհրդատու)
informed the applicant company that its cassation appeal had been
returned since “according to Article 70 of the Code of
Civil Procedure [(CCP) (ՀՀ
քաղաքացիական
դատավարության
օրենսգիրք)]
commercial entities could not be exempted from payment of the State
fee”.
- On
25 March 2003 enforcement proceedings were instituted and an
injunction was placed on the applicant company's assets in the amount
equal to the judgment debt.
- On
22 April 2004 the Commercial Court instituted bankruptcy proceedings
in respect of the applicant company on the basis of an application
lodged by the Tax Inspectorate.
- On
20 May 2004 the Commercial Court decided to stay those proceedings
until a decision had been taken on the applicant company's
application lodged with the European Court. It appears that the
bankruptcy proceedings are currently still stayed.
II. RELEVANT DOMESTIC LAW
- The
relevant provisions of the CCP read as follows:
Article 70: State fees
“1. A State fee shall be paid for: (1)
lodging a claim; ... (7) lodging appeals and cassation appeals
against court judgments and decisions...
3. The determination of the amount of a State
fee, the exemption from its payment, the deferral or postponement of
payment of a State fee, and the reduction of its amount are regulated
by the “Law on State Fees” of Armenia.
Private businessmen and commercial entities cannot be
exempted from payment of a State fee.”
Article 97: Grounds for securing a claim
“1. The court, upon the request of a
party or of its own motion, shall take measures to secure a claim, if
the failure to take such measures may make impossible or hinder the
enforcement of a judicial act or lead to the deterioration of the
disputed property's condition. It is allowed to secure a claim at any
stage of the proceedings.”
Article 98: Measures securing a claim
“1. Measures securing a claim are: (1)
placing an injunction on [(freezing)] the defendant's property or
monetary assets in the amount of the claim value...”
Article 212: Returning an appeal
“1. An appeal shall be returned if: ...
(5) documents substantiating the payment of a State fee according to
an established procedure and in a prescribed amount are not attached
to the appeal, and, in cases where a deferral or postponement of
payment of a State fee or a reduction of its amount are possible
under the law, no relevant request has been made or such request has
been refused.”
Article 225: Grounds for lodging a cassation appeal
“A cassation appeal can be lodged on: (1) points
of law or a procedural violation of the parties' rights; [and] (2)
the ground of newly discovered circumstances.
Article 230: Content of a cassation appeal
“3. A document substantiating the
payment of a State fee shall be attached to the [cassation] appeal.”
Article 241.1: Grounds for reviewing judgments and
decisions on the basis of new circumstances
“1. Judgments and decisions can be
reviewed on the basis of new circumstances [if] ... a violation of a
right (rights) guaranteed by an international convention to which
Armenia is a party has been found by a final judgment or decision of
an international court...”
- The
relevant provisions of the Law on State Fees read as follows:
Article 8: Rates of State fees
“Rates of State fees shall be established in
respect of the value of the property subject to assessment or the
base fee established by this law. The amount of the base fee shall be
AMD 1,000.”
Article 9: Rates of State fees paid for claims,
applications and complaints, for appeals and cassation appeals lodged
against court judgments and decisions, and for copies (duplicates) of
documents provided by courts
“9. for cassation appeals lodged
against court judgments and decisions: (a) if a pecuniary claim –
at the rate of three per cent of the claim value, but not less than
ten times and not more than one thousand times the base fee; (b) if a
non-pecuniary claim – twenty times the base fee...”
Article 21: Concessions in respect of State fees
“The following concessions can be fixed in respect
of State fees: (a) exemption from payment of a State fee; (b)
reduction of the amount of a State fee: (c) reduction of the rate of
a State fee; (d) deferral of payment of a State fee; and (e)
exemption, reduction or deferral of payment of a surcharge imposed
for the failure to pay a State fee to the budget in due time.”
Article 22: Concessions in respect of State fees in
courts
“...Private businessmen and commercial entities
cannot be exempted from payment of State fees prescribed by Article 9
of this law...”
Article 31: Setting concessions in respect of State
fees for specific payers or groups of payers
“Concessions in respect of payment of a State fee
by specific payers or groups of payers can be set by: ... (c) the
courts or judges in specific cases referred to in Article 9 of this
law taking into account the financial situation of the parties...”
- The
relevant provisions of the Law on Taxes read as follows:
Article 16
“Tax liability shall include payment of taxes
(including taxes for a concealed or understated taxable object), and
surcharges and fines prescribed by the tax legislation for violation
of the tax legislation and other legal acts regulating tax relations
in Armenia.”
Article 21
“Taxpayers (enterprises, institutions and
organisations) and their officials as determined by the legislation
of Armenia shall be responsible for accurate calculation and timely
payment of taxes, and for compliance with other requirements of the
tax legislation...”
Article 23
“In case of delayed payment of tax, taxpayers ...
shall pay a surcharge equal to 0.15 per cent of the overdue amount
for each day of delay.”
Article 25
“In case of failure to keep accounts (and also
other calculations and (or) records envisaged by the tax legislation
and the decrees of the Government of Armenia) or in case of keeping
accounts in violation of the established procedure or inaccurately
preparing accounting reports, calculations, tax returns and other
documents and information required under the tax legislation, a fine
shall be levied on the taxpayer equal to ten per cent of the amount
of the tax not paid or paid incompletely to the budget as a result of
these violations.”
Article 28
“In case of non-registration of objects of
business activity, such as supplied, furnished, transported or sold
goods and products, and non-registration of work carried out and
services rendered in conformity with the procedure prescribed by the
Government of Armenia, a fine shall be levied on the taxpayer equal
to 25 per cent of the overall value expressed in (calculated at) the
sales prices of the unregistered objects of business activity,
including the sold (realised) ones...
If repeated non-registration of objects of business
activity is recorded within one year of the date when the violation
was recorded by the tax inspectorate, a fine shall be imposed equal
to 50 per cent of the overall value expressed in (calculated at) the
sales prices of the unregistered objects of business activity,
including the sold (realised) ones.”
- The
relevant provisions of the Law on Value Added Tax read as follows:
Article 43
“The amount of the concealed or understated VAT
and a fine equal to 50 per cent of that amount shall be levied from
taxpayers who conceal or understate the turnover subject to VAT and
who conceal or understate the amount of VAT payable to the budget by
understating ... the amount of VAT paid for goods and services in
violation of the procedure prescribed by this law.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicant company complained that it had been unlawfully denied
access to the Court of Cassation. It relied on Article 6 of the
Convention, which, in so far as relevant, reads as follows:
“In the determination of ... any criminal charge
against him, everyone is entitled to a fair ... hearing ... by [a]
... tribunal...”
A. Admissibility
Applicability of Article 6
- Although
the applicability of Article 6 to the proceedings in question is not
in dispute, the Court considers it necessary to address this issue of
its own motion.
- The
Court reiterates at the outset that tax disputes fall outside the
scope of civil rights and obligations under Article 6, despite the
pecuniary effects which they necessarily produce for the taxpayer
(see, among other authorities, Ferrazzini v. Italy [GC],
no. 44759/98, § 29, ECHR 2001 VII). However, when
such proceedings involve the imposition of surcharges or fines, then
they may, in certain circumstances, attract the guarantees of Article
6 under its “criminal” head (see Bendenoun v. France,
judgment of 24 February 1994, Series A no. 284, p. 20, § 47;
Janosevic v. Sweden,
no. 34619/97, § 71, ECHR
2002 VII; and Jussila v. Finland [GC],
no. 73053/01,
§ 38, ECHR 2006 ...). The present case concerns proceedings
in which the applicant company was found to be liable to pay profit
tax, VAT and simplified tax plus additional surcharges and fines. It
remains therefore to be determined whether Article 6 can be
applicable to the proceedings in question under its “criminal”
limb.
- The
Court reiterates that the concept of “criminal charge”
within the meaning of Article 6 is an autonomous one (see Janosevic,
cited above, § 65). In determining whether an offence
qualifies as “criminal”, three criteria are to be
applied: the legal classification of the offence in domestic law, the
nature of the offence and the degree of severity of the possible
penalty (see Engel and Others v. the Netherlands, judgment of
8 June 1976, Series A no. 22, pp. 34-35, § 82; Öztürk
v.Germany, judgment of
21 February 1984, Series A no. 73, p.
18, § 50; and Ezeh and Connors v. the United Kingdom [GC],
nos. 39665/98 and 40086/98, § 82, ECHR 2003 X). The
second and third criteria are alternative and not necessarily
cumulative: for Article 6 to apply by virtue of the words “criminal
charge”, it suffices that the offence in question should by its
nature be “criminal” from the point of view of the
Convention, or should have made the person concerned liable to a
sanction which, by its nature and degree of severity, belongs in
general to the “criminal” sphere (see Janosevic,
cited above, § 67). The minor degree of the penalty, in taxation
proceedings or otherwise, is not decisive in removing an offence,
otherwise criminal by nature, from the scope of Article 6 (see
Jussila, cited above, § 35, where the Court found
Article 6 to be applicable even when the surcharge imposed amounted
to only 10 per cent of the tax due).
- Turning
to the first criterion, the surcharges and fines in the present case
were imposed in accordance with various tax laws and are not
classified as criminal. This is, however, not decisive (ibid., §
37).
- As
regards the second criterion, the Court notes that the relevant
provisions of the Law on Taxes and the Law on Value Added Tax are
applicable to all persons – both physical and legal –
liable to pay tax and are not directed at a specific group.
Furthermore, the surcharges and the fines are not intended as
pecuniary compensation for any costs that may have been incurred as a
result of the taxpayer's conduct. The purpose pursued by these
measures is to exert pressure on taxpayers to comply with their legal
obligations and to punish breaches of those obligations. The
penalties are thus both deterrent and punitive.
- The
Court considers that the above is sufficient to establish the
criminal nature of the offence (ibid., § 38). It would,
nevertheless, also point out that in the present case the applicant
company had quite substantial penalties imposed on it: the fines
ranging from 10 to 50 per cent and the surcharges for the period of
delay cumulatively amounting from about 5 to 43 per cent of the tax
due.
- In the light of the above, the Court concludes that
the proceedings to which the applicant company was a party can be
classified as “criminal” for the purposes of the
Convention. It follows that Article 6 applies.
- The Court further notes that this complaint is not
manifestly
ill-founded within the meaning of Article 35 § 3
of the Convention. It further notes that it is not inadmissible on
any other grounds. It must therefore be declared admissible.
B. Merits
1. The parties' submissions
(a) The Government
- The
Government submitted that Article 70 § 3 of the CCP did not
violate the applicant's right of access to court. According to the
Court's case-law, the right of access to court was not absolute and
could be subject to limitations. Referring to the case of Kreuz v.
Poland (no. 28249/95, § 60, ECHR 2001 VI),
they further claimed that the requirement to pay fees to civil courts
in connection with claims they are asked to determine could not be
regarded as a restriction on the right of access to a court that was
incompatible per se with Article 6 § 1 of the Convention,
unless this requirement impaired the very essence of this right.
This, however, was not so in the applicant company's case, since the
law provided for other concessions related to payment of court fees –
as opposed to full exemption prohibited under the above Article 70 §
3 – which ensured the effective implementation of the right of
access to court of commercial entities. In particular, under Article
21 of the Law on State Fees, commercial entities could apply for and
benefit from, inter alia, a reduction of the State fee, a
reduction of the rate of the State fee, and a deferral of payment of
the State fee. In the applicant company's case, the latter
possibility proved to be effective in ensuring the applicant
company's access to court, which is demonstrated by the decisions of
the Commercial Court of Appeal of
31 August 2001 and the
Commercial Court of 18 January 2002 granting the applicant company's
reasoned requests for deferral. On 3 February 2003 the applicant
company submitted a request for deferral, together with a cassation
appeal, which was similarly granted by the Court of Cassation,
notably by the latter's decision of 14 February 2003 fixing the date
of the hearing. In sum, the limitation contained in Article 70 §
3 of the CCP did not impair the very essence of the right of access
to court, taking into account the existence of other concessions
connected with the payment of court fees.
- Furthermore,
for a commercial entity to benefit from a deferral of payment of the
court fee, it had to submit a reasoned request and to substantiate
its inability to pay. The applicant company, however, failed to
submit any request to the Court of Cassation. The Court of Cassation
nevertheless granted the applicant company's request of 3 February
2003 to adjourn the case, allowing the applicant company to pay the
court fee by
24 February 2003 and warning it that, if it failed
to do so, the cassation appeal would be returned. The applicant
company, however, failed to respond to this warning in any way and
did not pay the deferred court fee. Therefore, the decision of the
Court of Cassation to return the applicant company's cassation appeal
was not arbitrary. Moreover, the applicant company failed to submit
any evidence either to the Court of Cassation or to the European
Court substantiating its insufficient financial means. The
requirement to submit such evidence is a legitimate and reasonable
condition for anybody who wants to benefit from concessions related
to payment of court fees. Similarly, the prohibition contained in the
above Article 70 § 3 was based on the logic that a commercial
entity, which is a legal person created for the purpose of making
profit, should, unless it had been declared insolvent, have
sufficient means to pay a court fee, which in the present case
amounted only to AMD 10,000 (approx. EUR 18.7 at the material time).
Thus, taking into account that the applicant company had failed to
substantiate its insufficient financial means, the amount of court
fee was not unreasonable and did not make it impossible for the
applicant company to pay it.
(b) The applicant company
- The
applicant company claimed that the facts in the Government's
observations had been presented in a distorted manner. Firstly, the
Court of Cassation had never granted its request for deferral of
payment of the court fee of 3 February 2003, failing to take any
decision whatsoever on this request. Secondly, the Government had
made contradictory submissions, on the one hand claiming that the
applicant company had not submitted any request for deferral of
payment of the court fee, while on the other hand claiming that the
applicant company's request for deferral of 3 February 2003 had been
granted by the Court of Cassation. Furthermore, the Government's
claim that the applicant company, in its request for deferral of 3
February 2003, did not substantiate its financial situation in any
way, was also untrue. This request clearly stated that the company's
assets had been frozen by the decision of the Commercial Court of 24
December 2001. Thus, on the one hand the courts had imposed an
injunction on the use of the company's assets, making it impossible
to pay the court fee, while on the other hand they had required the
company to pay this court fee. Thirdly, the letter of the Court of
Cassation of 14 February 2003 could not be regarded as a legal
document. Nor was the applicant company required to respond to the
warning contained in that letter, because there was no such procedure
prescribed by the CCP whereby the Court of Cassation was authorised
to make warnings in letters. Finally, the applicant claimed that it
was not true that the amount of the court fee due was only AMD
10,000. According to Article 9 § 9 of the Law on State Fees, the
court fee for cassation appeals amounted to three per cent of the
claim value, which in the applicant company's case made AMD 113,918
(approx. EUR 180 at the material time). In support of this argument,
the applicant company relied on the decision of the Commercial Court
of 5 November 2001, in which the amount of the court fee was
calculated at AMD 189,864.05.
- The
applicant further claimed that both Article 70 § 3 of the CCP
and Article 22 of the Law on State Fees contradicted the guarantees
of Article 6 of the Convention. These provisions created inequality
between physical and legal persons, the former being able to obtain
an exemption from payment of the court fee in case of insufficient
financial means, while the latter was deprived of this possibility.
Even if a legal person which was experiencing financial difficulties
was granted a deferral of payment of the court fee, it would still
find itself in a difficult financial situation in the future. In sum,
the applicant company claimed that the non-examination of its
cassation appeal violated its right of access to court guaranteed by
Article 6.
(c) The Government's reply
- The
Government, in their further observations, submitted firstly that the
CCP did not prescribe a procedure whereby the Court of Cassation
would adopt a decision on a request for a deferral of payment of the
court fee. Secondly, the Government argued that there was no
contradiction in their initial observations: the applicant company's
request for deferral of 3 February 2003 had indeed been granted
by the Court of Cassation. By saying “the applicant company
failed to submit any request to the Court of Cassation” they
meant that the applicant company had not made any other such
requests following the one of 3 February 2003. Thirdly, as regards
the injunction placed on the applicant company's assets, the assets
in question had been frozen only in the amount corresponding to the
applicant company's tax obligations. Fourthly, as regards the amount
of the court fee, the applicant company's assertion that it amounted
to AMD 189,864.05 was ill-founded. The claims brought by the
applicant company before the Court of Cassation were of a
non-pecuniary nature and the court fee, in accordance with Article 9
§ 9 of the Law on State Fees, amounted only to AMD 20,000
(approx. EUR 31). Thus, the applicant company's claim that even the
deferral of payment of a court fee could put it into a difficult
financial situation was unreasonable. The Government added that their
initial submission that the court fee amounted to AMD 10,000 was a
misprint. Finally, it was not clear how the applicant company, which
was allegedly in a difficult financial situation, was able to pay
more than AMD 1,000,000 for legal and other services.
2. The Court's assessment
- The
Court reiterates that the right to a court, of which the right of
access constitutes one aspect, is not absolute but may be subject to
limitations. Nevertheless, the limitations applied must not restrict
the access left to the individual in such a way or to such an extent
that the very essence of the right is impaired. Furthermore, a
limitation will not be compatible with Article 6 § 1 if it does
not pursue a legitimate aim and if there is not a reasonable
relationship of proportionality between the means employed and the
aim sought to be achieved (see, among other authorities, Khalfaoui
v. France, no. 34791/97, § 35, ECHR 1999 IX, and Papon
v. France, no. 54210/00, § 90, ECHR 2002 VII).
- The
Court further reiterates that, where appeal procedures are available,
Contracting States are required to ensure that physical and legal
persons within their jurisdictions continue to enjoy the same
fundamental guarantees of Article 6 before the appellate courts as
they do before the courts of first instance (see Brualla Gómez
de la Torre v. Spain, judgment of 19 December 1997, Reports
of Judgments and Decisions 1997-VIII, p. 2955, § 33,
Tinnelly & Sons Ltd and Others and McElduff and Others v. the
United Kingdom, judgment of 10 July 1998, Reports 1998-IV,
p. 1660, § 72, and Khalfaoui, cited above, §
37). Moreover, restrictions which are of a purely financial nature
and which are completely unrelated to the merits of an appeal or its
prospects of success should be subject to a particularly rigorous
scrutiny from the point of view of the interests of justice (see
Podbielski and PPU Polpure v. Poland, no. 39199/98, § 65,
26 July 2005).
- In
the present case, the applicant company's cassation appeal was not
examined due to its failure to pay the court fee. The Court notes
that the parties disagreed as regards the circumstances surrounding
the applicant company's request for deferral of payment of the court
fee of 3 February 2003, which the applicant company had submitted
together with its cassation appeal (see paragraph 18 above). In this
respect, the Court notes that the Government's argument that this
request had been examined and granted by the Court of Cassation is
not supported by the materials of the case. On the contrary, all the
materials suggest that the Court of Cassation, as opposed to the
Commercial Court of Appeal and the Commercial Court, did not take any
decision on the applicant company's request. It is not clear on what
grounds the Government referred to the Court of Cassation's letter of
14 February 2003 as a “decision” taken on the applicant
company's request for deferral, especially in view of the fact that
this letter contains no mention whatsoever of this request or the
circumstances surrounding it (see paragraph 19 above). The Court
therefore concludes that the applicant company's request for deferral
was not examined by the Court of Cassation.
- Furthermore,
while it appears from the decisions of the Commercial Court of Appeal
of 31 August 2001 (see paragraph 9 above) and the Commercial Court of
18 January 2002 (see paragraph 15 above) that commercial entities
have the opportunity to benefit from a deferred payment of a court
fee by virtue of Article 21 (d) of the Law on State Fees, it is
evident from the letter of 13 March 2003 that the Court of Cassation,
in not examining the applicant company's request for deferral, was
guided – whether by analogy or not – by Article 70 §
3 of the CCP, which flatly prohibits commercial entities from being
exempted from payment of court fees (see paragraph 22 above).
- The
Court observes that the requirement to pay court fees cannot be
regarded as a restriction on the right of access to a court which is
incompatible per se with Article 6 § 1 of the Convention.
However, the amount of such fees assessed in the light of the
particular circumstances of a given case, including the applicant's
ability to pay them, and the stage of proceedings at which such a
restriction is imposed, are factors which are material in determining
whether or not a person enjoyed his right of access (see Kreuz,
cited above, § 60). Accordingly,
the Court considers it necessary to examine whether, in rejecting the
applicant company's request for deferral of the court fee, the Court
of Cassation took into account the particular circumstances of the
applicant company's case, first of all its ability to pay.
- In
this respect, the Court notes that the Court of Cassation did not
examine the applicant company's request for deferral in which the
applicant company had made claims about its inability to pay.
Therefore, the Court of Cassation had no direct knowledge of the
applicant company's financial situation. Moreover, as already
indicated above, the Court of Cassation was prevented from making any
assessment of the applicant company's ability to pay by the express
provisions of the law (see paragraph 47 above). The Court considers,
however, that such a blanket prohibition on granting court fee
exemptions as contained in those provisions raises of itself an issue
under Article 6 § 1 of the Convention.
The Government's argument that a commercial entity should,
unless it had been declared insolvent, have sufficient means to pay a
court fee, is hypothetical (see, mutatis mutandis, Jedamski
and Jedamska v. Poland, no. 73547/01, § 63,
26 July 2005, and Teltronic-CATV v. Poland, no. 48140/99,
§ 57, 10 January 2006), and therefore does not affect the
Court's opinion on this matter.
- In
view of the above, the Court concludes that the applicant company was
denied access to court in violation of Article 6 § 1 of the
Convention.
II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION AND ITS
PROTOCOLS
- The
applicant company further complained under Article 1 of Protocol No.
1 to the Convention and Article 17 of the Convention that the
employees of the tax authorities were corrupt and had made an
unlawful assessment confiscating an overly excessive sum. Lastly, the
manager of the applicant company complained under Article 4 of the
Convention that, since he did not have enough money to pay the
judgment debt, he would be obliged to pay the sum from his future
salary, which would amount to slavery.
- Having
regard to all the material in its possession, and in so far as these
complaints fall within its competence, the Court finds that they do
not disclose any appearance of a violation of the rights and freedoms
set out in the Convention or its Protocols. It follows that this part
of the application must be rejected as being manifestly ill-founded,
pursuant to Article 35 §§ 3 and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- The
applicant company claimed a total of AMD 13,495,511 (approx. EUR
24,325) in respect of pecuniary damage. In particular, since its
cassation appeal had not been examined, it had not been able to
contest the lawfulness of the 2 April 2001 assessment and as a result
had incurred debt in the amount of AMD 4,013,900 (approx. EUR 7,235)
and a surcharge for the delayed non-payment of this debt in the
amount of AMD 2,197,611 (approx. EUR 3,961). Furthermore, the
applicant company had not been able to function during a period of
more than five years following the commencement of the court
proceedings, its assets still being frozen, so the company and its
manager had lost income in the amount of AMD 7,280,000 (approx. EUR
13,122). Finally, in the course of the relevant enforcement
proceedings AMD 4,000 (approx. EUR 7) was levied personally on the
company's manager since the company's assets were frozen. The
applicant company also claimed compensation for non-pecuniary damage
in the amount of EUR 5,000.
- The
Government claimed that there was no causal link between the
violation alleged and the pecuniary and non-pecuniary damage claimed.
Even if the case had been considered by the Court of Cassation, this
would not have changed the course of the case, since the applicant
company's tax obligations arose from the law. Furthermore, the
applicant company's assets had been frozen only in the amount
corresponding to the claim value and there was no decision to suspend
or terminate the applicant company's activity. In any event, the
claim for lost income was of a speculative nature.
-
The Court considers that an award of just satisfaction must be based
in the present case on the fact that the applicant company did not
have the benefit of the right of access to a court for the purposes
of Article 6 § 1 of the Convention. It cannot speculate as to
what the outcome of the trial would have been, if the Court of
Cassation had examined the applicant company's cassation appeal. The
Court therefore does not discern any causal link between the
violation found and the pecuniary damage alleged. However, it does
not find it unreasonable to regard the applicant company as having
suffered a loss of opportunities, even though it is difficult to
evaluate that loss (see Khalfaoui, cited above, § 58).
Be that as it may, the applicant company undeniably sustained
non-pecuniary damage on account of the breach of the Convention found
in the present judgment. Ruling on an equitable basis, the Court
awards the applicant company EUR 1,200.
- The
Court also considers it necessary to point out that a judgment in
which it finds a violation of the Convention or its Protocols imposes
on the respondent State a legal obligation not just to pay those
concerned the sums awarded by way of just satisfaction, if any, but
also to choose, subject to supervision by the Committee of Ministers,
the general and/or, if appropriate, individual measures to be adopted
in its domestic legal order to put an end to the violation found by
the Court and make all feasible reparation for its consequences in
such a way as to restore as far as possible the situation existing
before the breach (see Scozzari and Giunta v. Italy [GC],
nos. 39221/98 and 41963/98, § 249, ECHR 2000 VIII;
Ilaşcu and Others v. Moldova and Russia [GC], no.
48787/99, § 487, ECHR 2004-VII; and Lungoci v. Romania,
no. 62710/00, § 55, 26 January 2006). In the case of a violation
of Article 6 of the Convention, the applicant should as far as
possible be put in the position he would have been in had the
requirements of this provision not been disregarded (see, mutatis
mutandis, Sejdovic v. Italy [GC], no. 56581/00, §
127, ECHR 2006 ...).
- The
Court notes in this connection that Article 241.1 of the CCP allows
the reopening of the domestic proceedings if the Court has found a
violation of the Convention or its Protocols (see paragraph 25
above). The Court is in any event of the view that the most
appropriate form of redress in cases where an applicant was denied
access to court in breach of
Article 6 § 1 of the Convention
would, as a rule, be to reopen the proceedings in due course and
re-examine the case in keeping with all the requirements of a fair
trial (see Lungoci, cited above, § 56).
B. Costs and expenses
- The
applicant company also claimed a total of AMD 1,095,545 (approx. EUR
1,974) for costs and expenses incurred before the domestic courts and
before the Court, including legal advice (AMD 987,000 (approx. EUR
1,779)), translation services (AMD 78,000 (approx. EUR 141)), postal
and fax expenses (AMD 12,845 (approx. EUR 23)), and copying,
transportation, stationery and other expenses (AMD 17,700 (approx.
EUR 31)).
- The
Government claimed that the applicant company had failed to submit
any documentary proof of legal, translation or any other costs
incurred.
- According
to the Court's case-law, an applicant is entitled to reimbursement of
his costs and expenses only in so far as it has been shown that these
have been actually and necessarily incurred and were reasonable as to
quantum. The Court notes that the only costs and expenses which the
applicant company substantiated with documentary proof are postal
receipts connected with the applicant's communication with the Court
in the total amount of AMD 11,770 (approx. EUR 24) and with the
domestic courts in the amount of AMD 700 (approx. EUR 1.5), and fax
bills in the total amount of AMD 375 (approx. EUR 1). The Court
notes, however, that the postal receipts connected with the domestic
proceedings date from 2004, that is the period when the proceedings
examined in the present application had already terminated, and
therefore decides to award the applicant company EUR 25 in
respect of costs and expenses.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the complaint concerning the lack of
access to court admissible and the remainder of the application
inadmissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention in that the applicant company was denied
access to court;
- Holds
(a) that
the respondent State is to pay the applicant company, within three
months from the date on which the judgment becomes final in
accordance with Article 44 § 2 of the Convention,
the following amounts, to be
converted into the national currency of the respondent State
at the rate applicable at the
date of settlement:
(i) EUR
1,200 (one thousand two hundred euros) in respect of
non-pecuniary
damage;
(ii) EUR
25 (twenty-five euros) in respect of costs and expenses;
(iii) any
tax that may be chargeable on these amounts;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amount at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant
company's claim for just satisfaction.
Done in English, and notified in writing on 20 December 2007,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Santiago Quesada Boštjan M. Zupančič
Registrar President
