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FIFTH
SECTION
CASE OF GROZDANOSKI v. THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
(Application
no. 21510/03)
JUDGMENT
STRASBOURG
31
May 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 Grozdanoski v. the former Yugoslav Republic of
Macedonia,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Mr P. Lorenzen, President,
Mr K.
Jungwiert,
Mr V. Butkevych,
Mrs M.
Tsatsa-Nikolovska,
Mr J. Borrego Borrego,
Mrs R.
Jaeger,
Mr M. Villiger, judges,
and Mrs C.
Westerdiek, Section Registrar,
Having
deliberated in private on 9 May 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 21510/03) against the former
Yugoslav Republic of Macedonia lodged with the Court under Article 34
of the Convention for the Protection of Human Rights and Fundamental
Freedoms (“the Convention”) by a Macedonian national,
Mr Nikola Grozdanoski (“the applicant”), on 21 May
2003.
- The
applicant was represented by Mr P. Stojanoski, a lawyer practising in
Ohrid. The Macedonian Government (“the Government”) were
represented by their Agent, Mrs R. Lazareska Gerovska.
-
The applicant alleged unfairness of the proceedings before the
Supreme Court.
- On
7 June 2006 the Court decided to communicate to the Government the
applicant's allegations about the unfairness of the proceedings, in
particular the alleged breach of the principle of equality of arms.
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
THE CIRCUMSTANCES OF THE CASE
- The
applicant was born in 1934 and lives in Ohrid.
- On
30 December 1993 the applicant concluded a loan agreement (“the
agreement”) (договор
за одобрување
на кредит) with
the “Makbanka-BS” A.D. (“the company”), in
accordance with which he received a loan in the amount of DM 40,000
(German Marks) under the following conditions: to repay the loan
within three months with 8% monthly interest. The applicant took the
loan for the benefit of Mr K.S. who had been ineligible to apply due
to his poor financial status.
- On
the same date, the then Ohrid Municipal Court entered a notice (“the
notice”) in the public register, recording a mortgage in favour
of the company over a house and a plot of land owned by the
applicant.
-
The principal amount of the loan with interest was paid by Mr K.S.
within the three-month period as set forth in the agreement. Despite
that fact, the company continued charging 8% interest although the
validity of the agreement had not been extended. Until 10 May 1996
the amount was paid by Mr K.S. on behalf of the applicant. After that
date, the applicant continued to pay the 8% interest until 26 October
1996 when the loan was completely repaid.
- On
29 May 1997 the Ohrid Court of First Instance deleted the notice from
the public register after it had received a notification by the
company that the loan had been completely repaid.
-
On an unspecified date in 1997, Mr K.S. brought a civil action
against the company and the applicant claiming the difference between
the interest actually paid and the domestic rate, following the
three-month period. According to the expert opinion given in this
case, Mr K.S. and the applicant overpaid in the sum of DM 85, 831. On
28 October 1997 Mr K.S. withdrew the claim against the applicant. On
6 February 1998 the Ohrid Court of First Instance dismissed the
applicant's request to intervene in the proceedings as a claimant and
ordered his claim to be registered separately. On 16 September 1998
the court's decision became final and the applicant's action was
registered as a separate claim.
-
Mr K.S.'s claim was dismissed on 10 February and 17 October 2000
respectively, by the Court of First Instance and the Court of Appeal.
The courts considered that the company had no legal capacity to stand
in the proceedings as it had concluded the agreement with the
applicant and not with Mr K.S. The courts further found Mr K.S.'s
claim ill-founded as he had not been a party to the agreement, even
though the applicant had concluded it for his benefit.
-
It appears that the applicant's claim was dismissed by the trial
court's decision of 16 February 2000. On 1 June 2000 the Bitola Court
of Appeal upheld the applicant's appeal and remitted the case for a
fresh consideration.
-
On 3 April 2001 the Ohrid Court of First Instance dismissed as
ill-founded the applicant's claim for unlawful enrichment (неосновано
збогатување).
It held that the company had lawfully charged 8% interest as the loan
had not been repaid in time and accordingly as such the applicant had
been liable to pay interest as set forth in the agreement. It
concluded, therefore, that the agreement had been implicitly extended
without a need for a further express agreement by the parties. The
court further declared as withdrawn the applicant's claim against Mr
K.S.
-
On 25 September 2001 the Bitola Court of Appeal upheld the
applicant's appeal and remitted the case for re-examination. It held
that the lower court had not properly established in what capacity
the company had concluded the agreement: as an undertaking or a
savings institution (штедилница).
Relying on a letter of the National Bank of 4 May 1999, it stated
that the company had not been incorporated as a savings institution
at the time when the agreement had been concluded and consequently,
that it had not been authorised to give loans in foreign currency. It
held that the manner of incorporation of the company was decisive for
the legal status of the agreement: namely, whether it was null and
void or whether another agreement was implicitly concluded. In the
latter case, the company could only charge statutory interest, but
not at the rate as provided for by the agreement.
-
On 24 December 2001 the Ohrid Court of First Instance upheld the
applicant's claim. The court found that, at the time when the
agreement had been concluded, the company had not been incorporated
in compliance with the Law on Banks and Savings Institutions and, as
a consequence, it had not been authorised to give loans in foreign
currency, but only in domestic currency. It further established that
the company had been incorporated as a savings institution on 1 March
1994, i.e. following the conclusion of the agreement. It consequently
declared the agreement null and void. As the agreement met the
statutory requirements of another agreement (договор
за заем), the court
decided to consider it as it had been so concluded. As the company
was not authorised to enter into loan agreements in foreign currency
and to charge interest as set forth by the agreement, the court
ordered it to repay the applicant DM 85,831, as the difference
between the interest actually paid and the domestic rate, together
with interest.
-
On 7 February 2002 the company appealed. By submissions of
26 February and 19 March 2002 it supplemented the appeal.
-
On 14 March 2002 the applicant replied to the company's appeal.
-
On 25 April 2002 the Bitola Court of Appeal dismissed the company's
appeal and upheld the lower court's decision. It held that the court
below had correctly established the facts and applied domestic law.
It reiterated that, at the time when the agreement had been
concluded, the company had not been incorporated in accordance with
the Law on Banks and Savings Institutions and, as such, it had not
been authorised to give loans in foreign currency. It also found that
the lower court had correctly declared the agreement null and void.
-
On 15 May 2002 the Ohrid Court of First Instance granted the
applicant's request for enforcement and ordered the company to pay
the amount due. The money was subsequently transferred to the
applicant.
-
On 22 May 2002 the company submitted to the Supreme Court an appeal
on points of law (ревизија).
-
On 9 July 2002 the public prosecutor lodged with the Supreme Court a
request for the protection of legality (барање
за заштита на
законистоста).
-
On 27 February 2003 the Supreme Court gave a single decision
upholding the company's appeal on points of law and the public
prosecutor's request for the protection of legality. It overturned
the lower courts' decisions and dismissed the applicant's claim. It
found that the lower courts had properly established the facts, but
had incorrectly applied the substantive law. It found that at the
time when the agreement had been concluded, the company had been
registered as a financial institution authorised to enter into loan
and savings agreements with physical persons. It stated, inter
alia, that:
“... In accordance with the Law on Banks and
Savings Institutions of 1993 in force at that time, [the company] was
authorised to accept savings in domestic currency from physical
persons and to give loans to physical persons and sole proprietors.
Inferences can be drawn that [the company] was not authorised to
accept or to give loans in foreign currency to citizens. However,
that law does not provide for nullity of such agreements nor does it
prohibit the execution of such operations by savings institutions.
Such operation of a savings institution is regulated by penalty
provisions. It is undisputed that the agreement concluded between the
parties [the company and the applicant] was voluntarily executed by
[the applicant]... “
-
The court rejected the lower courts' reasoning that the agreement had
been null and void, as the company had been registered and authorised
to enter into such agreements irrespective of whether it had
concerned foreign currency. It stated that that fact could have only
influenced the execution of the agreement. It went on to conclude
that the applicant could not have requested restoration of the money
already paid to the company under the agreement, as the latter was a
financial institution set up by virtue of law, the operation of which
was authorised by the National Bank. Moreover, the scope of reference
of the company was regulated by a law which could not have been
unknown to the applicant.
-
The decision was served on the applicant on 24 April 2003.
-
On 5 May 2003 the Ohrid Court of First Instance granted the company's
request for enforcement of the Supreme Court's decision. The money,
which had already been transferred to the applicant, has been
deducted from the latter's pension in monthly instalments since then.
RELEVANT DOMESTIC LAW
-
Section 374 of the Civil Proceedings Act (Закон
за парничната
постапка)
(“the Act”) provides that appeals on points of law must
be submitted to the first-instance court in sufficient number of
copies for the court, the opposing party and the public prosecutor.
-
Section 376 of the Act provides that, inter alia, the
presiding judge of the first-instance court's panel of judges shall
communicate a copy of a timely, complete and admissible appeal on
points of law to the opposing party and to the public prosecutor
authorised to file a request for the protection of legality.
According to paragraph 3 of this section, the opposing party may,
within thirty days from the service of the appeal, lodge with the
court a reply. According to paragraph 4, after receipt of the reply
or after expiration of the time-limit for reply, the presiding judge
of the first-instance court's panel of judges shall transfer the
appeal and any reply, together with the complete file, to the [the
Supreme Court] through the second-instance court.
-
Section 381 § 1 of the Act provides that [the Supreme Court]
shall uphold the appeal on points of law and overturn the impugned
decision if it finds that domestic law was wrongly applied.
-
Section 392 of the Act provides that the Supreme Court shall give a
single decision if an appeal on points of law and a request for the
protection of legality were submitted against the same decision.
-
Section 394 of the Act provides that, if not otherwise regulated, the
above provisions likewise apply to a request for the protection of
legality submitted by the public prosecutor.
THE LAW
I. ALLEGED VIOLATIONS UNDER ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicant complained under Article 6 of the Convention that the
proceedings before the Supreme Court were unfair. In particular, he
argued that the principle of equality of arms had been violated as he
had not been given an opportunity to comment on the company's appeal
on points of law and the public prosecutor's request for the
protection of legality. He further complained that the Supreme Court
had incorrectly applied the national law. Article 6 of the
Convention, in so far as relevant, reads as follows:
“In the determination of his civil rights and
obligations ..., everyone is entitled to a fair ... hearing ... by
[a] ... tribunal...”
A. Admissibility
- The Court considers that the application is not
manifestly ill-founded within the meaning of Article 35 § 3 of
the Convention. It further finds that it is not inadmissible on any
other grounds. It must therefore be declared admissible.
B. Merits
1. The alleged violation of the equality of arms
I. The parties' submissions
- The
Government submitted that the proceedings were fair as the parties
were given an equal opportunity to present their case; that the
domestic courts had admitted in evidence their arguments; and that
all observations filed to the courts had been communicated for reply
to the other party concerned. They further averred, that despite the
complexity of the case, the domestic courts had proceeded with due
diligence and without unjustified delays.
-
The Government also maintained that the Supreme Court had reviewed
the lower courts' decisions in accordance with its jurisdiction and
had adopted the decision after having examined the evidence adduced.
They argued that the applicant's complaints requested this Court to
decide matters properly for the domestic courts. They stated that the
Supreme Court would not consider the case if the formal requirements
set forth in section 376 of the Act (see “Relevant domestic
law” above) had not been satisfied. Accordingly, they denied
any possibility that the Supreme Court would decide the company's
appeal on points of law without it being previously communicated to
the applicant. However, due to the frequent transmission of the
case-file between the courts, they could not provide a copy of the
slip receipt (доставница)
as evidence that the company's appeal on points of law had been
communicated to the applicant.
- The
applicant disputed that he had been given a fair trial before the
Supreme Court. He submitted that the Government had failed to provide
any evidence that a copy of the company's appeal on points of law had
been communicated to him. He averred that the rules of proceedings
before the Supreme Court had been infringed as he had been prevented
from commenting on the company's appeal on points of law. The lack of
the slip receipt in the case-file supported his arguments.
ii. The Court's assessment
- The Court firstly recalls that, in civil proceedings,
the principle of equality of arms implies that each party must be
afforded a reasonable opportunity to present his or her case -
including evidence – under conditions that do not place him/her
at a substantial disadvantage vis-à-vis his/her
opponent (see Dombo Beheer B.V. v. the Netherlands, judgment
of 27 October 1993, Series A no. 274, p. 19, § 33; Stran
Greek Refineries and Stratis Andreadis v. Greece, judgment of 9
December 1994, Series A no. 301 B, p. 81,
§ 46). The concept of a fair
trial, of which equality of arms is one aspect, implies the right for
the parties to have knowledge of and to comment on all evidence
adduced or observations filed (see Nideröst-Huber
v. Switzerland, judgment of 18 February 1997, Reports of
Judgments and Decisions 1997-I, p. 108, § 24, Steck-Risch
and Others v. Liechtenstein, no. 63151/00, § 55,
19 May 2005; M.S. v. Finland, no. 46601/99, § 32,
22 March 2005).
-
In the present case, the Court notes that the Supreme Court had full
jurisdiction to decide the applicant's case, as it examined the
merits of the company's appeal on points of law and the public
prosecutor's request for the protection of legality. It had,
accordingly, the option of remitting the case for a new decision by
the lower courts or quashing the impugned decision and taking the
decision itself: the latter option was taken in the present case.
-
It further observes that the company, being the opposing party in the
proceedings at issue, filed an appeal on points of law against the
Court of Appeal's decision. The public prosecutor also filed a
request for the protection of legality. According to section 376 of
the Act, they should have been communicated to the applicant (see
paragraph 27 above). In the absence of any evidence of service, the
Court is unable to accept the Government's argument that the appeal
and the request were ever served on the applicant. Moreover, the
company's appeal and the public prosecutor's request led to the
Supreme Court's decision which was to the applicant's significant
disadvantage. The Court considers that that procedural failure
prevented the applicant from effectively participating in the
proceedings before the Supreme Court.
- Article
6 § 1 of the Convention is intended, above all, to secure the
interests of the parties and those of the proper administration of
justice (see, mutatis mutandis, Acquaviva v. France,
judgment of 21 November 1995, Series A no. 333 A, p.17, §
66). In the present case, respect for the right to a fair trial,
guaranteed by Article 6 § 1 of the Convention, required that the
applicant be given an opportunity to have knowledge of, and to
comment upon the company's appeal and the public prosecutor's
request.
- Consequently,
there has been a violation of Article 6 § 1 of the Convention.
2. The remaining complaint under Article 6 of the
Convention
- Having
regard to its conclusion that there was an infringement of the
applicant's right to a fair hearing for the reasons stated above and
considering that it has only limited powers to deal with errors of
fact or law allegedly committed by national courts, the Court does
not find it necessary to examine separately the applicant's complaint
that the fairness of the proceedings was also breached on account of
the alleged incorrect application of the substantive law (see,
mutatis mutandis, Komanický v. Slovakia,
no. 32106/96, § 56, 4 June 2002).
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
- In
the application form, the applicant claimed 3,000,000 euros (EUR)
without specifying whether it concerned pecuniary or non-pecuniary
damage. In his reply to the Government's observations, the applicant
maintained that he suffered from a deterioration of his health. He
submitted that the respondent State should be ordered to pay a higher
amount than initially claimed. However he did not further
particularise this claim.
- The
Government commented on the applicant's claims for just satisfaction
as submitted in his application form.
- Since
the Court cannot speculate about the outcome of the trial had it been
in conformity with Article 6, an award of just satisfaction can only
be based on the fact that the applicant did not have the benefit of
the guarantees of that Article. The Court accepts that the lack of
such guarantees has caused the applicant non-pecuniary damage (see
M.S. v. Finland, cited above, § 41; Kuopila v.
Finland, no. 27752/95, § 42, 27 April 2000). The
Court, making its assessment on an equitable basis, awards the
applicant EUR 1,500 in respect of non-pecuniary damage.
B. Costs and expenses
- The
applicant did not claim reimbursement of his costs and expenses.
Accordingly, the Court does not award any sum in this respect.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the application admissible;
- Holds that there has been a violation of the
principle of equality of arms under Article 6 § 1 of the
Convention;
- Holds that there is no need to examine the
remaining complaint under Article 6 § 1 of the Convention;
- Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, EUR 1,500 (one
thousand five hundred euros) in respect of non-pecuniary damage, plus
any tax that may be chargeable;
(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's claim
for just satisfaction.
Done in English, and notified in writing on 31 May 2007, pursuant to
Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
