SECOND SECTION
CASE OF
JGK STATYBA LTD AND GUSELNIKOVAS v. LITHUANIA
(Application no.
3330/12)
JUDGMENT
(Merits)
STRASBOURG
5 November 2013
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 JGK Statyba Ltd and Guselnikovas v. Lithuania,
The European Court of Human
Rights (Second Section), sitting as a Chamber composed of:
Guido Raimondi,
President,
Danutė Jočienė,
Dragoljub Popović,
András Sajó,
Işıl Karakaş,
Paulo Pinto de Albuquerque,
Helen Keller, judges,
and Lawrence Early, Acting Section Registrar,
Having deliberated in private on 15 October 2013,
Delivers the following judgment, which was adopted on that
date:
PROCEDURE
The case originated in an application (no.
3330/12) against the Republic of Lithuania lodged with the Court under Article
34 of the Convention for the Protection of Human Rights and Fundamental
Freedoms (“the Convention”) by JGK Statyba Ltd and Mr Jurijus Guselnikovas, on
21 October 2005. The first applicant is JGK Statyba Ltd (“the applicant
company”), a private construction company registered in Lithuania. Mr Jurijus
Guselnikovas (“the second applicant”) is a Lithuanian national, who was born in
1952 and lives in Vilnius. Mr Guselnikovas is a shareholder and a member
of the board of the applicant company.
The applicants were represented by Mr J. Butkus
and Ms S. Naidenko, lawyers practising in Vilnius. The Lithuanian
Government (“the Government”) were represented by their Agent, Ms E. Baltutytė.
The applicants alleged that their right to a fair
hearing within a reasonable time under Article 6 § 1 of the Convention had been
breached in two sets of civil proceedings. They also complained that there had
been prolonged interference with their right to peaceful enjoyment of
possessions during those proceedings.
On 4 May 2012 the application was communicated to
the Government. It was also decided to rule on the admissibility and merits of
the application at the same time (Article 29 § 1).
THE FACTS
A. The circumstances of the case
The facts of the case, as submitted by the parties,
may be summarised as follows.
On 9 June 1995 the Vilnius District Court dismissed
an action by several private individuals against the applicant company for
attribution of ownership rights to two partially built houses, nos. 57-1 and
57-2. The court declared null and void the sale contracts on the basis of which
the claimants, including G.G. and M.N., had maintained their title to the
houses, and recognised the ownership rights of the applicant company in respect
of the houses.
The claimants’ appeal was dismissed by the
Vilnius Regional Court on 5 September 1995. The court noted, inter alia,
that G.G. and M.N. could request the company to cover their costs for
construction of the houses. That decision was final.
1. The first set of civil proceedings
On 15 July 1996 the applicant company lodged a
civil claim for the eviction of G.G. from the house, no. 57-2, that had
previously been attributed to the applicant company in the above-mentioned
civil proceedings between G.G. and the applicant company. G.G. had unlawfully
occupied the house and continued to live there, thus preventing the applicant
company from enjoying its ownership rights.
From 10 January to 11 November 1997 the
proceedings were suspended at G.G.’s request, because he had a pending appeal
on points of law against the court decision of 9 June 1995.
In December 1998 G.G. lodged a counterclaim
against the applicant company, seeking acknowledgement that he was the owner of
the house. G.G. also requested that the applicant company be prohibited from
disposing of or mortgaging it.
On 21 January 1999 the Vilnius Region District
Court (hereinafter “the district court”) imposed a provisional measure and
prohibited the applicant company from selling or transferring the disputed property,
in order to secure G.G.’s counterclaim. On the same day the proceedings were
suspended due to a related civil case which contained material relevant to the
proceedings in question.
On 3 February 1999 a letter was sent to G.G.
requesting monthly payments from him because he was unlawfully occupying the
house.
On 12 May 2000 the district court suspended the
enforcement of the court decision of 9 June 1995.
The civil proceedings were resumed on 28 August
2001.
On 23 May 2002 the same court allowed the
applicant company’s claim. However, on 18 June 2002 the Vilnius Regional Court
remitted the case for re-examination to the first-instance court. On 23
December 2002 the Supreme Court upheld that decision.
Court hearings of 8 April 2003 and 9 February
2004 were adjourned at the request of the parties, as they were involved in
friendly settlement negotiations; however, the negotiations failed on both
those occasions.
On 18 November 2003 the Vilnius Regional Court
ordered the case to be examined by the Vilnius Regional Court as the court of
first instance, having found that the district court did not have jurisdiction
to examine this kind of case. At the same time the adjournment of the case which
had been ordered by the latter court on 2 October 2003 was set aside.
On 7 September 2004 the Vilnius Regional Court,
at the request of G.G., issued an order seizing the applicant company’s plot of
land on which the house stood, to secure G.G.’s counterclaim.
The case was adjourned from 27 September to 6
December 2004 for a file from a related criminal case against G.G. to be
obtained from another court.
On 23 December 2004 the Vilnius Regional Court
dismissed the applicant company’s claim but allowed G.G.’s counterclaim.
On 24 May 2005 the Court of Appeal quashed the
decision of the lower court and allowed the applicant company’s claim. G.G.
appealed to the Supreme Court.
On 19 December 2005 the Supreme Court remitted
the case again to the first-instance court for re-examination.
The applicant company lodged a request to lift
the seizure of the property, arguing that this measure was not proportionate as
it imposed too heavy burden on financial interests of one of the parties to the
proceedings. On 2 February 2006 the Vilnius Regional Court rejected that
request.
On 26 October 2006 the Vilnius Regional Court adjourned
the proceedings until a related civil case, in which the legal status of the
applicant company was disputed, was resolved. The applicant company appealed
against that adjournment but the higher court upheld it.
On 5 September 2007 the proceedings were
recommenced.
The applicant company submitted requests to the
court for the seizure of the house occupied by G.G. to be lifted, and argued
that the company had been suffering losses because of unpaid rent amounting to
3,200 Lithuanian litai (LTL, approximately 920 euros (EUR)) each month. On 21
November and 2 December 2008 those requests were dismissed.
On 19 February 2009 the Vilnius Regional Court allowed
the applicant company’s claim and dismissed G.G.’s counterclaim. The court also
ordered the provisional measures to be lifted once the decision became final.
On 22 February 2010 the Court of Appeal upheld
that decision. That ruling was final.
According to the applicants, the disputed house
was returned by the bailiff to the applicant company on 28 July 2010.
2. The second set of civil proceedings
On 20 June 1996 a private individual, M.N.,
submitted a civil claim asking for acknowledgement of his ownership rights to the
house, no. 57-1, which had already been attributed to the applicant company by the
court decision of 9 June 1995 (see paragraph 6). The house had been
returned by the bailiff to the applicant company on 17 April 1996. Later on,
M.N. modified his claim, asking only for reimbursement of construction costs.
At the request of M.N., on 25 June 1996 the
court gave a ruling on seizure of the applicant company’s property, which
prohibited the house from being sold or ownership transferred until the case
had been examined by the courts.
On 16 November 1996 a pre-trial investigation
against M.N. was opened: he was accused of forgery of documents and
misappropriation of property.
On 17 November 1997 and 3 February 1998 M.N.
amended his action, withdrawing the claim for attribution of the title to the
house and asking only for reimbursement of costs.
In March 1998 the applicant company submitted a
counterclaim for damage allegedly caused by M.N. In May an amended counterclaim
was submitted.
On 1 June 1998 the court ordered a forensic assessment
of the construction costs claimed by M.N., and the proceedings were stayed
until 24 June 1999.
On 16 December 1999 the Vilnius Regional Court
dismissed M.N.’s claim for reimbursement of construction costs. At the same
time it dismissed the applicant company’s counterclaim concerning damages. On 5 June
2000 the Court of Appeal dismissed as unfounded both appeals submitted by the
parties.
Upon an appeal on points of law by M.N., on 18
October 2000 the Supreme Court quashed the decisions of those courts and
remitted the case for re-examination to the court of first instance.
The applicant company requested the courts to
lift the provisional measure. On 15 February 2001 the Court of Appeal declined
to lift it and observed that the proceedings were still ongoing, since the
Supreme Court had decided to remit the case for re-examination.
On 8 June 2001 the Vilnius Regional Court
suspended the proceedings until a related pre-trial investigation into M.N.
actions was complete.
After the proceedings were resumed, on 3 January
2002 the court suspended them again because the pre-trial investigation was
still ongoing.
On 17 February 2003 the proceedings were
resumed.
On 18 March, 29 April, 10 June, 4 September, and
14 October 2003 the hearings were adjourned, as the case was not ready for
examination because the pre-trial investigation was still ongoing; besides, the
applicant company’s representative was not present at three of those hearings.
M.N. objected to the applicant company’s requests for postponement, considering
the criminal proceedings against him irrelevant to the case at hand.
On 17 August 2004 the civil proceedings were
recommenced after the decision of the Vilnius Regional Court of 14 July 2004 to
discontinue the criminal case against M.N due to prescription.
On 7 October 2004 the Vilnius Regional Court
refused the applicant company’s request for the provisional measure to be
lifted.
On 8 June 2005 the Vilnius Regional Court
dismissed the civil claim by M.N. On 26 January 2006 the Court of Appeal by a
final decision rejected an appeal by M.N. against this decision as unfounded.
At the request of the applicant company the
Vilnius Regional Court lifted the provisional measure on 3 March 2006; that
decision became final on 27 April 2006.
B. Relevant domestic law and practice
. The
Code of Civil Procedure (hereinafter “the CCP”), in force from 1 January 2003,
provides that at the request of the parties to the proceedings the court may
order provisional measures (laikinąsias
apsaugos priemones) in order to secure a civil claim. A civil claim may be secured at
any stage of the proceedings, if, without application of those provisional
measures, enforcement of a future judgment would be impeded or become impossible
(Article 144 § 1). The old CCP (as effective until 1 January 2003) stipulated
that the court could also apply provisional measures of its own motion (Article
155), whereas, according to the new code, this is possible only for the
protection of the public interest.
. Article
145 of the CCP (Article 156 of the old CCP) stipulates that provisional measures
may include seizure of a defendant’s real or tangible property as well as the
defendant’s funds or pecuniary rights, a prohibition on transfer of ownership
rights, or a prohibition on the defendant carrying out certain actions, as well
as other provisional remedies.
. According
to Article 146 (Article 158 of the old CCP) a court, at
the request of the parties to the proceedings or other interested
persons, may replace a provisional measure with another one. Paragraph 2 of the
same Article sets out that if the defendant pays the amount sought or presents surety
to bind himself in favour of the defendant, the court may decide not to apply provisional
measures; the defendant may also mortgage his possessions.
. Pursuant
to Article 147 (Article 159 of the old CCP) the court may request a claimant or
another person asking for provisional measures to compensate the defendant for
any damages he or she might sustain due to application of the provisional
measures. Once a judgment dismissing a claim becomes effective, the defendant
is entitled to demand that the claimant compensate for the damage sustained as
a result of the application of
the provisional measures.
. Article
150 of the CCP, effective from 1 January 2003, provides that provisional measures
are lifted by a decision of the court dealing with the case after a request has
been received from the parties to the proceedings or other interested persons. The
old CCP stipulated that the court could also lift provisional measures of its
own motion (Article 160), whereas, according to the new code, this is possible
only under certain circumstances for the protection of the public interest.
. Seizure
(areštas) of property, as defined in Article 675 of the CCP (Article 408
of the old CCP), is a coercive temporary restriction or prohibition on the
debtor’s title to his or her property, or on one of the rights constituting the
ownership, that is, the right of use or transfer, or possession.
. On the
issue of explaining the purpose of provisional measures in civil proceedings,
in its ruling of 18 June 2009 in civil case no. 2-698/2009 the Court of Appeal
held that when a question of seizure of property has to be decided, due consideration
should be given not only to the amount of the claim but also to the financial
situation of all the parties. The court shall also take into account whether the
arguments and supporting evidence in the plaintiff’s request for provisional
measures supply prima facie confirmation that the claim can be
substantiated. On 31 December 2008 the Court of Appeal, when assessing the lawfulness
of a seizure of property, noted that the scope of restrictions imposed by the
court when applying provisional measures should not be wider than is absolutely
necessary in order to ensure enforcement of a future judgment in the claimant’s
favor (ruling in civil case no. 2-949/2008).
Article 6.272 § 1 of the Civil Code (which
entered into force on 1 July 2001) permits a civil claim to be made for
pecuniary and non-pecuniary damage in the event of unlawful actions on the part
of the investigating authorities or courts. Paragraph 2 of the same Article sets
out that compensation may be paid for damage caused by unlawful actions of a
judge or the court trying a civil case.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
The applicants complained that both sets of
civil proceedings had been incompatible with the “reasonable time” requirement,
laid down in Article 6 § 1 of the Convention, which reads as follows:
“In the determination of his civil rights and obligations ... everyone
is entitled to a ... hearing within a reasonable time by [a] ... tribunal ...”
A. Admissibility
The Government submitted that the applicants had
failed to exhaust all the effective domestic remedies by not lodging a civil
claim against the State for redress under Article 6.272 of the Civil Code in
view of the length of the proceedings.
The applicants contested that argument, and alleged
that taking into account the practice of the domestic courts at the material
time they had no legitimate expectation of having their action for damages
against the State satisfied.
In Maneikis v. Lithuania
(no. 21987/07, § 21, 18 January 2011) the Court found that in 2005 (when
the applicants lodged the present application with the Court), there were no
effective remedies in Lithuania to complain about the length of domestic court
proceedings. It follows that the Government’s objection of non-exhaustion of
domestic remedies must be dismissed.
The Government further submitted that the second
applicant, Mr J. Guselnikovas, was not a party to any of the civil
proceedings complained of. Only the applicant company, JGK Statyba Ltd, was a party
to those proceedings.
The applicants submitted that Mr J.
Guselnikovas, who owned 73 % of the applicant company’s shares, was
directly affected by the unreasonable length of the proceedings. The second
applicant’s rights to the company’s property remained restricted, so such
long-lasting and continuing uncertainty was causing him inconvenience and
distress.
The Court shares the arguments presented by the
Government that the second applicant was not a party to the proceedings at hand
in his own name. Those proceedings were decisive for the rights and obligations
of the applicant company. There is nothing in the case file which would allow
the Court to disregard the legal personality of the applicant company (see Camberrow
MM5 AD v. Bulgaria (dec.), no. 50357/99, 1 April 2004, and Agrotexim and
Others v. Greece, judgment of 24 October 1995, § 66, Series A no. 330-A).
The Court concludes that because J. Guselnikovas
was not a party to the civil proceedings, and did not submit a claim in his own
right, he cannot be considered a victim of a violation of the Convention within
the meaning of Article 34 (see Četvertakas and Others v. Lithuania,
no. 16013/02, § 28, 20 January 2009).
Therefore, the complaint under Article 6 § 1 in
respect of the second applicant is to be declared inadmissible as incompatible ratione
personae, pursuant to Article 35 §§ 3 and 4 of the Convention.
The Court also considers that the complaint submitted
by the applicant company raises serious issues under Article 6 § 1 and is not
manifestly ill-founded within the meaning of Article 35 § 3 of the Convention.
Nor is it inadmissible on any other grounds. It must therefore be declared
admissible.
B. Merits
1. The parties’ submissions
The applicants argued that the delay in the proceedings
was caused by State institutions and also by third parties who were abusing
their procedural rights.
The Government submitted that both proceedings
were suspended on several occasions, in particular because there were other
ongoing criminal and civil proceedings. Those suspensions were necessary and
should not be regarded as unjustified delays attributable to the State. Therefore,
as concerns the first civil case, four years and seven months should be
deducted from the overall duration; four years and two months should be
deducted from the duration of the second case.
The applicants submitted that postponement of
cases at the request of G.G. and M.N. constituted a means of putting pressure on
the applicant company so that it would waive its claim to recover the property.
The Government further submitted that the
complexity of both the civil cases was because of the large number of volumes
of case files (eight and four volumes respectively) and the financial
documents they contained, as well as the need to question many witnesses and
examine the circumstances of the related criminal and civil cases. Lastly, the
delay had also been caused because the parties to the proceedings had actively
exercised their procedural rights by lodging requests and complaints.
The applicants disagreed with the argument that
the cases were complex and needed numerous procedural actions by the courts.
They alleged that the greater part of the evidence had already been collected
in the civil case between the same parties, which had ended in September 1995.
There was thus no need to comply with the requests of G.G. and M.N. in order to
collect the evidence again, when it would only confirm the circumstances which
had already been established by the binding decision of September 1995.
2. The Court’s assessment
The Court will examine whether the length of the
proceedings was compatible with the requirements of Article 6 § 1. The Court reiterates
that the question whether the length of proceedings is “reasonable” must be
assessed in accordance with the circumstances of the case and the following
criteria: the complexity of the case, the behaviour of the applicant and that
of the competent authorities, and what was at stake for the applicant in the
dispute (see, among many other authorities,
Frydlender v. France [GC],
no. 30979/96, § 43, ECHR 2000-VII). The Court reiterates that only
delays attributable to the State may justify a finding of non-compliance with
the “reasonable time” requirement (see Humen
v. Poland, no. 26614/95,
§ 66, judgment of 15 October 1999).
(a) The first civil proceedings
The proceedings commenced on 15 July 1996 and
ended on 22 February 2010 with the Court’s of Appeal final ruling; they
thus lasted for about thirteen years and eight months at three levels of
jurisdiction.
In the present case what was at stake for the
applicant company was its normal commercial activity, which essentially
consists of construction and sale of houses, since the seizure of the property
prohibited the transfer of the houses to third parties (see, for comparison, Markass
Car Hire Ltd v. Cyprus, no. 51591/99, § 39, 2 July 2002).
The Court notes that the core of the dispute was
the question of the ownership of the house no. 57-2. Although the Court
can accept that the case was of a certain difficulty, which was due to the need
to assess the contractual relations of the parties and financial documents dating
back as far as 1991, it cannot be considered particularly complex. In
particular, the courts based their findings to a significant extent on facts
which had already been established by the binding decision of 5 September 1995
and had res judicata effect.
With regard to the conduct of the authorities
and the suspensions of the case because of other related cases, it might be
reasonable for the national courts to await under certain circumstances the
outcome of parallel proceedings as a measure of procedural efficiency. However,
this decision must be proportionate, given the special circumstances of the
case (see König v. Germany, judgment of 28 June 1978, Series A no. 27, §
110, and Herbst v. Germany, no. 20027/02, § 78, 11 January 2007).
The Court is not convinced that the adjournments
of the proceedings cited by the Government were really necessary. Firstly, this
concerned an adjournment for ten months because of the submission of an appeal on
points of law by G.G. in another civil case against the court decision of 5 September
1995, which at that time was already binding. With regard to the adjournment for
more than two and a half years because some of the relevant material was
included in another related civil case, the Court is of the opinion that the necessary
documents could have been obtained more expeditiously if the court of first
instance had been more active. Two other adjournments of the case, lasting
fifteen months taken together (see paragraph 24 above), were caused by the need
to wait for final decisions in related cases; these cannot therefore be
attributed to the authorities, and should be deducted from the overall length.
In addition, as regards the conduct of the
authorities, the Court notes two remittals of the case for fresh examination
(see paragraphs 15 and 22 above) and a delayed transfer of the case to the
Vilnius Regional Court according to the rules of jurisdiction (see paragraph 17
above). In view of the above, the Court concludes that the main responsibility
for the length of the first set of proceedings rested with the State.
The Court has held on a number of occasions that
if a State allows proceedings to continue beyond the
“reasonable time” prescribed by Article 6 of the Convention without doing
anything to advance them, it will be responsible for the resultant delay; the
State remains responsible for the efficiency of its system (see Richard
Anderson v. the United Kingdom, no. 19859/04, § 28, 9 February 2010, and Beggs v. the United Kingdom,
no. 25133/06, § 239, 6 November 2012).
It appears that in the present case the authorities did not take all
necessary and reasonable steps to advance the proceedings in question.
As regards the conduct of the applicant company,
the Court observes that a party to the proceedings cannot be held responsible
for delays if it exercises its procedural rights without abusing them (see Gorovaya
v. Russia, no. 20882/04, § 39, 22
December 2009). The applicant company cannot be blamed for being
involved in friendly negotiations (see paragraph 16 above) or for having chosen
to contest the adjournments of the case and the seizure of its property.
Accordingly, the Government’s argument must be dismissed.
Having regard to the above circumstances, the
Court considers that in the instant case the length of the proceedings was
excessive and failed to meet the “reasonable time” requirement.
There has accordingly been a breach of Article 6
§ 1 in respect of the first set of civil proceedings.
(b) The second set of civil proceedings
The period to be taken into consideration began
on 20 June 1996 and ended on 27 April 2006 when the seizure of the applicant
company’s property was lifted. The proceedings thus lasted nine years and ten
months at three levels of jurisdiction.
The Court first observes that the second set of
proceedings was adjourned on several occasions, for a total of approximately
three and half years, because of the ongoing pre-trial investigation into the
actions of M.N., who was accused of forgery of financial documents. The civil
proceedings were recommenced on 17 August 2004 after the pre-trial
investigation had been discontinued because of prescription. The Court observes
that the pre-trial investigation in connection with which the civil case was adjourned
itself lasted some seven years at one level of jurisdiction, and this duration
alone could raise concerns. While the Court can accept that the results of the pre-trial
investigation against M.N. were of relevance for the proper examination of the second
civil case, the overall length of the adjournment of the case cannot be
justified by the need for procedural efficiency in the present circumstances
(see paragraph 74 above).
In addition, the case was remitted for a fresh
examination (see paragraph 37 above). Similarly, as has been found in respect
of the first proceedings, the domestic courts based their findings on the
facts that had been established by the binding court decision of September
1995.
The Government submitted that the applicant
company had influenced or consented to a certain number of adjournments, amounting
to seven months taken together. The Court observes that at that time the civil
case was adjourned anyway because of the ongoing pre-trial investigation (see
paragraph 40 above).
Similarly to the first set of proceedings, the
applicant company’s exercise of its procedural rights by choosing to complain
about the adjournment of the case or provisional measures, and in the absence
of abuse of its rights, cannot be seen as unjustified delays in the proceedings.
The Court considers that the State failed to
ensure the speedy conduct of the proceedings (see Beggs, cited above). As
a result, it does not find the delay in the second set of proceedings to be
justified.
There has accordingly been a breach of Article 6
§ 1 in respect of the second set of civil proceedings.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL
NO. 1 OF THE CONVENTION
The applicants further claimed that the prolonged
and unlawful seizure of the two houses had violated their property rights protected
by Article 1 of Protocol No. 1 to the Convention. The prohibition on making use
of their property had caused them considerable financial losses and interfered
with the normal activity of the applicant company.
Article 1 of Protocol No. 1. reads as follows:
“Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his possessions
except in the public interest and subject to the conditions provided for by law
and by the general principles of international law.
The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary to control the
use of property in accordance with the general interest or to secure the
payment of taxes or other contributions or penalties.”
A. Admissibility
The Government submitted that the complaint lodged by
the second applicant should be declared inadmissible as the latter had not
participated in the proceedings and thus could not be considered a victim.
The applicants contested that argument.
The Court notes that only the applicant company
was a party to both proceedings and owned the disputed property in its name,
whereas Mr J. Guselnikovas’s personal ownership rights to the
property have not been asserted. It reiterates the finding in the present case as
regards admissibility of the complaint under Article 6 § 1 lodged by the second
applicant (see paragraph 62 above). There is no reason to depart from that
conclusion. In the same vein, the complaint under Article 1 of Protocol No. 1
in respect of the second applicant is to be declared inadmissible as
incompatible ratione personae, pursuant to Article 35 §§ 3 and 4 of the
Convention. Accordingly, the Court will proceed with the examination of the
complaint only in relation to the applicant company.
The Government further submitted that the
applicant company had no title to the disputed property until the final
decisions in the proceedings were delivered and became final, that is, until 22
February 2010 and 26 January 2006 respectively. As a result, the company
could not claim to have sustained any interference with the peaceful enjoyment
of its possessions.
The applicants disagreed, and submitted that the
situation concerning the applicant company’s title to the houses had already
been ascertained by the domestic courts in 1995, in a civil case which had preceded
both the civil proceedings complained of.
The Court observes that the domestic courts had indeed
already recognised the ownership rights of the applicant company in respect of
the houses, in the decision of 5 September 1995. The earlier application of
G.G. and M.N. for their title to the houses to be acknowledged was dismissed
(see paragraph 6 above). The Court holds that the binding final court decision
of 5 September 1995 was a sufficient legal basis for the view that the
applicant company had a “possession” within the meaning of Article 1 of
Protocol No. 1 as regards the disputed property. As a result, this plea by the
Government must be dismissed.
The Government further contended that the
applicant company had failed to exhaust all the effective domestic remedies by
not lodging a civil claim under Article 6.272 of the Civil Code against the State
for redress, in view of the prolonged application of the provisional measures.
The applicants contested that argument and noted
that no effective remedy allowing redress for the said violation existed.
. The
Court notes that it is incumbent on the Government claiming non-exhaustion to
satisfy the Court that the remedy was an effective one. Moreover, the
assessment of whether domestic remedies had to be exhausted is normally carried
out with reference to the date on which the application was lodged with the
Court (see Baumann v. France, no. 33592/96, § 47, ECHR 2001-V
(extracts), and Scordino, cited
above, § 144).
. The
Court considers that in the present case the applicants’ complaint under Article
1 of Protocol No. 1 is intrinsically linked with their complaint under Article
6 § 1 concerning the length of the proceedings. The alleged interference with
the applicants’ property rights was predetermined by the duration of the main
proceedings, and was their indirect consequence (see mutatis mutandis, Zeno
and others v. Italy (dec.), no. 1772/06,
27 April 2010).
. The
Court reiterates its conclusion in the present case, which is to reject the Government’s
plea in view of the ineffectiveness of the remedy provided for in Article 6.272
of the Civil Code as regards length of proceedings (see paragraph 57 above). As
the remedy under 6.272 of the Civil Code was not effective for the complaint
under Article 6 § 1, the Court does not see how such a claim would have had any
prospects of success for the complaint under Article 1 of Protocol No. 1.
. In
these circumstances, the Court remains unconvinced that when the present application
was submitted and before 2005 the possibility of claiming damages under Article
6.272 of the Civil Code for the excessive duration of the seizure of the
applicant company’s property had acquired a sufficient degree of legal
certainty to require it to be used for the purposes of Article 35 § 1 of the
Convention (see, mutatis mutandis, Jakubowska v. Luxembourg
(dec.), no. 41193/02, 28 September 2006).
. The
Government further submitted that the applicants had failed to avail themselves
of another civil remedy, which is provided for in Article 147 of the Code
on Civil Procedure (Article 159 of the old CCP) (see paragraph 50 above), by
lodging a claim for damages against G.G. and M.N.
. In
reply the applicants submitted that although such a remedy was available in
theory, it could not be regarded as providing a sufficient prospect of success,
especially taking into account the fact that there was no consistent domestic
case-law in this respect.
Even assuming that the applicant company could
have sued the parties to the proceedings who had requested the application of
provisional measures in respect of the company’s property, according to the
Court’s case-law suing a private individual cannot be regarded as a
remedy in respect of an act of the State (see Pine Valley Developments Ltd
and Others v. Ireland, judgment of 29 November 1991, § 48, Series A no.
222; and Zlínsat, spol. s r.o., v. Bulgaria, no. 57785/00, § 55, 15 June
2006).
. That
being so, the Government’s plea of inadmissibility on the ground of
non-exhaustion of domestic remedies must be dismissed.
The Court considers that this complaint raises serious issues under Article 1
of Protocol No. 1, and no other grounds for declaring it inadmissible have been
established. It must therefore be declared admissible.
B. Merits
1. The parties’ submissions
The applicants stated that by imposing
unreasonable restrictions on the disputed property the State authorities had ignored
the binding court decision and prevented the houses from being returned to their
lawful owner.
The Government submitted that no separate
question arose under Article 1 of Protocol No. 1, and thus the applicant
company’s complaints with regard to its property rights should be absorbed by
the complaint concerning “the reasonable time requirement” under Article 6 § 1
of the Convention.
The applicants further submitted that as a
result of the violation of their right to peaceful enjoyment of possessions and
the restrictions on their property, they were unable to dispose of the houses
and receive economic benefit. This situation resulted in negative consequences for
the normal commercial activity of the applicant company, loss of trust of its
customers, long-term decrease in turnover, loss of revenue and pecuniary damage
to the company, and increase in expenses and mortgage interest rates, as the
houses were mortgaged in connection with the company’s loan from a bank. The
applicants alleged that the applicant company’s building activity, which was directed
at the creation of a residential district which would accommodate the needs of
numerous families, should have been recognised by the domestic authorities as a
“general interest”, rather than the private interests of two individuals, G.G.
and M.N., being caused to prevail.
The Government further contended that even
assuming that to a certain extent there had been an interference with the
applicant company’s rights, that interference was proportionate. They
maintained that during the proceedings G.G. and M.N. had exercised their
procedural rights to request provisional measures with a view to securing their
civil claims. Those rights, as well as the applicant company’s right to seek to
defend its property rights by ordering the claimants to secure its eventual
losses, were set out in the Code of Civil Procedure. In addition, the
Government noted that as early as February 1996, and prior to the initiation of
the civil proceedings in question, it was clear that the applicant company had
failed to comply with its obligations under the said mortgage loan agreement.
2. The Court’s assessment
(a) General principles
. Article
1 of Protocol No. 1, which guarantees the right to the protection of property,
contains three distinct rules: “the first rule, set out in the first sentence
of the first paragraph, is of a general nature and enunciates the principle of
the peaceful enjoyment of property; the second rule, contained in the second
sentence of the first paragraph, covers deprivation of possessions and subjects
it to certain conditions; the third rule, stated in the second paragraph,
recognises that the Contracting States are entitled, amongst other things, to
control the use of property in accordance with the general interest. The three
rules are not, however, ‘distinct’ in the sense of being unconnected. The
second and third rules are concerned with particular instances of interference
with the right to peaceful enjoyment of property and should therefore be
construed in the light of the general principle enunciated in the first rule”
(see J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the
United Kingdom [GC], no. 44302/02, § 52, ECHR 2007-III, and Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 62, ECHR 2007-I).
To be compatible with Article 1 of Protocol No.
1, a measure of interference must fulfil three basic conditions: it must be
carried out “subject to the conditions provided for by law”, which excludes any
arbitrary action on the part of the national authorities, it must be “in the
public interest”, and it must strike a fair balance between the owner’s rights
and the interests of the community (see Vistiņš and Perepjolkins
v. Latvia [GC], no. 71243/01, § 94, 25 October 2012).
The concern to achieve a fair balance is
reflected in the structure of Article 1 of Protocol No. 1 as a whole. In
each case involving an alleged violation of that Article the Court must
therefore ascertain whether by reason of the State’s interference the person
concerned had to bear a disproportionate and excessive burden (see James and
Others, cited above, § 50; Mellacher and Others, cited above, § 48;
and Spadea and Scalabrino v. Italy, 28 September 1995, § 33, Series A
no. 315-B).
(b) Application of the above principles to the
present case
(i) Nature of the interference with the applicant
company’s possessions
Given the circumstances of the case, including
the Court’s finding that the applicant company can be considered the owner of
the houses from 5 September 1995 at the latest, the Court holds that there has
been an interference with the applicant company’s enjoyment of its possessions,
as it was not allowed the use of them for a prolonged period of time.
The Court notes that the seizure of the
applicant company’s property by prohibiting its sale or alienation amounted to
a temporary restriction on its use, and did not entail a transfer of ownership.
The attachment orders were issued in 1996 and 1999, and they were lifted after
the termination of the two civil proceedings, that is in 2010 and 2006 respectively.
The Court does not therefore consider that the case involves a deprivation of
property (see, mutatis mutandis, Air Canada v. the United Kingdom,
judgment of 5 May 1995, § 33, Series A no. 316-A).
The situation of the owner in the present case
is somewhat similar to that in the cases of Scollo v. Italy, 28
September 1995, § 27, Series A no. 315-C, Immobiliare
Saffi v. Italy [GC], no. 22774/93, ECHR 1999-V,
or Zeno and others, cited above, to the extent where the owners
unsuccessfully and for a prolonged period of time tried to evict their tenants
while seeking to recover their property in order to live in it. However,
contrary to these examples, the applicant company in the present case was not able
to sell or otherwise transfer its property for the duration of the court
proceedings.
The Court finds that the prohibition on
disposing of the houses belonging to the applicant company served to control
the use of its property within the meaning of the second paragraph of Article 1
of Protocol No. 1 (see Paeffghen
GmbH v. Germany (dec.), nos. 25379/04, 21688/05, 21722/05 and 21770/05, 18
September 2007) and, mutatis mutandis, Vendittelli v. Italy,
18 July 1994, § 38, Series A no. 293-A).
In order to comply with the requirements of the
second paragraph, it must be shown that the measure constituting the control of
use of property was lawful, that it was “in accordance with the general
interest”, and that there existed a reasonable relationship of proportionality
between the means employed and the aim sought to be realised (see Megadat.com
SRL v. Moldova, no. 21151/04, § 66, ECHR 2008).
(ii) Lawfulness of the interference and legitimate
aim
As far as the lawfulness of the measure is
concerned, the Court notes that this issue is not disputed between the parties.
The interference with the applicant company’s property rights, namely the
domestic court’s right to order seizure of property to secure a civil claim, is
set out in the relevant provisions of the Code of Civil Procedure, Articles 144-50
(Articles 155-60 of the old Code of Civil Procedure).
Accordingly, the Court is satisfied that the
application of the provisional measures in the case at hand was lawful.
The Court reiterates that an interference must
pursue a legitimate aim. The principle of a “fair balance” inherent in Article
1 of Protocol No. 1 itself presupposes the existence of a general interest
of the community (see Beyeler v. Italy [GC], no. 33202/96, § 111, ECHR
2000-I).
As regards the nature and scope of the seizure
orders applied to the applicant company’s property, the Government submitted
that their purpose was to secure satisfaction of G.G.’s and M.N.’s civil
claims.
The Court considers that the measure complained
of was of a temporary and preventive nature, and was designed to secure the
satisfaction of the claimants’ actions during the examination of the civil
cases. Its purpose was to eliminate the risk of impeding or seriously hindering
the satisfaction of the creditors’ claims in the course of two civil
proceedings (see paragraphs 11, 31 and 46 above).
It should be reiterated that States have a duty
to ensure the proper conduct of proceedings (see Beggs, above, § 239).
The Court is thus ready to accept that the duty
for the State to ensure the proper conduct of court proceedings, including
ensuring the satisfaction of creditors’ claims, is a legitimate aim. It should
be noted that the national authorities enjoy a certain margin of appreciation
in determining what is in the general interest of the community (see, for
example, mutatis mutandis, the James and Others judgment cited
above, § 46; see, by comparison, Mellacher, cited above, § 206).
In view of the above, the Court considers that
this interference was provided for by law and pursued a legitimate aim, as
required by Article 1 of Protocol No. 1 to the Convention.
(iii) Proportionality
. Even
if it has taken place “subject to the conditions provided for by law” -
implying the absence of arbitrariness - and in the public interest, an
interference with the right to the peaceful enjoyment of possessions must
always strike a “fair balance” between the demands of the general interest of
the community and the requirements of the protection of the individual’s
fundamental rights. In particular, there must be a reasonable relationship of
proportionality between the means employed and the aim sought to be achieved (see
Immobiliare Saffi, cited above, § 49).
In assessing compliance with Article 1 of
Protocol No. 1, the Court must make an overall examination of the various
interests in issue, bearing in mind that the Convention is intended to
safeguard rights that are “practical and effective”. It must look behind
appearances and investigate the realities of the situation complained of (see Hutten
Czapska v Poland [GC], no. 35014/97, § 168, ECHR 2006-VIII).
The Court notes at the outset that seizure of
property which belongs to one of the parties to proceedings is, by its nature,
a harsh and restrictive measure. It is capable of affecting the rights of an
owner to such an extent that his or her main business activity or even living
conditions may be put at stake (see, mutatis mutandis, Markass Car
Hire Ltd, cited above, § 39; Vendittelli, cited above, § 35).
The Court has accepted that provisional seizure
of property, as such, can be justified by “the general interest” if it is
intended to ensure that disputed property is not transferred to third parties until
the end of the proceedings, to ensure satisfaction of a creditor’s action. However,
having regard to their restrictive nature, preventive measures must be brought
to an end when the need for them has ceased (see: Raimondo v. Italy, 22 February 1994,
§ 36, Series A no. 281-A; and Vendittelli, cited above, § 40),
as the more time such provisional measures stay in place, the bigger is the
impact on the owner’s peaceful enjoyment of possessions.
The Court considers that in the present case
the alleged violation of the applicant company’s property rights is closely
linked to the duration of the main proceedings and is an indirect consequence of
it (see, mutatis mutandis, Zeno and others, cited above; Kunić
v. Croatia, no. 22344/02, § 67, 11 January 2007). The attachment
orders stayed in force for more than eleven years during the first proceedings,
and ten years during the second proceedings.
It is evident that the proper administration of
justice takes time (ibid., § 67). However, the Court has already found
that both sets of civil proceedings lasted an excessively long time, and that the
delays were mainly attributable to the State. Once those cases had ended, the
seizure of the disputed property ceased (see paragraphs 27-28 and 46 above) and
as a result the applicant company could again use its possessions as it wished.
As far as the obligation for the
authorities to consider alternative measures is concerned, compliance with the principle
of “good governance” must be taken into account. It requires that where an
issue in the general interest is at stake, in particular when the matter
affects fundamental human rights such as those involving property, the public
authorities must act in good time and in an appropriate and above all
consistent manner (see Rysovskyy v. Ukraine, no. 29979/04, §§ 70-71, 20
October 2011).
As regards the first set of proceedings, the
prohibition on transferring ownership of house no. 57-2 was imposed by the
court on account of G.G.’s counterclaim seeking acknowledgement that he had
title to the house.
In the second set of proceedings M.N. sought
acknowledgment by his initial claim that he had title to the disputed house no.
57-1. In 1998 this claim was modified to request only reimbursement of construction
costs.
While the Court can accept that initial claims of
such a nature and scope may justify the seizure of disputed property, that
situation cannot exempt the courts from ascertaining and giving reasons for whether
the conditions for the application of provisional measures provided for in the
domestic law are indeed met, and, whether they continue to exist during the
course of the proceedings.
The seizures of property were put in place when
there had already been a binding final decision of 1995 between the same
parties, which acknowledged the applicant company’s title to the same houses. Even
assuming the initial claims of G.G. and M.N. of 1996-98 were arguable, the
domestic courts imposed provisional measures without referring to the fact that
the applicant company’s ownership rights had already been definitively
established by the said court decision in September 1995.
In the Court’s view, seizure of the property
was not the only available remedy to ensure the satisfaction of the claims in
the situation at hand (see paragraphs 48-49 above). In particular, as regards the
second civil case, despite the fact that the claimant M.N. had amended his action
by withdrawing his claim to title of the house (see paragraph 32 above), and thus
ownership of the house no. 57-1 was no longer disputed, the domestic courts neither
lifted the measure nor replaced it with another, less restrictive one as
provided by the CCP (see paragraphs 47 and 49 above).
Consequently, even though the disputed
attachment orders formally served a “legitimate aim”, the Court holds that
given the nature and, in particular, duration of the measures they could have
had certain negative economic consequences on the applicant’s company and
hindered its normal activity, restricting its rights and interests more than
was necessary.
Moreover, the applicant company used its right
to request the courts to lift or replace the seizure orders. However, it
appears that the courts limited themselves to formal consideration of those
requests by leaving the seizures of the property to stand until the end of the proceedings.
141. The
Court further notes that in assessing whether the State struck a reasonable balance
of proportionality between the means employed and the aim sought to be
realised, the behaviour of the owner of the property and the degree of fault or
care displayed by him or her is in certain cases relevant (see AGOSI v. the
United Kingdom, 24 October 1986, § 54, Series A no. 108; Arcuri
v. Italy (dec.), no. 52024/99, ECHR 2001-VII). However, nothing suggests
that the applicant company was in a situation which was in any way similar to
that of the owners in the said cases, where the measures taken formed part of a
crime-prevention policy. It is therefore unnecessary for the Court to examine
the question of due care in respect of the applicant company.
The required fair balance between the protection
of property rights and the requirements of the general interest will not be secured
if a particular person has to bear a personal and excessive burden (see Sporrong
and Lönnroth v. Sweden, 23 September 1982, §§ 69-73, Series A no. 52).
The Court is of the opinion that by seizing the
houses and prohibiting transfer of ownership for over ten years, in particular
taking into account that the sale of such property was the normal commercial
activity of the applicant company, the domestic courts clearly gave precedence
to the interests of the claimants in having their claims secured. Furthermore,
nothing in the case file suggests that the tenant G.G., who lived in the
disputed house during the course of the proceedings, deserved any special
protection.
In the light of the foregoing and having regard
to the duration and severity of the interference, the Court considers that the seizure
orders in both civil cases imposed an excessive burden on the applicant company
and accordingly upset the balance that must be struck between the protection of
property rights and the requirements of the general interest.
Consequently, there has been a violation of
Article 1 of Protocol No. 1 of the Convention.
III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
Lastly, the applicants also complained under
Articles 17 and 18 of the Convention that the domestic authorities had not
prevented third persons from influencing the proceedings in question and
interfering with the applicants’ property rights.
The Government contested those complaints as
unfounded.
. The
Court has examined the above-mentioned complaints as submitted by the applicants.
However, having regard to all the material in its possession, and in so far as
they fall within its jurisdiction, the Court finds that these complaints 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 manifestly ill-founded, pursuant to Article 35 §§ 3 and 4
of the Convention.
IV. 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
As regards non-pecuniary damage, the second
applicant claimed 20,000 euros (EUR).
The Government argued that the second applicant
could not be considered a “victim”. In addition, the amount claimed by him was
excessive.
The Court has already found in the present case
that the second applicant cannot be considered a “victim” within the meaning of
Article 34 of the Convention. Thus, it agrees with the Government’s argument
and rejects his claim.
The applicant company claimed EUR 296,703 in compensation
for pecuniary damage, of which EUR 162,187 was for loss of rent (as concerns
the house no. 57-2) and EUR 134,515 for damage suffered as a result of its
failure to fulfil obligations under the loan agreement with the bank.
The applicant company contended that it would
have rented out the house for 3,200 Lithuanian litai (LTL) (approximately EUR
920), occupied from December 1995 until July 2010 by G.G., had the
provisional measures not been applied. In support of that claim the applicants
presented a general valuation prepared by a real estate agency, which indicated
that the monthly market rent for individual houses in similar neighbourhoods in
the city of Vilnius would have varied between LTL 1,500 (EUR 430) and LTL 6,000
(EUR 1,730) in the period 2009-10.
The applicants further referred to the costs incurred
by the applicant company in compliance with its obligation to pay a debt
resulting from the failure to fulfil the said loan agreement (paragraph 109
above). They submitted a decision of the Commercial Court of 1996.
The Government contested the applicants’
claims.
With regard to the pecuniary damage alleged by
the applicant company, the Government submitted that no causal link existed
between the alleged damage and the alleged violations of the Convention. The
applicant company’s failure to fulfil its financial obligations vis-à-vis
the commercial bank was already obvious in early 1996, that is before the start
of both sets of civil proceedings. The Government further contended that as
concerns the loss of income from rent for the house, the calculations submitted
by the applicants were hypothetical and subjective and not supported by
reliable evidence. In addition, according to the Government, the applicant
company could have first sought compensation through the domestic courts for
the loss of rent resulting from its inability to let the house, and thus should
have submitted civil claims against G.G., M.N. or the State.
The Court first observes that the house in
question was only partially built when the applicant company lost control of it.
The applicant company thus would have first needed to complete the construction
and to accomplish the works inside the house so it could be put on the market
for rent. In addition, it would inevitably have incurred certain maintenance
expenses and would also have been subjected to taxation.
Given that no evidence or expert reports have
been provided, the Court considers that the question of the application of
Article 41 is not ready for decision. That question must, therefore, be
reserved and the subsequent procedure fixed, having due regard to any agreement
which might be reached between the respondent Government and the applicant
company (Rule 75 § 1 of the Rules of Court).
Accordingly, the Court reserves this question
and invites the Government and the applicant company to notify it, within six
months from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, of any agreement that they may reach.
B. Costs and expenses
The applicants also claimed LTL 74,100 (EUR 21,450) for
costs and expenses incurred before the domestic courts and EUR 16,500 for those
incurred before the Court.
The Government contested these claims as excessive and
unfounded. They submitted that as concerns the expenses incurred before the
national courts, the applicant company had already been awarded a compensation
of LTL 12,445 (EUR 3,600) for costs and expenses as a result of the proceedings
which had ended in its favour. Besides, the payment documents and the sums
therein presented by the applicant company could not be attributed to the
proceedings at hand because the applicant company had been involved in a number
of other proceedings. With regard to the expenses incurred before the Court,
the documents submitted could not substantiate that the legal services paid
were rendered only in connection with the representation before the Court.
As to the applicant company’s claim for costs and expenses,
it is linked to its claim for pecuniary damage and is accordingly not ready for
decision either. Therefore, the Court likewise reserves the question of the
application of Article 41 of the Convention in respect of cost and expenses.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the complaints concerning the
rights of the first applicant under Article 6 § 1 and Article 1 of the Protocol
No. 1 to the Convention admissible and the remainder of the application
inadmissible;
2. Holds that there has been a violation of
Article 6 § 1 of the Convention;
3. Holds that there has been a violation of Article
1 of the Protocol No. 1 of the Convention;
4. Holds that, the question of the
application of Article 41 is not ready for decision in so far as pecuniary
damage and reimbursement of costs and expenses are concerned and accordingly,
(a) reserves the
said question;
(b) invites the
Government and the applicant to notify the Court, within six months from
the date of which the judgment becomes final in accordance with Article 44 § 2
of the Convention, of any agreement that they may reach;
(c) reserves the
further procedure and delegates to the President of the Chamber the power to
fix the same if need be;
5. Dismisses the remainder of the applicants’
claim for just satisfaction.
Done in English, and notified in
writing on 5 November 2013, pursuant to Rule 77 §§ 2 and 3 of the Rules of
Court.
Lawrence Early Guido Raimondi
Acting Registrar President
