FIFTH SECTION

CASE OF MINARIK AND OTHERS v. THE CZECH REPUBLIC

(Application no. 10583/09)

JUDGMENT

STRASBOURG

13 October 2011

This judgment is final but it may be subject to editorial revision.

 

In the case of Minarik and Others v. the Czech Republic,

The European Court of Human Rights (Fifth Section), sitting as a committee composed of:

Mark Villiger, President, 
 Karel Jungwiert, 
 Isabelle Berro-Lefèvre, judges, 
and Stephen Phillips, Deputy Section Registrar,

Having deliberated in private on 20 September 2011,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1.  The case originated in an application (no. 10583/09) against the Czech Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by German nationals Mr Roman Minarik (“the first applicant”) and Ms Susanne Minarik (“the second applicant”), by Czech nationals Mr Pavel Suda (“the third applicant”), Mr Miroslav Navrátil (“the fourth applicant”) and Mr Karel Rybáček (“the fifth applicant”) and by Day s.r.o. (“the sixth applicant”), a limited liability company incorporated under Czech law.

2.  The applicants were represented by Mr P. Zima, a lawyer practising in Prague. The Czech Government (“the Government”) were represented by their Agent, Mr V.A. Schorm, of the Ministry of Justice.

3.  On 30 August 2010 the President of the Fifth Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 1).

THE FACTS

I.  THE CIRCUMSTANCES OF THE CASE

4.  The applicants were minority shareholders of YTONG, a.s., a joint stock company incorporated under Czech law.

5.  On 24 June 2003 the general meeting of that company adopted, by votes of the main shareholder, a resolution on the winding up of the company and the transfer of all its assets to the main shareholder.

6.  On 25 June 2003 the applicants lodged with the Brno Regional Court (krajský soud) an action to have the resolution set aside, asserting that it had been adopted contrary to the applicable law, bilateral investment treaties and their property rights. Asserting the unlawfulness of the asset transfer contract on account of its clause reserving for arbitration jurisdiction over disputes concerning the value of the compensation, they further emphasised a number of irregularities of the resolution. They informed the court administering the commercial register about the action.

7.  On 11 July 2003 the court in charge of the commercial register approved the registration of the transfer. No hearing was held before that decision, which was not served on the applicants as they did not have standing to participate in the proceedings. Based on this decision the company YTONG, a.s. was deleted from the commercial register on 1 September 2003.

8.  On 11 December 2003 the Olomouc High Court (vrchní soud) dismissed the first and second applicants’ appeal contesting that decision. It ruled that since the applicants did not have standing to take part in the impugned proceedings, they were not entitled to appeal their outcome.

9.  On 6 January 2005 the Regional Court rejected the applicants’ claim to set aside the resolution. The applicants appealed.

10.  On 28 November 2005 the High Court, relying on Article 220h § 4 of the Commercial Code, discontinued the set-aside proceedings without examining the merits.

11.  On 24 June 2008 the Supreme Court (Nejvyšší soud) dismissed the applicants’ appeal on points of law holding that the decision to discontinue the proceedings had not been a decision on the merits and thus an appeal on points of law was not admissible.

12.  On 11 December 2008 the Constitutional Court (Ústavní soud) dismissed the applicants’ constitutional appeal, in which they claimed an impairment of their right to a fair trial in the set-aside proceedings by reason of the limitation on access to a court brought about by Article 220h § 4 of the Commercial Code. The Constitutional Court found that the Supreme Court had not erred in its impugned decision of 24 June 2008 and this part of the appeal was thus manifestly ill-founded. Since the appeal on points of law was not admissible in the applicants’ case, the court held that it was not an effective remedy to be exhausted and consequently their constitutional appeal against the decisions of the Regional and High Courts had been lodged out of time.

II.  RELEVANT DOMESTIC LAW AND PRACTICE

13.  The relevant domestic law and practice were set out in the Court’s judgment Kohlhofer and Minarik v. the Czech Republic, nos. 32921/03, 28464/04 and 5344/06, §§ 40-70, 15 October 2009.

THE LAW

I.  ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION

14.  The applicants complained under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 that the courts had refused to consider merits of their action challenging the resolution on the winding up of the company and thus the interference with their property rights had not been reviewed by any court.

15.  The Court considers appropriate to examine the present complaint under Article 6 § 1 of the Convention, which, 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

16.  The Government maintained that the complaints by the second applicant were substantially the same as those in application no. 28464/04, which had concerned the dissolution of the same company and which had been already examined in Kohlhofer and Minarik v. the Czech Republic, cited above.

17.  The second applicant disagreed and argued that application no. 28464/04 had dealt with an entry of the general meeting resolution in the commercial register, but the current application concerned the proceedings to declare the resolution invalid.

18.  The Court, however, observes that the issue in the Kohlhofer and Minarik judgment, cited above, was the lack of access of the applicants, including the current second applicant, to a court regarding general meeting resolutions depriving them of their shares in the respective companies. In that context, the Court considered both the set aside proceedings, that are challenged in the present application and were then pending, and the commercial register proceedings (see § 78 and 104). In fact the Court found a violation of Article 6 of the Convention because the second applicant had been deprived of a determination on merits of the claim of unlawfulness of the general meeting resolution and the asset transfer contract (§ 106).

19.  Consequently, the Court considers that the present application of the second applicant is substantially the same as a matter that has already been examined by the Court and must be declared inadmissible under Article 35 § 2 (b) of the Convention.

20.  The Court notes that the application of the other applicants is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

21.  The Court further notes that in their observations from 10 March 2011 the applicants also complained that they had not had access to a court regarding their claim on the adequacy of financial compensation.

22.  The Court however observes that this complaint is not part of the original application and that the original application was not accompanied by any documents regarding any proceedings on the adequacy of financial compensation. In any case this complaint has been registered under application no. 48203/09 lodged by the same six applicants and does not fall to be considered in the present application.

B.  Merits

23.  The applicants complained that the courts had refused to consider the merits of their claim that the general meeting resolution depriving them of their shares had been unlawful.

24.  The Government asked the Court to asses the admissibility and merits of the application at its own discretion.

25.  The Court notes that the issue in the present case is the same as that in the case of Minarik v. the Czech Republic, no. 46677/06, 10 February 2011, where it found, like in Kohlhofer and Minarik v. the Czech Republic, cited above, a violation of Article 6 § 1 of the Convention on the same ground as is the complaint in the present application. Having examined all relevant circumstances, the Court does not see any reason to hold otherwise in the present case.

26.  There has accordingly been a breach of Article 6 § 1 of the Convention as regards the applicants’ lack of access to a court regarding their claim that the resolution of the general meeting on the winding up of the company was unlawful.

II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION

27.  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

28.  The applicants claimed 20,000 euros (EUR) each in respect of non-pecuniary damage.

29.  The Government considered that a possible finding of a violation would constitute in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicants.

30.  The Court considers that finding a violation of Article 6 § 1 of the Convention represents in itself just satisfaction for the applicants (see Kohlhofer and Minarik v. the Czech Republic, cited above, § 117).

B.  Costs and expenses

31.  The applicants claimed altogether 1,300,780 Czech korunas (CZK) as costs and expenses incurred in domestic arbitration proceedings in which they challenged the amount of compensation they had received for their shares. Additionally, they claimed CZK 12,650 for costs and expenses incurred before the domestic courts in the set aside proceedings. Lastly, they claimed CZK 20,000, each, for costs and expenses incurred before the Court.

32.  The Government maintained that only those costs should be awarded that had been incurred in causal connection with the violation found. In particular they maintained that costs incurred in the arbitration proceedings should not be reimbursed. Regarding the claimed costs before the Court the Government considered them excessive.

33.  According to the Court’s settled case-law, costs and expenses will not be awarded under Article 41 unless it is established that they were actually and necessarily incurred and are also reasonable as to quantum. Furthermore, legal costs are only recoverable in so far as they relate to the violation found (see Scordino v. Italy (no. 1) [GC], no. 36813/97, § 283, ECHR 2006-V).

34.  Accordingly, the Court considers that only those domestic costs and expenses incurred in the proceedings on the deletion of the company from the Companies Register and the proceedings to set aside the resolution of the general meeting can be awarded. Regard being had to the documents in its possession, the Court awards the sum of EUR 520 for the applicants’ costs and expenses incurred before domestic courts.

35.  As to the costs and expenses incurred in the proceedings before the Court, regard being had to the documents in its possession and to the above criteria, the Court considers it reasonable to award the sum claimed by the applicants, that is EUR 4,100 for the five applicants, whose complains were declared admissible.

36.  Consequently, the Court awards the applicants EUR 4,620 under this head.

C.  Default interest

37.  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

1.  Declares the complaints of the first, third, fourth, fifth and sixth applicants 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 the finding of a violation constitutes in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicants;

4.  Holds

(a)  that the respondent State is to pay the applicants, within three months EUR 4,620 (four thousand six hundred and twenty euros), plus any tax that may be chargeable, in respect of costs and expenses, to be converted into Czech korunas at the rate applicable at the date of settlement];

(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;

5.  Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 13 October 2011, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Stephen Phillips Mark Villiger 
 Deputy Registrar President


MINARIK AND OTHERS v. THE CZECH REPUBLIC JUDGMENT


MINARIK AND OTHERS v. THE CZECH REPUBLIC JUDGMENT