AS TO THE ADMISSIBILITY OF
Application no. 18363/02
by Esa PUOLAKKA
The European Court of Human Rights (Fourth Section), sitting on 26 October 2004 as a Chamber composed of:
Sir Nicolas Bratza, President,
Mr M. Pellonpää,
Mr L. Garlicki,
Mr J. Borrego Borrego,
Mrs E. Fura-Sandström,
Ms L. Mijović,
Mr D. Spielmann, judges,
and Mr M. O'Boyle, Section Registrar,
Having regard to the above application lodged on 17 December 2001,
Having deliberated, decides as follows:
The applicant, Mr Esa Puolakka, is a Finnish national, who was born in 1948 and lives in Joensuu. He is represented before the Court by Mr Lassi Ropponen, a lawyer practising in Pieksämäki.
A. The circumstances of the case
The facts of the case, as submitted by the applicant and as they appear from the documents, may be summarised as follows.
On 31 December 1993 the Finnish Savings Bank – SSP Oy (which later became the Property Management Corporation Arsenal (Omaisuudenhoitoyhtiö Arsenal-SSP Oy, Egendomsförvaltningsbolaget Arsenal – SSP Ab; “Arsenal-SSP” hereinafter) instituted civil proceedings against 24 defendants, including the applicant, who was the general manager of the Savings Bank of Northern Carelia (which had in 1992 merged into the Finnish Savings Bank – SSP Oy, later replaced by the Arsenal-SSP). Arsenal-SSP sought damages amounting to 75,400,000 Finnish Marks (FIM; corresponding to 12,681,370 euros (EUR)) plus 16 per cent interest as from 31 January 1994 for allegedly granting credit negligently in 1988-1991 and for subsequent credit losses allegedly caused, inter alia, by the applicant in his capacity as managing director.
On 25 February 1994 the plaintiff supplemented its application for a summons.
On 12 July 1995 the Joensuu District Court (käräjäoikeus, tingsrätten) dismissed parts of the defendants' procedural defence claims in its separate decision.
In his written submissions to the District Court the applicant requested the court to declare the action inadmissible or dismiss the claims on the grounds of alleged defects in the application for a summons and on the grounds that, due to the merger, the plaintiff did not have standing to lodge the action. It was contended that, in any case, the former Finnish Savings Bank had not transferred its claims to the Arsenal-SSP in the merger and had not issued a valid decision to institute the proceedings for damages.
The applicant also requested the dismissal of the claims as the Savings Bank of Northern Carelia had granted him a discharge from liability concerning the years 1988-1993. He maintained that the provisions of the old Savings Bank Act (säästöpankkilaki, sparbankslag; 541/69) of 1969 covered the years 1988-1989 and were to be interpreted in such a way that the discharge from liability prevented the board of trustees (isännistö, principalerna) from lodging subsequent claims for damages. As regards the period of time from 1990 he maintained that, according to section 131, subsection 2 of the new Savings Bank Act (Act no. 1270/90) of 1990, the discharge from liability prevented the board of trustees' claims for damages provided that the boards had been presented in the balance sheet, audit report or otherwise with accurate and sufficient information about the contested decisions and measures. He maintained that the board of trustees had been so informed and that even the Finnish Savings Bank had, after the merger, granted a discharge from liability.
The applicant maintained that a special limitation period (section 133 of the Savings Bank Act of 1990) of three years for instituting damage actions had expired and that this provision also applied retroactively to the period covered by the old Savings Bank Act. Thus, the action should be dismissed insofar as it concerned years 1988-1989. Further, he contested any causal relationship between his actions and the damage caused to the Arsenal-SSP, referring to extraneous reasons such as the exceptionally severe economic depression during 1987-1991 and two occasions of devaluation of the Finnish Mark. The plaintiff contested his claims on all points.
On 15 February 1996 the District Court delivered its judgment and upheld the plaintiff's claims. It dismissed the applicant's grounds for declaring the case inadmissible. It held that the Savings Bank Act of 1969 did not regulate the legal consequences of the discharge from liability by the board of trustees and found that the purported discharge did not prevent the institution of proceedings. As regards the Finnish Savings Bank's purported discharge, inter alia, of the applicant from liability after the merger, the District Court found that this did not prevent the action, either. The court held, inter alia:
“it had not been proven that the general meeting had been presented in the balance sheet or in the audit report such information as would prevent it from later instituting the action for damages ... [t]he general meeting has thus not been presented with adequate and sufficient information as required by the law.”
The District Court found, inter alia, that the applicant, as the managing director of the Savings Bank of Northern Carelia, had acted negligently as loans had been granted without adequate security (turvaava vakuus, tryggande säkerhet) and without ascertaining the clients' solvency and to an extent which was not proportionate to the bank's own capital resources. It further held that the Savings Bank of Northern Carelia had overvalued securities and that these actions had caused the bank damage.
The District Court did however adjust the applicant's liability to 20 per cent of the actual damages, thus amounting to FIM 5,953,470.39 (EUR 1,001,302). It ordered the applicant to jointly and separately reimburse the plaintiff's legal expenses of FIM 2,000,000 (EUR 336,375).
All parties to the proceedings appealed to the Court of Appeal (hovioikeus, hovrätten) of Eastern Finland.
On 19 December 1996 the Court of Appeal issued a decision and an interlocutory judgment concerning the District Court's decision of 12 July 1995 and its judgment of 15 February 1996. It upheld the District Court's findings about the procedural defence claims.
On 26 February 1998 the Court of Appeal, after a previous preparatory hearing and an oral hearing, issued its judgment by votes 2-1. It dismissed the plaintiff's appeal and discharged the applicant from all damages claims, and ordered the plaintiff to reimburse the applicant's legal expenses in the District Court and the Court of Appeal.
On 9 February 1999 the Supreme Court (korkein oikeus, högsta domstolen) granted the plaintiff leave to appeal. On 13 April 1999, in his observations in reply to the plaintiff's appeal the applicant requested, inter alia, that the witnesses heard in the Court of Appeal, comprising almost 30 witnesses, be reheard in the Supreme Court. The Supreme Court invited the parties' further observations twice, i.e. on 4 April 2000 and 15 June 2000. On 2 October 2000 it held a preparatory hearing. On 22-23 November 2000 the Supreme Court held an oral hearing which was limited so as to concern five only of the nine contested credit-matters. In the oral hearing the testimony of six witnesses and some of the parties was heard.
On 19 June 2001 the Supreme Court issued its judgment reversing the Court of Appeal's judgment. It accepted four claims against the applicant and held that he had caused the plaintiff damage amounting FIM 32,900,000 (EUR 5,533,382). It held the applicant jointly and separately liable for the damages with other defendants, however adjusting the liabilities to the sum of FIM 3,360,000 (EUR 565,111). It quashed the Court of Appeal's judgment as regards the legal expenses and ordered the applicant to reimburse the plaintiff's legal expenses in the District Court in an amount of FIM 38,095.24 (EUR 6,407) and held him liable, jointly and separately with other defendants, to pay FIM 50,000 (EUR 8,409) plus interest in respect of the Supreme Court proceedings. The applicant and the plaintiff were ordered to bear their own legal expenses in the Court of Appeal.
According to the applicant, on 12 September 2001 the Government Guarantee Fund (valtion vakuusrahasto, statens säkerhetsfond) instructed the Arsenal-SSP that it could limit the enforcement proceedings against the applicant to a sum not exceeding per capita liability for the damages and legal expenses.
1. The applicant complains under Articles 6 and 13 of the Convention that the length of the civil proceedings was excessive as they lasted over eight years;
2. He also complains under Article 6 § 3 (d) of the Convention that the burden of proof (to show that the board of trustees had had accurate and sufficient information when granting the discharge from liability) was wrongly placed on him in the domestic proceedings;
3. He complains under Article 6 § 3 (d) of the Convention that he was not allowed to hear the members of the board of trustees (isännistö, principalerna) of the Savings Bank of Northern Carelia as witnesses and that the Supreme Court failed to hear several witnesses and examined the case only partially;
4. He complains about the domestic courts' finding that his discharge from liability was not valid and maintains that the judgments were not adequately reasoned in those regards;
5. He complains under Article 14 of the Convention about unequal treatment by the Government Guarantee Fund, in particular in comparison with another settlement case of a former bank director and party leader S.
1. The applicant complains under Articles 6 and 13 of the Convention about the length of the civil proceedings, which started on 31 December 1993 and ended on 19 June 2001. Article 6, insofar as relevant, reads as follows:
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time ...”
Article 13 reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
The Court considers that it cannot, on the basis of the case file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 2 (b) of the Rules of Court, to give notice of this part of the application to the respondent Government.
2. The applicant complains that the burden of proof was allegedly wrongly placed on him in the civil proceedings. The Court has examined this complaint under Article 6 of the Convention (see above).
With regard to the judicial decision of which the applicant complains, the Court recalls that, in accordance with Article 19 of the Convention, its task is to ensure the observance of the obligations undertaken by the Parties in the Convention. In particular, it is not competent to deal with an application alleging that errors of law or fact have been committed by domestic courts, except where it considers that such errors might have involved a possible violation of any of the rights and freedoms set out in the Convention (Schenk v. Switzerland, judgment of 12 July 1988, Series A no. 140, p. 25, § 45).
While Article 6 of the Convention guarantees the right to a fair trial, it does not lay down any rules as to the burden of proof in civil matters, which is therefore primarily a matter for regulation under national law. The examination of the case-file does not disclose any appearance of a violation of a fair trial in this respect. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
3. The applicant complains under Article 6 § 3 (d) of the Convention that he was not allowed to hear the members of the board of trustees of the Savings Bank of Northern Carelia as witnesses and that the Supreme Court failed to hear several witnesses and examined the case only partially. The Court has examined this complaint under Article 6 §§ 1 and 3 (d) of the Convention, which reads as follows:
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing ...
Everyone charged with a criminal offence has the following minimum rights:
(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;”
The Court recalls that the requirements inherent in the concept of “fair hearing” are not necessarily the same in cases concerning the determination of civil rights and obligations as they are in cases concerning the determination of a criminal charge. This is borne out by the absence of detailed provisions such as paragraphs 2 and 3 of Article 6 applying to cases of the former category. Thus, although these provisions have a certain relevance outside the strict confines of criminal law (see, mutatis mutandis, Albert and Le Compte v. Belgium, judgment of 10 February 1983, Series A no. 58, p. 20, § 39), the Contracting States have greater latitude when dealing with civil cases concerning civil rights and obligations than they have when dealing with criminal cases.
Nevertheless, certain principles concerning the notion of a “fair hearing” in cases concerning civil rights and obligations emerge from the Court's case-law. Most significantly for the present case, it is clear that the requirement of “equality of arms”, in the sense of a “fair balance” between the parties, applies in principle to such cases as well as to criminal cases (see the Feldbrugge v. the Netherlands judgment of 26 May 1986, Series A no. 99, p. 17, § 44).
As regards litigation involving opposing private interests, “equality of arms” implies that each party must be afforded a reasonable opportunity to present his case – including his evidence – under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent. It is left to the national authorities to ensure in each individual case that the requirements of a “fair hearing” are met (see Dombo Beheer B.V. v. the Netherlands, judgment of 27 October 1993, Series A no. 274, §§ 32-33).
Turning to the present application, as regards the alleged inability to hear the trustees as witnesses, the Court observes that the minutes of the District Court's preparatory and principal hearings indicate that numerous witnesses proposed by the plaintiff and, inter alia, the applicant, were heard. In his letter of appeal to the Court of Appeal the applicant relied on the same evidence as was presented in the District Court, including several minutes of the meetings of the board of trustees of the Savings Bank of Northern Carelia. While complaining that the District Court had not heard the members of the board of trustees as witnesses, he did not propose that they be heard as witnesses in the Court of Appeal. Nor did the applicant rely on these persons as witnesses or request an oral hearing in his observations in reply to the plaintiff's appeal submitted to the Supreme Court. To that extent therefore he has failed to exhaust domestic remedies as required by Article 35 § 1 of the Convention and the complaint must be rejected pursuant to Article 35 § 4.
As regards the Supreme Court's refusal to hear certain witnesses and to examine the matter only partially the examination of the case-file does not indicate any appearance of a violation of a fair trial in light of the principles outlined above. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
4. The applicant complains about the domestic courts' finding that his discharge from liability was not valid and that the judgments were not adequately reasoned in those regards.
Insofar as regards the domestic courts' conclusions drawn from the interpretation of the judicial meaning of the discharge from liability the Court refers to its findings above (complaint no. 2) and notes that interpretation and application of domestic law is primarily a matter for the assessment of the national courts. The examination of the case-file does not disclose any appearance of a violation of a fair trial in these respects or as regards the reasoning of the judgment. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
5. The applicant complains under Article 14 of the Convention (prohibition of discrimination in enjoyment of Convention rights) about unequal treatment by the Government Guarantee Fund, in particular in comparison with another settlement case.
Leaving aside the question of whether the actions of the Government Guarantee Fund may be regarded as attributable to the State, the Court notes that the applicant has not shown that he has had recourse to any domestic remedies in these respects and, in any case, that he has not substantiated his complaint. It follows that this complaint fails to disclose any appearance of of a violation of the provisions of the Convention and must be rejected under Article 35 §§ 1, and 4 of the Convention as manifestly ill-founded as a whole.
For these reasons, the Court unanimously
Decides to adjourn the examination of the applicant's complaint concerning the length of the civil proceedings;
Declares the remainder of the application inadmissible.
Michael O'Boyle Nicolas Bratza
PUOLAKKA v. FINLAND DECISION
PUOLAKKA v. FINLAND DECISION