SECOND SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 48140/99 
by TELTRONIC-CATV 
against Poland

The European Court of Human Rights (Second Section), sitting on 3 May 2005 as a Chamber composed of:

Mr J.-P. Costa, President
 Mr A.B. Baka
 Mr I. Cabral Barreto
 Mr R. Türmen
 Mr V. Butkevych
 Mr L. Garlicki, 
 Ms D. Jočienė, judges
and Mrs S. Dollé, Section Registrar,

Having regard to the above application lodged on 25 January 1999,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Teltronic-CATV, is a limited liability company registered in Poland. It was represented before the Court by Mr J. Gałkowski, a lawyer practising in Bielsko-Biała. The respondent Government were represented by their Agent, Mr J. Wołąsiewicz, of the Ministry of Foreign Affairs.

A.  The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

On 15 April 1997 the applicant company filed a claim against the Best-Sat company in the Bielsko-Biała District Court (Sąd Rejonowy). The value of the claim was PLN 246,969.86. The claim resulted from Best-Sat's refusal to pay the applicant company's invoice issued on 8 October 1995 for the construction of a TV cable network, in accordance with the contract concluded between the parties. The applicant company requested that its claim be considered in a summary procedure (postępowanie nakazowe).

On 24 April 1997 the District Court decided that the case should be considered in the ordinary procedure as it did not fulfil the legal conditions for the summary procedure. On 14 May 1997 the applicant company filed with the Bielsko-Biała District Court an interlocutory appeal (zażalenie) against the decision of 24 April 1997. Subsequently, the court ordered the applicant company to pay a court fee of PLN 2,789.60 for the consideration of its interlocutory appeal. On 10 June 1997 the applicant filed with the Bielsko-Biała District Court an application for an exemption from that fee. However, on 21 July 1997 the District Court dismissed that application. The applicant filed another, apparently unsuccessful, interlocutory appeal against the decision of 21 July 1997, claiming that the company was on the brink of insolvency as a result of its enforceable claims not having been satisfied by the Best-Sat company.

On an unspecified later date, the case was transmitted to the Bielsko-Biała Regional Court (Sąd Wojewódzki) in order to be considered in ordinary proceedings. On 3 February 1998 the Regional Court ordered the applicant company to pay a court fee of PLN 13,948.49 in relation to its claim.

On 17 February 1998 the applicant company filed with the Bielsko-Biała Regional Court an application for an exemption from the fee, pursuant to section 113 § 2 of the Code of Civil Procedure. It stated that the amount of the fee was considerably beyond its means. It also submitted that, for the first 10 months of 1997, it had made net profits of only PLN 7,695.37, while the company's assets amounted to PLN 31,366.98, but consisted mostly of claims to be satisfied.

The applicant company stressed that it had no possibility to dispose of its assets promptly in order to secure funds to pay the court fee and, even if that were possible, it would lead to the winding up of the company. It further argued that the lack of funds to pay the court fee did not result from any fault in its activities or from a negligent failure to secure funds for the litigation. It also maintained that its claim resulted from work done over the past few years which had dominated the activities of the company. Consequently, it did not have other possibilities to secure sufficient funds from other contracts.

On 2 March 1998 the Regional Court ordered the applicant company to produce a number of documents concerning its financial situation. The relevant documents were submitted to the court as enclosures to a letter of 16 March 1998. In the same letter the applicant supplemented its application for exemption from the court fees. It stated that it had three enforceable claims, including two against the Best-Sat Company which were the subject of the pending litigation. The third claim, although enforceable as of 25 November 1997, had not been satisfied. The applicant company stated that its fixed assets of PLN 11,670.90 were necessary to continue the running of its business and, if disposed of, the company would have to be wound up. The plaintiff also submitted that in 1997 it had made net profits of PLN 2,723.19, which were used to set off the losses made in 1995 and 1996.

On 25 May 1998 the Bielsko-Biała Regional Court rejected the application. The court gave the following reasons for its decision:

“At the request of the court, the plaintiff has submitted its balance sheets as of 30 November 1997 and of 30 March 1998, as well as a bank statement regarding its accounts as of 17 March 1998. In the court's view the above documents prove unequivocally that the plaintiff makes profits from its business, as evidenced by the balance on its bank accounts for the period between December 1997 and March 1998. It should also be pointed out that the plaintiff has gross profits (przychód) from its business activity estimated at PLN 26,322.95, including gross profits from the sale of goods and materials in the amount of PLN 2,365.81.

Furthermore, according to the balance sheet of 3 March 1998, the plaintiff company has significant fixed assets (majątek trwały) in the amount of PLN 7,192.67, and current assets (majątek obrotowy) in the amount of PLN 31,067.97.

The examination of the above documents leads to the conclusion that the plaintiff can afford to pay the court fees because it has sufficient funds.

It should also be pointed out that, in case of a lack of such funds, the plaintiff could obtain them by means of partners' surcharges (dopłaty) since it is a limited liability company.

All the other expenses of the plaintiff should be treated by it on equal terms with the expenses which are necessary to pursue its claims (...)”

On 4 June 1998 the applicant company filed an interlocutory appeal against the decision of 25 May 1998 with the Katowice Court of Appeal. It submitted that the District Court had made a mistake in calculating the amounts of fixed and current assets because the figures relied on were from 1 January 1997, but the value of the assets had decreased since then. As of 31 January 1998 the amount of fixed and current assets were estimated at PLN 5,019.27 and PLN 18,494.77 respectively. The applicant company argued that the combined value of all its assets only slightly exceeded the amount of the court fee, and that, if the latter had to be paid in that amount, the company would be forced to wind up.

The applicant company further pointed out that the fixed assets consisted of office equipment which was necessary to run the business, whereas its current assets consisted mostly of reserves of materials necessary to provide services to clients and claims which were the subject of separate litigation. Thus, even assuming that the value of current assets exceeded the amount of the court fee, it could not be presumed that the former could be disposed of in order to provide the funds necessary to pay that fee.

The applicant company also contested the Regional Court's view that all expenses should be treated equally, and pointed out that any surplus would be used to pay taxes since failure to do so could result in prosecution. Finally, the applicant observed that the unpaid invoice which gave rise to the present claim related to work done by the applicant company over a period of two years, which had dominated the applicant's business during that period. That was, to a large extent, the reason why the applicant company had been unable to secure funds for possible litigation expenses. Lastly, the applicant company, in principle, agreed with the Regional Court's view as to the possibility of obtaining additional funds by means of partners' surcharges. However, relying on section 113 § 2 of the Code of Civil Procedure, it stressed that a legal person was entitled to exemption from court fees if it proved that it did not have sufficient funds.

On 31 July 1998 the Katowice Court of Appeal rejected the applicant's appeal as follows:

“According to the plaintiff's documents, its financial situation deteriorated only in 1998. However, it emerges from the documents produced in support of the statement of claim that the plaintiff's claim results from work done between 1993 and 1995, since the notice to pay for that work is dated 16 January 1995. From that it unequivocally follows that the plaintiff could have secured the funds necessary for the pursuance of its claims prior to 1996 when its financial situation deteriorated, and when, as it transpires from its balance sheets, its assets and gross profits from the sale of goods and materials had been at the level which had been referred to in the contested decision.

The Court of Appeal also does not subscribe to the plaintiff's view that, if at the current moment the plaintiff does not have sufficient funds to pay the court fee, then it can successfully request to be exempted ... under section 113 § 2 of the Code of Civil Procedure.

As follows from the established case-law of the Supreme Court, and also the case-law of this Court of Appeal, the possibilities of paying the court fees by a legal person should be assessed in the larger context not only of the funds currently held but also those that could possibly have been secured. When the plaintiff holds a current bank account, where its turnover is recorded, and that turnover still in December 1997 was of significant volume, then there are no reasons to assume that the plaintiff could not take out the necessary loan in order to obtain the funds needed to pursue claims of the very significant value of PLN 246,969.86. Obviously, interest will be charged on such a loan, but there are no grounds to hold that that the cost of such a loan should be borne by the taxpayers, which would happen if exemption from court fees was granted...

The Court of Appeal also fully shares the Regional Court's argument that, since the plaintiff is a limited liability company, the obligation of the partners to make appropriate surcharges in order to secure funds to cover expenses related to the assertion of claims should be taken into consideration...”

The applicant company did not pay the required court fee. On an unspecified later date, the Bielsko-Biała Regional Court ordered that the applicant company's statement of claim be returned to it, which meant that its claim was of no legal effect.

According to the applicant company's tax return for 1997, in that year it made net profits of PLN 4,484.70.

B.  Relevant domestic law

Under Polish law every plaintiff is obliged to pay a court fee at the time of lodging a statement of claim with a court. Court fees are based on a percentage (if a fee is due for lodging a claim or an appeal) or a fraction (if a fee is due for lodging an interlocutory appeal) of the value of the claim in question. The court fees incurred by either party can, depending on the outcome of the litigation, be finally repaid by the losing party (who, in principle, is ordered to pay all the costs of litigation in a final judgment).

There are, however, categories of litigants who are exempted from court fees by virtue of statutory provisions. Some of those categories are listed in Article 111 § 1 of the Code of Civil Procedure. That provision, in the version applicable at the relevant time, exempted from court fees a party lodging a paternity action, a party seeking maintenance, a prosecutor, a court-appointed guardian and “any party exempted from court fees by the competent court” (that is to say, a party who had been granted an exemption under Article 113 of the Code, cited below).

The other categories of exempted litigants are listed in, inter alia, sections 8 and 9 of the Law of 13 June 1967 on Court Fees in Civil Cases (Ustawa o kosztach sądowych w sprawach cywilnych). Under section 8 of the Law, the State Treasury, municipalities and other public organs or institutions are not obliged to pay court fees, provided that the claim in question does not relate to their business activities.

In the case of a successful outcome of litigation initiated by a person exempted from court fees, the fees which would normally have been collected from that person for lodging and proceeding with the claim are awarded to the State Treasury against the opponent.

The Law of 13 June 1967 on Court Fees in Civil Cases (as amended) sets out general principles with respect to the collection of fees by courts. Section 5(1) of the Law, in the version applicable at the material time, stipulated:

“Unless otherwise provided by the law, a party who has submitted to a court a pleading which is subject to court fees, shall pay such fees.”

The relevant part of section 16 of the Law, in the version applicable at the material time, provided as follows:

“1.  The court shall not take any action if the court fee due for lodging a given pleading is not paid. In such a case the president of the court shall order the party concerned to pay the fee due within a period not exceeding seven days, on pain of having the pleading returned. If the party does not comply with the time-limit, the pleading shall be returned to this party.

...

3.  Any appeal, cassation appeal, interlocutory appeal or objection to a judgment by default ... shall be rejected if the court fee due is not paid within the [above] time-limit.”

Section 18 provided:

“A pleading which has been returned to a party as a result of the fact that the court fee had not been paid, shall be of no legal effect.”

Exemption from the payment of court fees was (and still is) a matter for the discretion of the court competent to deal with the case. According to Section 112 § 2 of the Code of Civil Procedure, the competent court may grant partial exemption from the fees.

Section 113 of the Code of Civil Procedure, in the version applicable at the material time, stipulated:

Ҥ1. An individual may ask the court competent to deal with the case to grant him an exemption from court fees provided that he submits a declaration to the effect that the fees required entail a substantial reduction in his and his family's standard of living. Such a declaration shall contain details concerning his family, assets and income. It falls within the court's discretion to assess whether or not the declaration satisfies the requirements for granting the exemption requested.

§2. A legal person or an entity without legal personality could be granted an exemption from court fees provided that it proves that it does not have sufficient resources for those costs.”

The relevant part of Article 120 § 1 of the Code, in the version applicable at the material time, stated:

“The court shall revoke an exemption from court fees or legal assistance granted if the basis therefor did not exist or has ceased to exist. In either instance, the party concerned shall pay all court and/or legal fees due in the case ...”

COMPLAINT

The applicant company complained under Article 6 § 1 of the Convention about a breach of the right of access to a court by the imposition of very high court fees which it could not afford to pay.

THE LAW

The applicant company complained that its right of access to a court, guaranteed by Article 6 §1 of the Convention, had been violated because the excessive amount of court fees required for lodging its claim resulted in the claim not being examined by the court. Article 6 § 1 of the Convention, in so far as relevant, provides:

“In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal...”

1.   The Government's submissions

The Government submitted that, under Polish law, there was a general obligation to pay court fees for lodging claims with the courts. They recalled that that obligation could not be regarded as a restriction on the right of access to a court that is incompatible per se with Article 6 § 1 of the Convention. Having regard to the fact that the applicant company was a legal person engaged in a commercial activity, as opposed to a natural person on an average income, the Government argued that the amount of the court fee at issue should not be seen as disproportionate, especially in the light of the overall value of the claim.

They further maintained that there was nothing untoward in requiring the applicant company to take a loan in order to pursue its claims before the courts. They also stated that the applicant company could have instituted proceedings against the Best-Sat company earlier.

The Government argued that it was generally accepted that commercial entities should take into account the possible need for litigation. In their submission, that necessity was part of the risks involved in running a business. They further stressed that the applicant company's partners could have made appropriate surcharges to secure the funds necessary to pay the court fees.

In conclusion, the Government submitted that the court fee at issue had been imposed on the applicant company pursuant to a general binding rule in civil proceedings. They argued that the imposition of the court fee had had a legitimate aim and that its amount had neither been disproportionate to the applicant company's means nor arbitrary.

2.      The applicant company's submissions

The applicant company submitted that it had been deprived of the effective right of access to a court, guaranteed by Article 6 § 1, as a result of the courts' refusal to exempt it from the court fees which it could not afford to pay. This refusal, in turn, prevented it from pursuing its claims in court.

It disagreed with the Government's argument that the amount of the court fee at issue was not disproportionate, given that the case concerned a legal person engaged in a commercial activity. It argued that there was no justification to distinguish between natural and legal persons as regards their applications for an exemption from court fees. It stressed that, under Polish law, both natural and legal persons could apply for such exemption on very similar grounds. In respect of both categories of persons, the decisive element was the actual impossibility to pay the court fees because of an unintentional lack of resources.

The applicant company also submitted that, in accordance with the laws applicable at the relevant time, following the issue of the invoice of 8 October 1995 it had been obliged to pay a VAT bill (PLN 44,486.32) by 25 November 1995 and, in the same month, to pay income tax on the amount due, regardless of the fact that its invoice had not been paid by the Best-Sat company. In case of failure to pay those taxes, the persons in charge of the company risked prosecution.

Furthermore, the applicant company maintained that it had attempted to take a loan in order to provide funds for the litigation. However, no bank had been prepared to grant such a loan, given the company's difficult financial situation.

In respect of the reasons relied on by the Bielsko-Biała Regional Court in its decision of 25 May 1998, the applicant company submitted that the Regional Court had erred in apparently equating its gross profits with net profits. Likewise, the Regional Court had been wrong in concluding that the value of the applicant company's fixed and current assets had enabled it to pay the court fees, since those assets had been indispensable for the running of the company. Had the applicant company disposed of those assets, it would have had to have been wound up.

As regards the argument that the relevant funds could have been obtained by means of the partners' surcharges, it stated that it had been a small limited liability company and the partners had had no real possibility of providing additional capital for its activities. As to the argument about the allegedly late submission of the principal claim to the court, the applicant company explained that it had first attempted to pursue its claims out of court, which had delayed matters.

3.  The Court's assessment

The Court considers, in the light of the parties' submissions, that the complaint raises serious issues of fact and law under the Convention, the determination of which requires an examination of the merits. The Court concludes therefore that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other ground for declaring it inadmissible has been established.

For these reasons, the Court by a majority

Declares the application admissible, without prejudging the merits of the case.

S. Dollé J.-P. Costa  
 Registrar President

TELTRONIC-CATV v. POLAND DECISION


TELTRONIC-CATV v. POLAND DECISION