CASE OF SOLARIS, S.R.O. AND OTHERS
v. THE CZECH REPUBLIC
(Application no. 8992/07)
13 October 2011
This judgment is final but it may be subject to editorial revision.
In the case of Solaris, s.r.o. and Others v. the Czech Republic,
The European Court of Human Rights (Fifth Section), sitting as a committee composed of:
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 the last-mentioned date:
1. The case originated in an application (no. 8992/07) 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 Solaris, s.r.o., a company registered in the Czech Republic, Mr Roman Minarik, a German national, Mr Karel Rybáček, Mr Tomáš Hlavnička, Mr Miroslav Sobotka and Ms Jana Hlavničková, born in 1948, who all are Czech nationals (“the applicants”), on 15 February 2007.
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. The applicants alleged, in particular, a violation of their right of access to court under Article 6 of the Convention.
4. On 8 March 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).
I. THE CIRCUMSTANCES OF THE CASE
5. The six applicants are: Solaris, s.r.o., a company registered in the Czech Republic, Mr Roman Minarik, a German national who was born in 1965 and lives in Wilstätt, Mr Karel Rybáček, born in 1956, Mr Tomáš Hlavnička, born in 1969, Mr Miroslav Sobotka, born in 1955 and Ms Jana Hlavničková, born in 1948, who all are Czech nationals and live in Prague. They are represented before the Court by Mr P. Zima, a lawyer practising in Prague.
6. The facts of the case, as submitted by the applicants, may be summarised as follows.
7. The applicants were minority shareholders of Moravské naftové doly, a.s., a joint stock company incorporated under Czech law.
8. On 28 May 2004 the general meeting of that company adopted, by vote of the main shareholder, a resolution on the winding up of the company and the transfer of all its assets to the main shareholder.
9. The applicants received cash compensation based on the value of their shares on 1 January 2004. The amount of compensation was based on an evaluation made by an expert appointed by a court on the proposal of the main shareholder.
A. Proceedings to set aside the resolution of the general meeting
10. On 31 May 2004 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 and that it violated a bilateral investment treaty and that the law on which the resolution was based was itself unconstitutional. At the same time, they informed the court administering the Companies Register about their action and asked it not to allow the entry of the winding up of the company and the transfer of all its assets to the main shareholder until the legality of the resolution had been decided by the Regional Court.
11. On 6 April 2007 the Brno Regional Court (krajský soud) terminated the proceedings holding that the winding up of the company had been already entered into the Companies Register and thus the court was required terminate the proceedings by virtue of Article 220h of the Commercial Code.
12. On 27 June 2007 the Olomouc High Court (vrchní soud) upheld the decision.
13. On 28 July 2009 the Supreme Court (nejvyšší soud) rejected the applicants’ appeal on points of law.
14. The applicants lodged a constitutional appeal, which is pending.
B. Proceedings on the deletion of the company from the Companies Register
15. On 15 June 2004 the Regional Court approved the registration of the transfer and deletion of the company from the Companies Register. No hearing had been held before that decision, which was not served on the applicants as they did not have standing to participate in the proceedings.
16. On 3 February 2005 the High Court rejected the 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. It further held that the appeal had been lodged after the decision had become final and thus too late.
17. On 25 July 2006 the Supreme Court rejected the applicants’ appeal on points of law as inadmissible. It held that an appeal on points of law, such as lodged by the applicants, was admissible only against decisions on the merits but the High Court had rejected their appeal on procedural grounds.
C. Proceedings on the adequacy of financial compensation
18. The applicants instituted proceedings before the Regional Court for a review of the amount of the compensation provided by the main shareholder. These proceedings are pending.
II. RELEVANT DOMESTIC AND PRACTICE
19. The relevant domestic law and practice are set out in the Court’s judgment Kohlhofer and Minarik v. the Czech Republic, nos. 32921/03, 28464/04 and 5344/05, §§ 40-70, 15 October 2009.
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
20. The applicants complained that they had not been able effectively to challenge the resolution on the winding up of the company because the courts had been precluded by the Commercial Code to review the merits of their claims.
They relied on Article 6 § 1 of the Convention, which reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
21. The Government disputed the applicants’ assertions.
22. The Government maintained that the application was inadmissible for non-exhaustion of domestic remedies for being premature.
The applicants disputed that objection.
The Court has rejected the same objections of the Government in Minarik v. the Czech Republic, no. 46677/06, §§ 19-24, 10 February 2011, and finds no reason not to do so on this occasion.
23. The Court notes that this complaint 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.
24. The applicants maintained that Czech legislation had made it impossible for them to challenge the winding-up resolution before a court. They considered that their application had the same characteristics as that of Kohlhofer and Minarik v. the Czech Republic, cited above, where the Court found a violation of Article 6 of the Convention.
25. The Government took the view that in several aspects the present case differs from Kohlhofer and Minarik v. the Czech Republic, cited above, particularly because of the prospect of significant change in domestic case-law and legislation following the Court’s judgment in that case. The Government further invited the Court to reconsider its conclusions in the Kohlhofer and Minarik judgment, finding the dissenting opinion in that case to be preferable. They maintained that the restrictions on the applicants’ access to court had been proportionate and that the applicants’ shares had constituted financial property rights which could be fully protected in the pending compensation proceedings.
26. The Court notes that the observations and arguments of the parties are practically identical to those in the case of Minarik v. the Czech Republic, cited above, 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. There has accordingly been a breach of Article 6 § 1 of the Convention as regards the applicants’ lack of access to court regarding their claim that the resolution of the general meeting on the winding up of the company was unlawful.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1
27. The applicants complained that the resolution on the winding up of the company had been tantamount to an expropriation of shares of the minority shareholders and thus that the second sentence of Article 1 of Protocol No. 1 to the Convention is applicable. They maintained that that provision had been violated because the interference had not been lawful, had been contrary to general principles of international law, that there had been no public interest in the action and that it had not been proportionate.
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.”
28. The Government maintained that the applicants’ complaints under this provision of the Convention were inadmissible.
29. The Court observes that the proceedings for compensation, crucial in the light of Article 1 of Protocol No. 1, are still pending.
30. It follows that this part of the application is premature within the meaning of Article 35 § 1 of the Convention (see Kohlhofer and Minarik v. the Czech Republic, cited above, § 112 and Minarik v. the Czech Republic, cited above, § 35) and must therefore be declared inadmissible pursuant to Article 35 § 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
31. 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.”
32. The applicants claimed 125,400 Czech korunas for costs and expenses incurred before the Court.
33. The Government did not consider this amount to be unreasonable or unsupported by documentation.
34. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and to the above criteria, the Court considers it reasonable to award the sum of EUR 5,150 for the applicants’ costs and expenses incurred in the proceedings before the Court.
35. The Court considers it appropriate that 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 complaint concerning Article 6 § 1 admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
(a) that the respondent State is to pay the applicants, within three months, EUR 5,150 (five thousand one hundred and fifty euros), plus any tax that may be chargeable to the applicants, 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.
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
Deputy Registrar President
SOLARIS, S.R.O. AND OTHERS v. THE CZECH REPUBLIC JUDGMENT
SOLARIS, S.R.O. AND OTHERS v. THE CZECH REPUBLIC JUDGMENT