FOURTH SECTION

CASE OF PETIKON OY AND PARVIAINEN v. FINLAND

(Application no. 26189/06)

JUDGMENT

STRASBOURG

27 January 2009

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 Petikon Oy and Parviainen v. Finland,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
	Nicolas Bratza, President,
	Giovanni Bonello,
	David Thór Björgvinsson,
	Ján Šikuta,
	Päivi Hirvelä,
	Ledi Bianku,
	Nebojša Vučinić, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 6 January 2009,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in  against  lodged with the  of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Finnish limited liability company, Petikon Oy, and a Finnish national, Mr Tomi Parviainen, (“the applicants”), on 25 March 2006.
2.  The Finnish Government (“the Government”) were represented by their Agent, Mr Arto Kosonen of the Ministry for Foreign Affairs.
3.  On  the President of the Fourth Section decided to communicate the application. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 3).
THE FACTS
THE CIRCUMSTANCES OF THE CASE
4.  The second applicant was born in 1947 and lives in Espoo.
5.  The applicant company, which is wholly owned and administered by the second applicant, bought shares in a housing corporation on 18 June 1992. Later the applicants found out that the same shares had been given as security by company X. which had been declared bankrupt. They also found out that the whole of the real estate had been placed under an interdiction against sale or dispersal.
6.  On 23 August 1993 the applicant company initiated an action for damages in the Espoo District Court (käräjäoikeus, tingsrätten) against the bank and the bank director responsible for selling the shares, claiming compensation for the loss of the shares. On 25 October 1993 the District Court dismissed the claim as premature without considering the merits.
7.  On 23 December 1993 the applicant company initiated, together with the other share holders, a new action for damages against the bank as the rules on civil procedure had changed in the meantime. The company claimed that the damage had been caused by a bank manager and that the bank as employer was liable for its employees. Allegedly, the bank manager had given incorrect information, had not acted diligently but in breach of good banking practice and was guilty of criminal conduct. The company claimed that the bank was obliged to compensate, inter alia, by reimbursing the purchase price of the shares, the condominium charges paid to the housing corporation and the company's legal expenses incurred in the criminal case.
8.  The case was postponed pending the outcome of other civil proceedings related to the present case. The final judgment in those proceedings was rendered on 7 December 1995.
9.  After the conclusion of the above-mentioned civil proceedings, the present case was postponed once more pending the outcome of criminal proceedings which had been brought against the representatives of the bank and which concerned the same sale of shares. The Helsinki District Court judgment in the criminal proceedings was issued on 19 December 1997.
10.  In letters dated 14 January and 2 April 1998 and addressed to the Espoo District Court, the applicant company requested that, despite the pending appeal against the judgment in the criminal case, the consideration of the present case be resumed.
11.  On 2 April 1998 the applicant company also informed the Espoo District Court that the shares in the housing corporation had been declared part of the bankruptcy estate of company X. pursuant to the above-mentioned final judgment of 7 December 1995. The shares were thus worthless since the housing company was de facto bankrupt.
12.  On 18 June 1998 the defendant bank requested that the proceedings remain adjourned pending the outcome of criminal proceedings since the proceedings were still pending on appeal.
13.  On 6 November 1998 the Espoo District Court held a preparatory meeting. On 4 March 1999 it decided to adjourn the proceedings pending the final outcome of the criminal proceedings. According to the court, it was important to await that outcome as the question of criminal liability formed the basis of the civil proceedings and the cases partly overlapped.
14.  On 8 March 1999 the applicant company lodged an appeal with the Helsinki Appeal Court (hovioikeus, hovrätten), requesting that the Espoo District Court decision of 4 March 1999 be annulled and that the civil proceedings be immediately resumed. It claimed that, due to the adjournment, the proceedings would necessarily last over ten years and that, as a result, the excessive length of the proceedings would violate its rights under Article 6 of the Convention. It requested that the proceedings in the Appeal Court be examined urgently.
15.  On 6 May 1999 the Appeal Court found that the applicant company's appeal did not give reason to take any action.
16.  By an appeal dated 21 June 1999 the applicant company appealed against this decision to the Supreme Court (korkein oikeus, högsta domstolen), which refused leave to appeal on 10 December 1999.
17.  The applicant company filed a written statement dated 31 July 2001 informing the Espoo District Court that the criminal proceedings had been terminated by a final judgment given on 9 March 2001 and requesting the resumption of the civil proceedings.
18.  On 27 November 2001 the second applicant lodged a request to intervene in his own name in the proceedings before the Espoo District Court and claimed compensation. The applicants presented as written evidence a deed of sale with which the second applicant had purchased the said shares of the housing corporation from the applicant company on 1 December 1992 and with which the claim for compensation had been transferred to the second applicant.
19.  The court held an oral hearing in the case on 3 and 7 May 2002.
20.  By a judgment of 10 July 2002, the Espoo District Court first rejected the second applicant's request to intervene and found that the first applicant was the correct plaintiff. The court rejected the remainder of the complaints and considered that the circumstances of the sale of the shares and the documents relating to it were so obscure that the risk involved in the purchase had been apparent. Moreover, the court found no causal link between the acts of the defendant bank and the damage suffered by the first applicant.
21.  By an appeal dated 2 September 2002, the applicants appealed to the Appeal Court, requesting that the Espoo District Court judgment be quashed. By a letter dated 6 August 2003, the applicants asked the appellate court to accelerate the proceedings.
22.  On 1 February 2005 the Appeal Court found that the rightful owner of the shares was the second applicant and that, consequently, only the second applicant could claim damages. The court noted, however, that the defendant bank had already paid compensation and interest due from 6 February 1996 onwards. Since the second applicant had claimed damages in his own name only on 27 November 2001, he no longer had any claims against the bank. The Appeal Court thus rejected the applicants' appeal.
23.  On 4 April 2005 the defendant bank appealed to the Supreme Court, complaining about the partial rejection by the Appeal Court of its claim for costs and expenses. On 18 January 2006 the Supreme Court refused leave to appeal.
THE LAW
I.  ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
24.  The applicants complained that the length of the 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...”
25.  The Government contested that argument.
A.  Admissibility
26.  The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B.  Merits
1. The applicant company
27.  As regards the applicant company, the period to be taken into consideration began on 23 December 1993 when it initiated an action for damages and ended on 18 January 2006 when the Supreme Court refused leave to appeal. It thus lasted almost twelve years and one month for three levels of jurisdiction, of which two levels twice.
28.  The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicants and the relevant authorities and what was at stake for the applicants in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
29.  The Government maintained that the case was postponed twice, with the applicants' consent, pending the outcome of other proceedings. It was only after the District Court judgment of 19 December 1997 that the parties disagreed on the further suspension of the case. The criminal case was so closely connected to the present case that the adjournment of the latter, pending the final judgment in the criminal proceedings, was justified. The Government also argued that the applicants had considered the criminal case to have factual significance for the outcome of the present case. There had thus been an acceptable reason for adjourning the case. The case had been considered expeditiously by the courts and there had been no periods of unnecessary delay.
30.  The Government further pointed out that the case had already been pending for eight years when the second applicant entered the trial and presented the deed of sale with which he had purchased the shares in the housing corporation from the applicant company on 1 December 1992. He could have brought an action in his own name in the first place and thus avoided all confusion as to the correct recipient of the compensation. Had the applicants not caused this confusion by their own actions, it would probably have been unnecessary to resume consideration of the present case after the judgment by the Appeal Court in the criminal case on 29 June 2000. Moreover, the applicants had submitted at least seven additional written statements in the case, amending or supplementing their earlier statements made in the District Court. The applicants had thus contributed significantly to the length of the proceedings.
31.  As to the complexity, the Government maintained that the case was not particularly complex but that it involved several parties, a fairly large amount of written evidence and the hearing of at least nine witnesses. The mere question of identifying the correct plaintiff had added to the complexity of the case.
32.  The applicants claimed that the charges in the criminal case were brought only in September 1995 and the applicants could thus not have known about them in December 1993 when they brought their action for compensation. There had been no reason to adjourn the present case prior to September 1995. The applicants accepted that they had consented to the adjournment pending the outcome of the criminal case in the District Court and that this period of less than two years could be deducted from the total time. However, they claimed that the decision by the District Court on 4 March 1999 to adjourn the proceedings pending the final outcome of the criminal proceedings had clearly been incorrect and the main reason for the delay.
33.  With regard to their own conduct, the applicants stated that it had been correct to bring the action in the applicant company's name. In any event, the applicants had had the right to initiate separate compensation proceedings. The intervention of the second applicant in the proceedings had not caused any delay. As to the complexity of the case, the applicants agreed that the case had not been very complex but that its outcome had very much depended on the hearing of witnesses. The applicants had tried to expedite the proceedings as much as possible.
34.  The Court observes that the proceedings before the District Court lasted more than eight years and six months, the appeal procedure before the Appeal Court two years and five months, and the proceedings before the Supreme Court some nine months. The bulk of the time was accordingly taken up at first instance. The case was adjourned pending the outcome of two other sets of proceedings, in total for more than seven years and two months, of which some two years with the consent of the applicants. After the case was resumed, the proceedings continued relatively swiftly.
35.  The Court sees no indication that the applicants contributed to the  before the first-instance court. No reproach can be levelled against the applicants for having made full use of the remedies available under domestic law, that is, for having instituted separate compensation proceedings in the first place or for having appealed against the District Court's decision of 4 March 1999 to adjourn the proceedings. In fact, the applicants made several requests after 19 December 1997 that the case be resumed and the proceedings accelerated. Even though the applicants lodged additional submissions to the District Court, there is no evidence to demonstrate that the applicants were, at any stage of the proceedings, guilty of dilatory conduct or that they otherwise upset the proper running of the proceedings. Therefore, and taking into consideration that the case was not even particularly complex, the Court does not consider that the applicants' conduct explains the  of the proceedings.
36.  Having regard to its case-law on the subject, the Court considers that, in this respect, the  of the proceedings was excessive and failed to meet the “reasonable time” requirement.
37.  There has accordingly been a violation of Article  § in respect of the applicant company.
2. The second applicant
38.  As regards the second applicant, the parties disagree as to the date when the proceedings started. The applicants took the view that the proceedings in respect of the second applicant began also on 23 December 1993, when the applicant company initiated an action for damages, whereas the Government submitted that the period to be taken into consideration began on 27 November 2001 when he entered the proceedings as an intervener. The Court does not find any substantiation of the applicants' allegation that the second applicant had been individually and substantially affected by the compensation proceedings before 27 November 2001. Therefore, it finds that the period to be taken into consideration began on that date. It ended on 18 January 2006, when the Supreme Court refused leave to appeal. Consequently, the proceedings lasted almost four years and two months for three levels of jurisdiction, of which two levels twice.
39.  Having regard to its case-law on the subject, the Court considers that, in this respect, the length of the proceedings was not excessive and that it did meet the “reasonable time” requirement.
40.  There has accordingly been no violation of Article 6 § 1 in respect of the second applicant.
II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
41.  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
42.  The applicants claimed EUR 1,772.36 as pecuniary damages for the costs and expenses incurred before the domestic courts. These costs and expenses – 7,900 Finnish Marks (FIM) for counsel's fees plus value-added tax and FIM 900 for the court fees – related only to that part of the domestic proceedings which started with the applicants' appeal of 8 March 1999 against the District Court's decision of 4 March 1999 to adjourn the case and ended with the applicants' appeal to the Supreme Court on 21 June 1999.
43.  The Government contested the claim, arguing that the present case concerned the length of the proceedings and not the substance of the proceedings before the domestic courts. In their view, there was no causal link between the violation found and the pecuniary damage alleged.
44.  The applicants also claimed 20,000 euros (EUR) in respect of non-pecuniary damage.
45.  The Government contested this claim, considering that it was excessive as to quantum. In their view, the finding of a violation of Article 6 constituted sufficient just satisfaction as far as the applicant company was concerned.
46.  The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. On the other hand, the Court considers that the fact that the proceedings in issue continued beyond a reasonable time must have caused the applicant company, its directors and shareholders considerable inconvenience and prolonged uncertainty. It is therefore legitimate to consider that the applicant company must have sustained non-pecuniary damage which is not sufficiently compensated by the finding of a violation of the Convention. Ruling on an equitable basis, it awards the applicant company EUR 8,000 under that head.
B.  Costs and expenses
47.  The applicants also claimed EUR 2,090 for the costs and expenses incurred before the Court. costs consisted of postage and copying costs of EUR 260 and of counsel's fees of EUR 1,830 (including value-added tax).
48.  The Government contested the claim as the costs and expenses were not itemized nor supported by relevant documents. Were the Court to have another opinion, the Government considered the applicants' claim for counsel's fees reasonable as to quantum. However, the postage and copying costs should not be separately compensated but included in the fees. In any event, the Government considered the applicants' claim for postage and copying costs excessive as to quantum, stating that the award in that respect should not exceed EUR 50.
49.  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 were reasonable as to quantum (see, among other authorities, Pammel v. Germany, 1 July 1997, § 82, Reports of Judgments and Decisions1997‑IV). In the present case, regard being had to the information in its possession, the above criteria, the Court considers it reasonable to award the applicant company the sum of EUR 1,000 (including any value-added tax) under this head.
C.  Default interest
50.  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 application admissible;

2.  Holds that there has been a violation of Article 6 § 1 of the Convention respect of the applicant company;

3.  Holds that there has been no violation of Article 6 § 1 of the Convention in respect of the second applicant;

4.  Holds
(a)  that the respondent State is to pay the applicant company, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts:
(i)  EUR 8,000 (eight thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii)  EUR 1,000 (one thousand euros), plus any tax that may be chargeable to the applicant company, in respect of costs and expenses;
(b)  that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts 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 27 January 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Fatoş Aracı	Nicolas Bratza
	Deputy Registrar	President