European Court of Human Rights

THIRD SECTION

Application no. 40265/07
VÝCHODOSLOVENSKÁ VODÁRENSKÁ SPOLOČNOSŤ, A.S.
against Slovakia
lodged on 30 August 2007

STATEMENT OF FACTS

 

  The applicant, Východoslovenská vodárenská spoločnosť, a.s., is a joint-stock company established under the laws of Slovakia with its head office in Košice. Its shareholders are Slovak municipalities. The application was lodged on its behalf by Mr S. Hreha and Mr R. Kočiško, the company’s authorised signatories. The applicant company is represented before the Court by Mr P. Kerecman, a lawyer practising in Košice.

A.  The circumstances of the case

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

  The applicant company has been involved, among other activities, in supplying drinking water. In that context it has run a network of water pipes.

  The limited liability company D.K., whom the applicant company supplied with drinking water, intended to produce bottled table water by means of ultra-violet treatment of spring water and to distribute it in Slovakia and in the countries of the European Union. In 2000 company D.K. requested the applicant company to supply it with raw water, that is spring water which was not treated for the purpose of meeting the standard of drinking water. The representatives of D.K. argued that table water could only be produced from raw water.

  The applicant company refused to supply D.K. with raw water as, firstly, it was not suitable for production of table water for hygienic reasons and, secondly, the capacity of the water source was not sufficient to connect company D.K. There was a risk of saturation of drinking water with raw water in case of connecting company D.K. to the existing pipe.

  Company D.K. lodged a petition with the Antimonopoly Office stating that the applicant company had abused its dominant position in that it had refused to supply it with raw water.

  In a decision of 23 June 2003, amended on 6 August 2003, the Antimonopoly Office found that the applicant company had abused its dominant position within the meaning of section 7(5)(b) of the Competition Act 1994, ordered it to abstain from such behaviour and to restore the supply of raw water to company D.K. within thirty days. The fine in the amount equivalent to approximately 36,000 euros (EUR) was imposed on the applicant company.

  On 7 July 2003 the applicant company lodged an administrative appeal.

  In a decision of 9 January 2004, as amended on 26 January 2004, the Council of the Antimonopoly Office partly modified the first-instance decision. It held that the applicant company had abused its dominant position, ordered it to abstain from such behaviour in the future and to restore the supply of raw water to company D.K. within thirty days. Reference was made to section 7(5)(b) of the Competition Act 1994 and section 8(2)(b) of the Competition Act 2001. A fine in the amount equivalent to EUR 12,250 was imposed on the applicant company.

  On 27 February 2004 the applicant requested a judicial review of the decision of 9 January 2004, as amended, before the Supreme Court.

  On 14 December 2004 the Supreme Court dismissed the applicant’s action.

  On 24 February 2005 the applicant company appealed.

  On 28 June 2005 the applicant company requested that the appeal proceedings should be stayed according to Article 109 § 1(c) of the Code of Civil Procedure and a preliminary ruling be requested from the Court of Justice under Article 234 § 3 of the Treaty establishing the European Community (EC Treaty). Firstly, the applicant company requested clarification whether Article 82 of the EC Treaty can be interpreted in the way that it, as a supplier of drinking water, had abused its dominant position in the circumstances of the present case, i.e. by refusing to supply raw water. Secondly, it requested interpretation whether it could be considered as abusing its dominant position when it had in no way prevented company D.K. from drawing raw water directly from the source by means of its own pipe. Thirdly, reply to the question was sought as to whether Article 82 of the EC Treaty could be interpreted as justifying the order to supply company D.K. with raw water without any restrictions as regards the scope and time-frame of such obligation.

  The applicant argued that the appeal chamber of the Supreme Court was the last instance in the case and that all conditions for a preliminary reference were met as the proposed questions had a factual connection with the subject of the proceedings and involved an aspect of the European Community law. They did not concern an abstract or hypothetical issue or questions with which the Court of Justice had already dealt with. The applicant company further argued that by failing to make a preliminary reference to the Court of Justice the Supreme Court would violate its constitutional right to a hearing by a judge authorised to hear the case in accordance with the law.

  At the hearing held on 21 November 2005 the Supreme Court (appeal chamber) refused to make a preliminary reference to the Court of Justice. On the same day it dismissed the appeal of the applicant’s company.

  The judgment with reasons stated that by its request for a preliminary reference “the applicant had primarily sought the application of Article 82 of the EC Treaty and not its interpretation”. The Slovak legal system was compatible with the law of the European Union as regards the point in issue and it permitted to examine the matter in an appropriate manner at domestic level. There was therefore no risk that a conflict with the Community law might arise.

  On 15 February 2006 the applicant company lodged a constitutional complaint alleging a breach of its right to judicial protection as guaranteed by Article 46 § 1 of the Constitution, its right to a judge as guaranteed by Article 48 § 1 of the Constitution, and its right to a fair hearing laid down in Article 6 § 1 of the Convention.

  On 29 May 2007 the Constitutional Court rejected the complaint as being manifestly ill-founded. It referred to the judgment of the Court of Justice in the case of Ynos of 10 January 2006 and held that, since the relevant facts which were the subject-matter in the above proceedings had occurred prior to Slovakia’s accession to the European Union on 1 May 2004, the Court of Justice would have had no jurisdiction to rule on the preliminary questions.

B.  Relevant domestic law

1.  The Constitution

  Article 46 guarantees to everyone the right to claim his or her rights before an independent and impartial court by means of procedure established by law.

  Article 48 § 1 guarantees to everyone the right to have his or her case asssessed by a judge to whom such case falls to be examined in accordance with the law.

2.  The Code of Civil Procedure

  Pursuant to Article 109, a court stays the proceedings after it has decided to request the Court of the European Communities to rule on a preliminary question in accordance with an international treaty. Reference is made to Article 234 of the EC Treaty.

3.  Competition Protection Acts

  Pursuant to section 7(5)(b) of the Competition Protection Act 1994 (Law no. 188/1994), restriction of production, distribution or technical development of goods to the detriment of consumers constitutes abuse of a dominant position on the market.

  The above law was replaced by the Competition Protection Act 2001 (Law no. 136/2001) with effect from 1 October 2002. Its section 8(2)(b) qualifies as abuse of a dominant position on the relevant market threatening to restrict or restricting production, distribution or technical development of goods to the detriment of users.

C.  The relevant European Union law and practice

1.  The EC Treaty

  Article 82 of the Treaty establishing the European Community (currently Article 102 of the Treaty on the Functioning of the European Union) provides:

“Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in: (...)

(b) limiting production, markets or technical development to the prejudice of consumers;” (...)

  Article 234 of the Treaty establishing the European Community (former Article 177 and, since 1 December 2009, Article 267 of the Treaty on the Functioning of the European Union) reads in its relevant part as follows:

“The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

a) the interpretation of this Treaty;

b) the validity and interpretation of acts of the institutions of the Community (...)

Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice.”

2.  Practice of the Court of Justice of the European Union

  In its judgment of 6 October 1982 in the Case 283/81 of Srl CILFIT and Lanificio di Gavardo SpA v Ministry of Health the Court of Justice held:

(7)  “[The] obligation to refer a matter to the Court of Justice is based on cooperation, established with a view to ensuring the proper application and uniform interpretation of Community law in all the member State, between national courts, in their capacity as courts responsible for the application of community law, and the Court of Justice. More particularly, the third paragraph of article 177 [subsequently Article 234, currently Article 267 of the Treaty on the Functioning of the European Union] seeks to prevent the occurrence within the Community of divergences in judicial decisions on questions of community law. The scope of that obligation must therefore be assessed, in view of those objectives, by reference to the powers of the national courts, on the one hand, and those of the Court of Justice, on the other, where such a question of interpretation is raised within the meaning of the article [267].

(...)

(21)  ... the third paragraph of Article [267] is to be interpreted as meaning that a court or tribunal against whose decisions there is no judicial remedy under national law is required, where a question of Community law is raised before it, to comply with its obligation to bring the matter before the Court of Justice, unless it has established that the question raised is irrelevant or that the Community provision in question has already been interpreted by the court or that the correct application of Community law is so obvious as to leave no scope for any reasonable doubt. The existence of such a possibility must be assessed in the light of the specific characteristics of community law, the particular difficulties to which its interpretation gives rise and the risk of divergences in judicial decisions within the Community.”

  In Erich Ciola v Land Vorarlberg (Case C-224/97, judgment of 29 April 1999) the Court of Justice held, inter alia:

“(26)  ... since the provisions of the EC Treaty are directly applicable in the legal systems of all Member States and Community law takes precedence over national law, those provisions create rights for the persons concerned which the national authorities must observe and safeguard, and any conflicting provision of national law therefore ceases to be applicable (see Case 167/73 Commission v France [1974] ECR 359, paragraph 35).

(27) Since the essential requirements of Article 59 of the Treaty became directly and unconditionally applicable at the end of the transitional period (see Case 279/80 Webb [1981] ECR 3305, paragraph 13), that provision consequently precludes the application of any conflicting measure of national law.

(...)

(34) It follows from the foregoing that a prohibition which is contrary to the freedom to provide services, laid down before the accession of a Member State to the European Union not by a general abstract rule but by a specific individual administrative decision that has become final, must be disregarded when assessing the validity of a fine imposed for failure to comply with that prohibition after the date of accession.”

  In the judgment in the case of Ynos kft v János Varga (Case C‑302/04) of 10 January 2006 the Court of Justice held that it does not have jurisdiction to answer the questions referred for a preliminary ruling by a Hungarian court concerning the interpretation of a provision of Directive 93/13 on unfair terms in consumer contracts where the facts of the dispute in the main proceedings had occurred prior to the accession of the Republic of Hungary to the European Union. The judgment stated that the Court of Justice has jurisdiction to interpret a Community directive only as regards its application in a new Member State with effect from the date of that State’s accession to the European Union.

  Paragraph 32 of the judgment in the case of Elektrownia Pątnów II sp. zoo v Dyrektor Izby Skarbowej w Poznaniu of 12 November 2009 (Case C-441/08) reads as follows:

“It follows, furthermore, from settled case-law that new rules apply immediately to the future effects of a situation which arose under the old rules (see, inter alia, Case 270/84 Licata v ESC [1986] ECR 2305, paragraph 31). In application of that principle the Court has thus held that, if the Act concerning the conditions of accession of a Member State contains no specific conditions with regard to the application of a provision of the EC Treaty, that provision must be regarded as being immediately applicable and binding on that Member State from the date of its accession, with the result that it applies to the future effects of situations arising prior to that new Member State’s accession to the Communities (see, to that effect, Case C-122/96 Saldanha and MTS [1997] ECR I-5325, paragraph 14, and Case C-162/00 Pokrzeptowicz-Meyer [2002] ECR I-1049, paragraph 50).”

COMPLAINTS

  The applicant company complains under Articles 6 § 1 and 13 of the Convention of a breach of its right to a fair hearing by a tribunal established by law and of its right to an effective remedy.

  In particular, it complains that the Supreme Court refused to make a preliminary reference to the Court of Justice to whom it fell to determine the relevant issues. In its view, the Supreme Court was obliged to request a preliminary ruling by the Court of Justice under Article 234 of the EC Treaty as all the relevant conditions had been met. The Supreme Court’s decision to refuse a preliminary reference to the Court of Justice was arbitrary, and the Supreme Court failed to indicate any relevant reasons for it.

  The applicant company further complains that the Constitutional Court decided on its complaint erroneously while relying on the judgment of the Court of Justice in the case of Ynos kft v János Varga which was delivered two months after the Supreme Court’s decision on the applicant company’s case. That case concerned the interpretation of a provision of a Directive where the facts of the dispute in the main proceedings had occurred prior to the accession of the Republic of Hungary to the European Union. The applicant company argued that, unlike in the case of Ynos kft v János Varga, its request for a preliminary reference concerned the interpretation of a provision of the EC Treaty, that the first-instance court delivered its decision and appeal proceedings were started after Slovakia’s accession to the European Union, and that the effects of the contested measure have lasted after that accession as the applicant company has been obliged to supply raw water to company D.K. under the threat of a fine.

QUESTIONS TO THE PARTIES

 

  Can the applicant company in the present case be considered to be a non-governmental organisation within the meaning of Article 34 of the Convention (see, mutatis mutandis, TRANSPETROL, a.s. v. Slovakia (dec.), no. 28502/08, 15 November 2011, §§ 60-64, with further references)?

 

  In particular, to what extent is it relevant, from the point of view of its standing to bring an application under Article 34 of the Convention, that the principal shareholders of the applicant company are municipalities? Have other companies been authorised to provide similar services as the applicant company in the region concerned, or has it held a special position in that respect? If so, what is the basis for such special position and what is its scope?

 

  Is Article 6 § 1 of the Convention applicable to the proceedings in issue and, if so, has there been a breach of that provision?