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FIFTH SECTION

CASE OF SEDMINEK v. SLOVENIA

(Application no. 9842/07)

JUDGMENT

STRASBOURG

24 October 2013

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 Sedminek v. Slovenia,

The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:

            Mark Villiger, President,
            Angelika Nußberger,
            Boštjan M. Zupančič,
            Ann Power-Forde,
            Ganna Yudkivska,
            Helena Jäderblom,
            Aleš Pejchal, judges,
and Claudia Westerdiek, Section Registrar,

Having deliberated in private on 1 October 2013,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

The case originated in an application (no. 9842/07) against the Republic of Slovenia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Slovenian national, Mr Milan Sedminek (“the applicant”), on 13 February 2007.

The Slovenian Government (“the Government”) were represented by their Agent, Mrs T. Mihelič Žitko, State Attorney.

On 4 January 2011 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

The applicant was born in 1955 and lives in Polzela.

On 21 August 1996 the applicant bought business premises from company I. Shortly afterwards, he learned that the premises were in fact smaller than had been agreed in the contract.

A. Contentious proceedings (Ref. No. P 1179/98)

On 14 September 1998 the applicant instituted civil proceedings against company I. before the Celje District Court, claiming reimbursement of the corresponding part of the purchase price exceeding the payment for the actual size of the premises.

Hearings were held on 26 November 2001 and 19 December 2001. On the latter date the court decided to appoint a construction expert and adjourned the main hearing so that an expert opinion could be obtained. Both parties agreed that I.U. would be appointed as expert.

On 23 January 2002 the Celje District Court appointed I.U. as the construction expert. On 21 February 2002 notification of the appointment and a summons to retrieve the case file were sent to I.U. Two attempts to serve the court’s correspondence on I.U. were made, but he failed to collect them from the post office. The correspondence was finally served on him on 24 May 2002.

After I.U. had failed to retrieve the case file, despite being reminded to do so by the Court in letters dated 17 July and 15 November 2002 respectively, the Celje District Court appointed another construction expert, J.A, on 12 February 2003. The applicant filed a request to have J.A. excluded from the case on grounds of partiality.

On 25 April 2003 the court granted the applicant’s request to have J.A. excluded and appointed a new expert, F. J.

On 5 May 2003 F. J. informed the court that owing to medical reasons he would not be able to fulfil his appointment. On the same date the court appointed V. T. as expert.

On 30 June 2003 V. T. submitted his expert opinion.

On 29 September 2003 the court held a main hearing at which the parties proposed that the expert opinion be supplemented by further information. The main hearing was for that reason adjourned.

On 4 December 2003 V.T. informed the court that there was no need to supplement his opinion.

On 12 January 2004 a main hearing was held. The parties agreed to obtain additional project documentation from company S.

After having obtained the documentation from company S., the applicant informed the court that he would not be requesting a main hearing with regard to the submitted documentation.

On 2 April 2004 the Celje Distric Court delivered its judgment and ordered company I. to pay 1,103,650 Slovenian tolars (SIT − approximately 5,800 euros (EUR)) plus statutory default interest calculated from 1 September 1996.

B. Bankruptcy proceedings (Ref. Nos. St 19/2004 and St 1349/2008)

On 8 April 2004 the Celje District Court decided to open bankruptcy (insolvency) proceedings against company I.

On 6 May 2004 the applicant lodged a claim in the bankruptcy proceedings, seeking the amount payable under the Celje District Court judgment of 2 April 2004.

After the opening of the bankruptcy proceedings, 247 creditors lodged claims in the total amount of SIT 2,320,682,457 (approximately EUR 12,212,000).

On 7 July 2004 the applicant’s claim in the amount of SIT 5,502,364 (approximately EUR 29,000) was acknowledged in the bankruptcy proceedings.

On 7 February 2007 the receiver reported to the applicant about the debts and assets of the estate, estimating that after distribution to the priority creditors there would probably be nothing left to repay the ordinary creditors.

On 9 July 2009 the Celje District Court issued a decision on the distribution of the bankruptcy estate to the first ranking (secured) creditors.

On 9 August 2010 the Celje District Court issued a decision on the distribution of the bankruptcy estate to the next ranking (preferential) creditors.

On 27 May 2011 the applicant lodged a supervisory appeal with the Celje District Court. In the appeal, the applicant complained about the length of both the contentious and bankruptcy proceedings. He argued that if the contentious proceedings had been conducted within a reasonable time, he would have been able to enforce his claim before the opening of the bankruptcy proceedings. He further informed the court that he would be willing to settle in the bankruptcy proceedings for 50% of the claim.

On 8 July 2011 the president of the Celje District Court rejected the applicant’s supervisory appeal on procedural grounds as unsubstantiated, since he had failed to give valid reasons as to why he believed the court had been unnecessarily delaying the proceedings.

The bankruptcy proceedings are still pending.

II. RELEVANT DOMESTIC LAW AND PRACTICE

A. Act on the Protection of the Right to a Trial without Undue Delay

The Act on the Protection of the Right to a Trial without Undue Delay (Zakon o varstvu pravice do sojenja brez nepotrebnega odlašanja, Official Gazette, No. 49/2006 - “the 2006 Act”) became operational on 1 January 2007. Under its sections 1 and 2, the right to a trial within a reasonable time is guaranteed for parties to court proceedings, participants in non-contentious proceedings and injured parties in criminal proceedings.

Section 3 of the 2006 Act provides for two remedies to expedite pending proceedings - a supervisory appeal (nadzorstvena pritožba) and a motion for a deadline (rokovni predlog) - and, after the case has been finally resolved, a claim for just satisfaction in respect of damage sustained because of the undue delay (zahteva za pravično zadoščenje).

For a more detailed presentation of the relevant domestic law see Žunič v. Slovenia, (dec.) no. 24342/04, §§ 16-26, 18 October 2007, and Žurej v. Slovenia (dec.), no. 10386/03, 16 March 2010.

B. Legislation and practice concerning bankruptcy proceedings

The relevant provisions of the Compulsory Settlement, Bankruptcy and Liquidation Act (Zakon o prisilni poravnavi, stečaju in likvidaciji, Official Gazette 67/1933, in force until 15 January 2008) read:

Section 11

“(2) Bankruptcy proceedings shall be conducted promptly.”

Section 84

“(1) The bankruptcy panel may, in order to protect the interests of creditors in the bankruptcy proceedings, appoint a committee of creditors.”

Section 137

“(1) Creditors shall register their claims with the bankruptcy panel within two months of the notice of the opening of the bankruptcy proceedings being published in the Slovenian Official Gazette.”

The relevant provisions of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (Zakon o finančnem poslovanju, postopkih zaradi insolventosti in prisilnem prenehanju, Official Gazette, no. 126/2007, in force from 15 January 2008, operational from 1 October 2008) read:

Section 48: Principle of the promptness of proceedings

“(1) The court shall execute its procedural acts in insolvency proceedings within the time-limits prescribed by this Act, provided that by exercising its competencies of supervision over the receiver it makes efforts to ensure that all the actions of the receiver executed in insolvency proceedings are completed within the time-limits prescribed by this Act.

(2) Courts and other State bodies shall give priority consideration to matters which involve the debtor in bankruptcy as a party to proceedings, or the result of which affects the progress of bankruptcy proceedings.”

Section 57: Obtaining the capacity ad processum of a creditor

“(1) Creditors shall obtain entitlement to carry out procedural acts in main insolvency proceedings by lodging their claims in the proceedings within the time-limits prescribed in section 59...”

Section 76: The committee of creditors as the body of creditors

“The committee of creditors shall be a body of creditors which carries out procedural acts in insolvency proceedings which the law stipulates are to be carried out by the committee of creditors, on behalf of all the creditors subject to the proceedings.”

In practice, the bankruptcy proceedings are divided into three stages. In the first stage, claims are registered and acknowledged if they are not disputed by any of the other creditors within a certain time. It is also determined whether any creditors have separate rights entitling them to have assets excluded from the bankruptcy estate. In the second stage, the receiver realises the estate by determining the value of the assets and realising them through sales and recovery claims against third parties. In the third stage, the bankruptcy estate is distributed amongst the creditors.

C. Domestic practice concerning the application of the 2006 Act in the context of bankruptcy proceedings

The Government submitted to the Court copies of four domestic decisions dated 8 May 2008 (Dec. no. Su Np 3/2008), 28 November 2008 (Dec. No. Su Np 99/2008), 1 April 2010 (Dec. No. Su Np 25/2010) and 29 September 2010 (Dec. No. Su Np 64/2010) concerning supervisory appeals of parties in bankruptcy and compulsory dissolution proceedings. All four supervisory appeals were dismissed by the presidents of the competent courts as unfounded.

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION

The applicant complained that the length of contentious and bankruptcy proceedings had been incompatible with the “reasonable time” requirement 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 ...”

A. Admissibility

B. Merits

1. The parties’ submissions

The applicant argued, in particular, that owing to the delays in the initial contentious proceedings against company I. he would probably never be able to enforce his claim, since shortly after the Celje District Court had issued its judgment, bankruptcy proceedings were opened against company I. These are still pending but it appears that there will be nothing left in the estate to repay him.

The Government argued that bankruptcy proceedings were complex and intricate by nature and that in the present case 247 creditors had registered claims. The process of realising the debtor’s estate was very complex and cumbersome, in particular on account of the difficulties encountered in selling property; the inadequate management of the debtor resulting in unclear accounting books; and difficulties in selling shares the debtor owned in other companies, which were not traded on organised markets. Furthermore, company I.’s activities were primarily in the construction industry, which had been particularly affected by the economic crisis in Slovenia, as were those of its business partners and debtors, which further affected the ability to monetise the company’s property.

2. The Court’s assessment

The Court considers that the period to be taken into consideration began on 14 September 1998, when the applicant instituted proceedings against company I. before the Celje District Court, and has not yet ended. The relevant period has therefore so far lasted fifteen years at two levels of jurisdiction.

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 applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).

Applying the criteria separately to the contentious and the following bankruptcy proceedings, the Court observes that the contentious proceedings before the Celje District Court were not complex and no significant delays in that stage in the proceedings can be attributed to the applicant. But it nevertheless took the court more than three years to schedule the first hearing, a further year to appoint an expert and altogether more than five years and six months to deliver a judgment.

As to the bankruptcy proceedings, the Court is willing to accept that in the present case the number of creditors and the amount of claims lodged in the proceedings suggest that they were complex, and numerous procedural steps had to be taken in order to realise I.’s estate, including lodging civil claims against third parties and selling the assets through public auctions. The Court however cannot agree with the Government that the complexity of the proceedings can justify the overall duration of these proceedings which are, after nine years, still pending. In this context, the Court reiterates that it is for the State to organise its legal system in such a way to enable its courts to comply with the requirement of Article 6 § 1 of the Convention (see, mutatis mutandis, Tusa v. Italy, 27 February 1992, § 17, Series A no. 231-D, Jama v. Slovenia, no. 48163/08, § 36, 19 July 2012). The Court cannot follow the Government’s argument that the bankruptcy proceedings in which the applicant tried to enforce a judgment previously given in his favour were of minor importance to him.

Having examined all the material submitted to it and having regard to its case-law on the subject (see Čakš v. Slovenia, no. 33024/02, § 19, 7 December 2006, Jama v. Slovenia, cited above, § 36), the Court, for the reasons set out above, considers that in the instant case the overall length of the proceedings was excessive and failed to meet the “reasonable time” requirement.

There has accordingly been a breach of Article 6 § 1.

II. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION

The applicant also complained of the absence of effective domestic remedies in respect of the excessive length of the contentious and the bankruptcy proceedings, which falls to be examined under Article 13, which 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.”

A. Admissibility

The Court finds that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

1. The parties’ arguments

The applicant argued that there had not been any remedy available to him in order to accelerate the proceedings or to obtain compensation for their undue length. As regards the bankruptcy proceedings, he submitted that it was impossible to substantiate the supervisory appeals in such types of proceedings to the extent that they would be allowed and would lead to some progress in the proceedings. He stressed that the supervisory appeal he had lodged with the Celje District Court had included all the elements required by section 5 of the 2006 Act, but it was nevertheless rejected on procedural grounds.

The Government argued that since the bankruptcy proceedings had continued after 1 January 2007, the applicant had the remedies provided for by the 2006 Act at his disposal, which they believed had been proven to be effective. They maintained that the applicant could have lodged these acceleratory remedies and that once the bankruptcy proceedings were finally resolved he could then, provided he had properly exhausted the acceleratory remedies, submit a claim for just satisfaction under the 2006 Act. They argued that even though the applicant’s first supervisory appeal had been rejected, he could have lodged a new and complete supervisory appeal immediately after the service of the decision rejecting his first supervisory appeal. They further relied on the domestic decisions concerning supervisory appeals of parties in bankruptcy and compulsory dissolution proceedings which, in their opinion, confirmed that the parties in such types of proceedings were aware of the remedies under the 2006 Act.

2. Relevant principles and previous findings of the Court concerning the effectiveness of remedies with respect to Slovenia

The Court reiterates that Article 13 guarantees an effective remedy before a national authority for an alleged breach of the requirement under Article 6 § 1 to hear a case within a reasonable time (see Kudła v. Poland [GC], no. 30210/96, § 156, ECHR 2000-XI).

The Court further reiterates that remedies available to a litigant at domestic level for raising a complaint about the length of proceedings are “effective” within the meaning of Article 13 of the Convention if they “[prevent] the alleged violation or its continuation, or [provide] adequate redress for any violation that [has] already occurred” (ibid., § 158). Article 13 therefore offers an alternative: a remedy is “effective” if it can be used either to expedite a decision by the courts dealing with the case, or to provide the litigant with adequate redress for delays that have already occurred (ibid., § 159). The same is necessarily true of the concept of an “effective” remedy within the meaning of Article 35 § 1 (see Mifsud v. France (dec.) [GC], no. 57220/00, ECHR 2002-VIII).

The Court notes that it has found in the case of Lukenda v. Slovenia (no. 23032/02, §§47-71, ECHR 2005-X) the remedies for raising a complaint about the length of proceedings available to the applicants before the implementation of the 2006 Act ineffective.

In the case of Grzinčič v. Slovenia (no. 26867/02, 3 May 2007), followed by the decision in Korenjak v. Slovenia ((dec.) no. 463/03, 15 May 2007), the Court, basing its conclusions on an assessment of the legislative provisions of the 2006 Act, found that the aggregate of remedies provided for in cases involving excessively long proceedings pending at first and second instance was effective in the sense that the remedies were, in principle, capable of both preventing the continuation of the alleged violation of the right to a hearing without undue delay, and of providing adequate redress for any violation that has already occurred (Grzinčič, cited above, § 98).

. In the subsequent case of Žunič (cited above), the Court specified that it was indispensable that the proceedings, which had already lasted a long time, were finally resolved particularly promptly following the exhaustion of the acceleratory remedies (ibid. § 50). Moreover, it emphasised that the national authorities should have ensured that the aggrieved party had prompt access to the compensatory remedy once he or she had made use of the acceleratory remedies (ibid., §53).

In the case of Jama v. Slovenia (cited above) the Court found that in the circumstances of that case both the acceleratory remedies and the compensatory remedy had proven to be ineffective, since no significant progress had been made after the applicant had availed himself of the acceleratory remedies, and he also had not been afforded prompt access to the compensation claim with respect to damages sustained owing to the unreasonable length of the proceedings (ibid., §§ 47-49).

3. The present case

The Court notes that while the bankruptcy proceedings are the continuation of the previous contentious proceedings, they nevertheless represent a distinct stage of the proceedings with regard to the remedies available in respect of complaints of undue delay. In this connection, the Court points out that it has previously assessed the effectiveness of remedies in cases against Slovenia by distinguishing between different stages of proceedings or sets of proceedings (see Sirc v. Slovenia, no. 44580/98, §§ 166-178, 8 April 2008; Blekić v. Slovenia (dec.), no. 14610/02, §§ 72-85; Robert Lesjak v. Slovenia, no. 33946/03, §§ 40-53, 21 July 2009; Beguš v. Slovenia, no. 25634/05, §§ 27-31, 15 December 2011).

(a) Contentious proceedings (Ref. No. P 1179/98)

The Court observes that the contentious proceedings had terminated on 2 April 2004, hence prior to the implementation of the 2006 Act. It notes that the objections and arguments put forward by the Government in cases involving proceedings terminated before the implementation of the 2006 Act have been rejected in earlier cases (see Grzinčič, cited above, §§ 75 and 76) and sees no reason to reach a different conclusion in the present case.

(b) Bankruptcy proceedings (Ref. Nos. St 19/2004 and St 1349/2008)

The Court observes that creditors in bankruptcy proceedings, as was the applicant, have very limited possibilities to participate in them, since, as a general rule, individual creditors do not act as independent parties to the proceedings, but through an appointed committee of creditors, if that is established. They are not summoned to hearings and do not receive court decisions.

The Court notes that the Government have presented four domestic decisions on supervisory appeals of parties in bankruptcy and compulsory dissolution proceedings. All four supervisory appeals were however dismissed as unfounded, since the parties had allegedly failed to give valid reasons as to why they believed that the courts had been unreasonably delaying the proceedings.

In view of the above, and in the absence of any example put forward by the Government which would enable it to reach a different conclusion, the Court would be reluctant to conclude in the present case that the applicant had a realistic chance of obtaining sufficient insight into the proceedings to be able to properly substantiate his supervisory appeal and succeed with the acceleratory remedies, in order to later be able to obtain access to a compensatory remedy on account of excessive length of proceedings as provided for by the 2006 Act.

The Court considers that with regard to both stages of proceedings there has been a violation of Article 13 on account of the absence of any remedy under domestic law whereby the applicant could have obtained a ruling upholding his right to have his case heard within a reasonable time, as set forth in Article 6 § 1. In view of this conclusion, it also rejects the Government’s objection concerning the exhaustion of domestic remedies.

III. APPLICATION OF ARTICLE 41 OF THE CONVENTION

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

The applicant claimed a total of between EUR 23,954 and 47,908 as damages. As regards pecuniary damages, he argued that if the contentious proceedings had not lasted an unduly long time, bankruptcy proceedings would not have been instituted against company I. in the meantime and he would have been able to use enforcement proceedings to enforce the judgment given in his favour in the contentious proceedings, whereas it now appears that because of the bankruptcy proceedings there was nothing left in the estate to repay him.

The Government contested the claim, arguing in particular that the claimed amount corresponds to the Celje District Court judgment, plus the respective default interest. In their view, the applicant was therefore in substance claiming the reimbursement of pecuniary damages only, in respect of which there had been no causal link between the alleged violation and the damages sought.

In the absence of any explicit reference by the applicant that he was claiming pecuniary damages only, the Court cannot follow the argument of the Government.

The Court cannot speculate on any pecuniary damages as a result of the overall length of proceedings and therefore rejects this claim. Nevertheless, the Court considers that the applicant must have sustained non-pecuniary damage. Ruling on equitable basis, it awards him EUR 16,000 under that head.

B. Costs and expenses

The applicant made no claim as regards the costs and expenses incurred before the Court. The Court therefore makes no award under this head.

C. Default interest

The Court considers it appropriate that the default interest rate 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. Joins to the merits the Government’s objection concerning the exhaustion of domestic remedies and rejects it after the examination of the merits;

2. Declares the application admissible;

3. Holds that there has been a violation of Article 6 § 1 of the Convention;

4. Holds that there has been a violation of Article 13 of the Convention;

5. Holds

(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 16,000 (sixteen thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(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;

6. Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 24 October 2013, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Claudia Westerdiek Mark Villiger
Registrar President

European Court of Human Rights

1. Exhaustion of domestic remedies

2. Compliance with the six-month rule

3. Conclusion

1. The parties’ submissions

2. The Court’s assessment