CASE OF HUNGUEST ZRT v. HUNGARY
(Application no. 66209/10)
16 January 2018
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 Hunguest Zrt v. Hungary,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
Vincent A. De Gaetano,
Marko Bošnjak, judges,
and Marialena Tsirli, Section Registrar,
Having deliberated in private on 12 December 2017,
Delivers the following judgment, which was adopted on that date:
1. The case originated in an application (no. 66209/10) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian company, Hunguest Zrt (“the applicant company”), on 4 November 2010.
2. In Hunguest Zrt v. Hungary ((merits) no. 66209/10, 30 August 2016, “the principal judgment”), the Court held that the length of the civil proceedings in question had been excessive and had failed to meet the “reasonable time” requirement and that therefore there had been a violation of Article 6 § 1 of the Convention. Furthermore, the Court found that the cumulative presence of two measures, namely the applicant’s being unable, for an unreasonably long time, to use financial resources that it had had to deposit at the outset of the proceedings and the significant amount of interest that had accrued on the awarded amount - both circumstances flowing from the length of the civil litigation - had imposed an individual and excessive burden on it, in violation of Article 1 of Protocol No. 1 to the Convention. The principal judgment became final on 30 November 2016.
3. Under Article 41 of the Convention, the applicant company sought just satisfaction of 15,000 euros (EUR) combined for pecuniary and non-pecuniary damage concerning the violation of Article 6 § 1. The applicant company also claimed EUR 1,062,115 in respect of pecuniary damage and EUR 20,000 in respect of non-pecuniary damage concerning the violation of Article 1 of Protocol No. 1.
4. Since the question of the application of Article 41 of the Convention was not ready for decision, the Court reserved it and invited the Government and the applicant to submit, within three months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (see the principal judgment, § 39, and point 4 of the operative provisions).
5. The applicant and the Government each filed observations.
6. Mr Péter Paczolay, the judge elected in respect of Hungary, withdrew from the case (Rule 28 of the Rules of Court). Accordingly, Ms Helena Jäderblom was appointed to sit as an ad hoc judge (Article 26 § 4 of the Convention and Rule 29 § 1).
7. 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.”
1. The parties’ submissions
8. The applicant company requested that the Court award just satisfaction of 15,000 euros (EUR) combined for the pecuniary and non-pecuniary damage arising from the violation of Article 6 § 1 of the Convention.
9. Concerning the violation of Article 1 of Protocol No. 1, the applicant company claimed EUR 20,000 in respect of non-pecuniary damage. As regards pecuniary damage, it submitted that it had suffered a real loss when its own money, deposited in a bailiff’s trust account, had yielded no interest, while it had been ordered to pay accrued interest on the money due to the plaintiff. The amount in question, 275 million Hungarian forints (HUF), deposited in the bailiff’s trust account, had yielded no interest between 27 March 2001, that is the date of depositing the amount, and 17 December 2009, when enforcement of the second-instance court’s judgment had taken place. The applicant referred to the provisions of the Civil Code of 1959, which was in force at that time, on calculating late-payment interest. By applying that method to the full amount of the deposit for the period from 27 March 2001 to 17 December 2009, the applicant company claimed EUR 1,062,115 in respect of pecuniary damage.
10. The Government contested the claims as excessive.
11. They considered it reasonable to pay the applicant EUR 5,000 in respect of the excessive length of the civil proceedings that had been in violation of Article 6 § 1 of the Convention.
12. Concerning the violation of Article 1 of Protocol No. 1, they argued that if the domestic courts had closed the case within a reasonable time, then the applicant company would have paid less default interest under the domestic rules. Under the Court’s case-law, proceedings at three levels of jurisdiction were reasonably expected to end in five years. Accordingly, if the case had been finished by 31 May 2005, the Court would have found no violation of Article 6 § 1. In the view of the Government therefore, only the protraction of the case after 1 June 2005 should be taken into account when calculating the losses sustained by the applicant company.
13. The Government argued in particular that if the proceedings had ended sooner the applicant would have incurred a lower amount of default interest. In that case, it could have recovered part of its deposit (rather than having finally to supplement it) and, moreover, the recovered sum itself could have produced interest. According to the opinion of an expert accountant submitted by the Government, terminating the case at a stage that was compatible with the Court’s case-law under Article 6 § 1 would have allowed the applicant company to pay HUF 94,148,677 less in default interest, to recover HUF 28,509,912 from the deposit and gain interest of HUF 17,989,751 on the latter amount. Altogether, the course of action taken by the authorities had caused the applicant to pay HUF 140,648,340 (approximately EUR 465,000) in excess of what would have been payable under normal circumstances.
14. Lastly, the Government did not accept any claim in respect of non-pecuniary damage by the applicant, a company.
2. The Court’s assessment
15. The Court reiterates that a judgment in which it finds a breach of the Convention or its Protocols imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach. If national law does not allow reparation or allows only partial reparation, Article 41 of the Convention empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate (see Bittó and Others v. Slovakia (just satisfaction), no. 30255/09, § 20, 7 July 2015).
16. The Court has found on many occasions, applying to the circumstances of the case the criteria developed in its case-law (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VI), that an overall length of about five years in a civil case examined on three levels of jurisdiction does not indicate a violation of Article 6 § 1 of the Convention (see, for example, László Sándorné Tóth v. Hungary (dec.), no. 40909/11, § 24, 13 June 2017, and Vera Valerjevna Gudovics v. Hungary (dec.), no. 61203/14, 14 June 2016). Accordingly, the Court accepts the Government’s argument that the instant proceedings could reasonably have been expected to end by 31 May 2005 and that the pecuniary damage to be awarded can only relate to the subsequent period, rather than the entire length of the litigation as argued by the applicant company. Therefore the Court finds it reasonable to follow the Government’s method, as outlined in paragraphs 12 and 13 above, as a basis for calculating just satisfaction in respect of pecuniary damage. That method more objectively reflects the losses sustained by the applicant company in that it is based only on the relevant time period.
The Court therefore awards the applicant EUR 465,000 in respect of the pecuniary damage sustained.
17. In respect of non-pecuniary damage, the Court reiterates that the possibility that a commercial company may be awarded pecuniary compensation for non-pecuniary damage cannot be excluded, considering that the situation in issue must have caused the applicant company prolonged uncertainty in the conduct of its business (see Comingersoll S.A. v. Portugal [GC] no. 35382/97, § 35, ECHR 2000-IV; Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, § 221, ECHR 2012; and Rock Ruby Hotels Ltd v. Turkey (just satisfaction), no. 46159/99, § 36, 26 October 2010). Making an overall assessment of the relevant considerations on the basis of the material available to it and having regard to the findings of the principal judgment, the Court finds that the applicant should be awarded EUR 6,500 altogether as compensation for the non-pecuniary damage sustained as a consequence of the violations of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1.
B. Costs and expenses
18. The applicant company also claimed EUR 6,750 plus VAT for the costs and expenses incurred before the Court. That amount corresponds to 40.5 hours of legal work billable by its lawyer, charged at an hourly rate of HUF 50,000 plus VAT.
19. The Government contested those claims as excessive.
20. 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 the above criteria, the Court considers it reasonable to award the full sum claimed, that is to say EUR 6,750.
C. Default interest
21. 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,
(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, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 465,000 (four hundred and sixty-five thousand euros), plus any tax that may be chargeable, for pecuniary damage sustained in respect of the violation of Article 1 of Protocol No. 1 to the Convention;
(ii) EUR 6,500 (six thousand five hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(iii) EUR 6,750 (six thousand seven hundred and fifty 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;
2. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 16 January 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Marialena Tsirli Ganna