CASE OF AVOTIŅŠ v. LATVIA
Preliminary objection dismissed (Article 35-3-b - No significant disadvantage);Preliminary objection dismissed (Article 35-1 - Exhaustion of domestic remedies);No violation of Article 6 - Right to a fair trial (Article 6 - Civil proceedings;Article 6-1 - Fair hearing;Equality of arms)
George Nicolaou;Ineta Ziemele;Krzysztof Wojtyczek;Ledi Bianku;Päivi Hirvelä;Vincent A. De Gaetano;Zdravka Kalaydjieva
5. On 4 May 1999 the applicant and F.H. Ltd., a commercial company incorporated under Cypriot law, signed a deed of acknowledgement of debt before a notary. Under the terms of the deed the applicant declared that he had borrowed 100,000 United States dollars (USD) from F.H. Ltd. and undertook to repay that sum with interest by 30 June 1999. The document also contained choice of law and jurisdiction clauses according to which it was to be governed “in all respects” by Cypriot law and the Cypriot courts were to have non-exclusive jurisdiction to hear any disputes arising out of it. 6. In 2003 F.H. Ltd. brought proceedings against the applicant in the Limassol District Court (Επαρχιακό Δικαστήριο Λεμεσού, Cyprus), alleging that he had not repaid the above-mentioned debt and requesting that he be ordered to pay the debt together with interest. 7. In an order of 27 June 2003 the District Court summoned the applicant to appear before it. Since the applicant was not resident in Cyprus, F.H. Ltd. made an ex parte application to the same court on 11 September 2003 seeking a fresh order enabling a summons to be served on the applicant outside the country, requiring him to appear within thirty days from the date of service. In that connection the claimant company’s lawyer produced an affidavit declaring that the defendant was habitually resident at an address in G. Street in Riga and that a summons could be served on him at that address. The applicant, for his part, contended that it had been objectively impossible for him to receive the summons at that address, which was simply the address at which he had signed the loan contract and the deed of acknowledgement of debt in 1999 and was not his home or business premises. 8. On 7 October 2003 the Limassol District Court ordered that the applicant be summoned at the above-mentioned address. It summoned him to appear or to come forward within thirty days of receiving the summons, failing which all future announcements concerning the case would be posted on the court’s noticeboard. An affidavit produced by an employee of the firm of lawyers representing F.H. Ltd. showed that, in accordance with the court order, the summons was sent by recorded delivery on 16 November 2003 to the address in G. Street in Riga. It also showed that the legal firm had received a post office slip confirming that the letter had been received by the applicant on 18 November 2003 (the Latvian national holiday and therefore a non-working day in Latvia). The applicant claimed never to have received the summons. 9. As the applicant did not appear, the Limassol District Court, ruling in his absence on 24 May 2004, ordered him to pay the claimant USD 100,000 or the equivalent in Cypriot pounds (CYP), plus interest at an annual rate of 10% of the aforementioned amount from 30 June 1999 until payment of the debt. The applicant was also ordered to pay costs and expenses in a gross amount of CYP 699.50, plus interest at an annual rate of 8%. According to the judgment, which was finalised on 3 June 2004, the applicant had been duly informed of the hearing but had not attended. The judgment itself made no reference to the fact that it was final or to the available remedies. 10. On 22 February 2005 F.H. Ltd. applied to the Riga City Latgale District Court (Rīgas pilsētas Latgales priekšpilsētas tiesa, Latvia) seeking recognition and enforcement of the judgment of 24 May 2004. In its request the company also sought to have a protective measure applied. It stated that the applicant was the owner of real property in Garkalne (a district of Riga) which, according to the land register, was already mortgaged to a bank. Accordingly, fearing that the applicant might seek to evade enforcement of the judgment, it asked the District Court to place a charge on the property and record it in the land register. Lastly, it requested that the applicant be ordered to pay the costs. In its request the company gave as the applicant’s place of residence an address in Č. Street in Riga which differed from the address previously notified to the Cypriot court. 11. On 28 April 2005 the Latgale District Court adjourned examination of the company’s request, pointing to a series of substantive defects which the company was given one month to correct. In particular, the court noted that the company had omitted to explain why it had referred to the address in Č. Street, when the applicant’s presumed address, as it had featured hitherto in the case, was in G. Street. 12. On 26 May 2005 F.H. Ltd. submitted a corrigendum in which it explained, among other points, that according to the data taken from the register of residents (Iedzīvotāju reģistrs), the address in Č. Street was the applicant’s officially declared home address. As to the address in G. Street, the company’s representatives had assumed it to be the applicant’s actual residence. 13. In an order of 31 May 2005 the Latgale District Court ruled that the corrigendum submitted by F.H. Ltd. was insufficient to remedy all the defects in its request. The court declined to examine the request and sent it back to the company. The latter lodged an appeal with the Riga Regional Court (Rīgas apgabaltiesa), which set aside the impugned order on 23 January 2006 and remitted the case to the District Court, instructing it to examine the request for recognition and enforcement as rectified by the corrigendum of 26 May 2005. 14. In an order of 27 February 2006 issued without the parties being present, the Latgale District Court allowed F.H. Ltd.’s request in full. It ordered the recognition and enforcement of the Limassol District Court’s judgment of 24 May 2004 and the entry in the Garkalne municipal land register of a charge on the property owned by the applicant in that municipality. The applicant was also ordered to pay the costs. 15. It was not until 16 June 2006 that the applicant learnt – by chance, according to his account – of the existence of both the Cypriot court judgment of 24 May 2004 and the Latvian court order of 27 February 2006. He did not attempt to challenge the Cypriot judgment before the Cypriot courts. However, he lodged a so-called ancillary appeal (blakus sūdzība) against the above-mentioned order with the Riga Regional Court, while asking the Latgale District Court to extend the time allowed for lodging the appeal. In that connection the applicant observed that there was nothing in the case file to indicate that he had been summoned to appear at the hearing of 27 February 2006 or that he had been notified of the order issued that day. Accordingly, the thirty-day period laid down by the Civil Procedure Law should start running on 16 June 2006, the date on which he had become aware of the order in question. 16. In an order of 13 July 2006 the Latgale District Court granted the applicant’s request and extended the time-limit for lodging an appeal. It noted, inter alia, as follows: “... It is clear from the court order of 27 February 2006 that the issue of recognition and enforcement of the foreign judgment was determined in the absence of the parties, on the basis of the documents furnished by the claimant [F.H. Ltd.]. At the same time the order states that it is open to the applicant to appeal against it within thirty days from the date of receipt of the copy [of that order], in accordance with section 641(2) of the Civil Procedure Law. The court considers the circumstances to which the applicant, P. Avotiņš, refers, to be established, namely the fact that he did not receive the order ... of 27 February 2006 until 16 June 2006, this being attested to by the reference in the list of consultations [appended to the case file], and by the fact that the order, served [on the applicant] by the court, was returned on 10 April 2006... It is apparent from the documents appended to the appeal that the applicant has not lived at his declared address in [Č.] Street since 1 May 2004; this confirms ... the statement made by his representative at the hearing, according to which the applicant no longer lives at the above-mentioned address. Accordingly, the thirty-day period should ... run from the date on which the applicant received the order in question... At the same time, the court does not accept the view of the representative of [F.H. Ltd.] that the applicant himself is responsible for his failure to receive the correspondence because he did not declare his home address promptly, and that the time allowed [for lodging an appeal] should not therefore be extended. The fact of not complying with the legislation on registration of residence is not sufficient to justify the potential consequences if the court were to refuse to allow the applicant to exercise the fundamental rights guaranteed by the State as regards access to the courts and judicial protection, including the right to appeal against a decision. ...” 17. In his grounds of appeal before the Riga Regional Court the applicant argued that the recognition and enforcement of the Cypriot judgment in Latvia was in breach of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and and commercial matters (known as the “Brussels I Regulation”, hereafter “the Regulation”) and of the relevant provisions of the Latvian Civil Procedure Law. He submitted two arguments in that regard. 18. First, the applicant observed that in accordance with Article 34(2) of the Regulation (corresponding in substance to section 637(2), third subparagraph, of the Latvian Civil Procedure Law), a judgment given in default in another Member State could not be recognised if the defendant was not served with the document which instituted the proceedings in sufficient time and in such a way as to enable him to arrange for his defence. In the applicant’s view, those provisions had been breached in his case. The applicant maintained that both the Cypriot lawyers who had represented the claimant company in the Limassol District Court and the Latvian lawyers who had represented it in the Latvian courts had been perfectly aware of his business address in Riga. He observed in that connection that he had had professional dealings with the Cypriot lawyers, who had telephoned him and sent faxes to his office; as to the Latvian lawyers, he had met them in person. Therefore, they must all have been aware of his business address. Furthermore, the summons could have been sent to the applicant’s home address in Garkalne, as he had a residence there that was officially declared in accordance with the law and his property there was entered under his name in the land register, which the lawyers could have consulted. However, instead of having the summons sent to one of those addresses, which were known and accessible, the lawyers had given the courts an address where it was objectively impossible to reach him. 19. Second, the applicant observed that, under the terms of Article 38(1) of the Regulation and section 637(2), second sub-paragraph, of the Latvian Civil Procedure Law, a judgment had to be enforceable in the State of origin in order to be enforceable in the Member State requested. In the instant case, there had been a threefold breach of those requirements. Firstly, the requesting party had only submitted the text of the Cypriot court judgment to the Latvian court, and not the certificate required in accordance with Annex V to the Regulation. In that connection the applicant acknowledged that under Article 55(1) of the Regulation the court in which enforcement was sought could, in some circumstances, exempt the requesting party from the obligation to produce a certificate; however, in the present case, the Latgale District Court had omitted to explain whether and for what reason it considered that the requesting party could be exempted from that obligation. Secondly, the Cypriot judgment itself had contained no reference to its entry into force or possible remedies. Lastly, in order to be enforced in accordance with the Regulation, a judgment had to be enforceable in the country of origin; however, none of the documents produced by the company demonstrated that the judgment of 24 May 2004 was enforceable in Cyprus. The applicant therefore concluded that the judgment could under no circumstances be recognised and enforced in Latvia. 20. In a judgment of 2 October 2006 the Regional Court allowed the applicant’s appeal on the merits, quashed the impugned order and rejected the request for recognition and enforcement of the Cypriot judgment. 21. F.H. Ltd. lodged an appeal against that judgment with the Senate of the Supreme Court, which examined it at a hearing on 31 January 2007. At the start of the hearing the appellant company submitted copies of several documents to the Senate, including the certificate provided for by Article 54 of the Regulation and by Annex V thereto, dated 18 January 2007 and signed by an acting judge of the Limassol District Court. According to the certificate, the document instituting the proceedings had been served on the applicant on 27 November 2003. The last part of the certificate, intended for the name of the person against whom the judgment was enforceable, had been left blank. When asked to comment on these documents, the applicant’s lawyer argued that they were clearly insufficient to render the judgment enforceable. 22. In a final judgment of 31 January 2007 the Senate quashed and annulled the Regional Court judgment of 2 October 2006 and allowed F.H. Ltd.’s claims. It ordered the recognition and enforcement of the Cypriot judgment and the entry in the land register of a charge on the applicant’s property in Garkalne. The relevant extracts from the judgment read as follows: “ ... It is clear from the documents in the case file that the Limassol District Court judgment was made final. This is confirmed by the explanations provided by both parties at the Regional Court hearing on 2 October 2006, according to which no appeal had been lodged against the judgment, and by the certificate issued on 18 January 2007... As [the applicant] did not appeal against the judgment, his lawyer’s submissions to the effect that [he] was not duly notified of the examination of the case by a foreign court are of no importance. Having regard to the foregoing, the Senate accepts that the judgment of the Limassol District Court (Cyprus) of 24 May 2004 should be recognised and enforced in Latvia. Article 36 of the Regulation provides that a foreign judgment may under no circumstances be reviewed as to its substance; in accordance with section 644(1) of the Civil Procedure Law, once such judgments have been recognised they are to be enforced in accordance with the conditions laid down by the same Law. ...” 23. On the basis of the Senate judgment the Latgale District Court issued a writ of execution (izpildu raksts) on 14 February 2007. The applicant complied immediately with the terms of the writ and paid the bailiff employed by the claimant company a total of 90,244.62 Latvian lati (LVL, approximately 129,000 euros (EUR)), comprising LVL 84,366.04 for the principal debt and LVL 5,878.58 in enforcement costs. He then requested that the charge on his property in Garkalne be lifted. In two orders dated 24 January 2008 the judge with responsibility for land registers (Zemesgrāmatu nodaļas tiesnesis) refused the request. The applicant lodged an appeal on points of law with the Senate of the Supreme Court which, in an order of 14 May 2008, lifted the charge on the property.