CASE OF AVOTIŅŠ v. LATVIA
No violation of Article 6 - Right to a fair trial (Article 6 - Enforcement proceedings;Article 6-1 - Fair hearing;Adversarial trial;Equality of arms)
Aleš Pejchal;András Sajó;André Potocki;Dean Spielmann;Egidijus Kūris;Elisabeth Steiner;Ganna Yudkivska;George Nicolaou;Ineta Ziemele;Ján Šikuta;Jon Fridrik Kjølbro;Josep Casadevall;Krzysztof Wojtyczek;Ledi Bianku;Mark Villiger;Nona Tsotsoria;Päivi Hirvelä;Paul Lemmens;Robert Spano;Vincent A. De Gaetano;Zdravka Kalaydjieva;Ksenija Turković
13. The applicant was born in 1954 and lives in Garkalne (Riga district). At the time of the events which are the subject of the present application he was an investment consultant. 14. On 4 May 1999 the applicant and F.H. Ltd., a commercial company incorporated under Cypriot law, signed an acknowledgment of debt deed 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 deed also contained choice of law and jurisdiction clauses according to which it was governed “in all respects” by Cypriot law and the Cypriot courts had nonexclusive jurisdiction to hear any disputes arising out of it. The applicant’s address was given as G. Street in Riga and was indicated as follows: “[FOR] GOOD AND VALUABLE CONSIDERATION, I, PĒTERIS AVOTIŅŠ, of [no.], G. [street], 3rd floor, Riga, Latvia, [postcode] LV-..., (‘the Borrower’) ...” 15. 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 principal debt together with interest. In the Strasbourg proceedings the applicant submitted that he had in fact already repaid the debt before the proceedings were instituted in the Cypriot court, not by paying the sum of money in question to F.H. Ltd. but by other means linked to the capital of F.H. Ltd.’s parent company. However, he acknowledged that there was no documentary evidence of this. The respondent Government contested the applicant’s submission. 16. In an order dated 27 June 2003 the District Court authorised the “sealing and filing of the writ of summons”. On 24 July 2003 a “specially endorsed writ” was drawn up, describing the facts of the case in detail. It gave the applicant’s address as G. Street in Riga, the address indicated on the acknowledgment of debt deed. 17. Since the applicant was not resident in Cyprus, F.H. Ltd. made an ex parte application to the same District Court on 11 September 2003 seeking a fresh order enabling a summons to be served on the applicant outside the country and requiring him to appear within thirty days from the date of issuing of the summons. The claimant company’s lawyer produced an affidavit declaring that the defendant was habitually resident at an address in G. Street in Riga and could actually receive judicial documents at that address. The applicant, for his part, contended that it would have been physically impossible for him to receive the summons at the address in question, which was simply the address at which he had signed the loan contract and the acknowledgment of debt deed in 1999 and was not his home or business premises. 18. On 7 October 2003 the Limassol District Court ordered that notice of the proceedings be served on the applicant at the address provided by the claimant company. The applicant was summoned to appear or to come forward within thirty days of receiving the summons. If he did not do so the court would make no further attempt to contact him and would instead post all future announcements concerning the case on the court noticeboard. 19. 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 had been sent by recorded delivery to the address in G. Street in Riga on 16 November 2003. However, the copy of the summons furnished by the Latvian Government indicated that it had been drawn up on 17 November 2003. The slip produced by the Cypriot postal service stated that the summons had been sent on 18 November 2003 to the address in G. Street, and had been delivered and signed for on 27 November 2003. However, the signature on the slip did not appear to correspond to the applicant’s name. The applicant claimed never to have received the summons. 20. As the applicant did not appear, the Limassol District Court ruled in his absence on 24 May 2004. It 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, the final version of which was drawn up on 3 June 2004, the applicant had been duly informed of the hearing but had not attended. The judgment did not state whether the decision was final or indicate possible judicial remedies. 21. 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 temporary precautionary measure applied. It stated that the applicant was the owner of real property in Garkalne (Riga district) 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 in question and record the charge 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. 22. On 28 April 2005 the Latgale District Court adjourned examination of F.H. Ltd.’s request, informing the company that the request contained a number of defects which it had one month to correct. In particular, F.H. Ltd. had not explained why it had given an address in Č. Street when the applicant was supposedly resident in G. Street. 23. On 26 May 2005 F.H. Ltd. submitted a corrigendum in which it explained, among other points, that according to the information contained in 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. In that connection the Latvian Government provided the Court with a copy of a letter from the authority responsible for the register of residents according to which, prior to 19 June 2006, the applicant’s officially declared address had been in Č Street. 24. 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 therefore 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 on 23 January 2006 set aside the order of 31 May 2005 and remitted the case to the District Court in order for the latter to examine the request for recognition and enforcement as rectified by the corrigendum of 26 May 2005. 25. In an order of 27 February 2006 issued without the parties being present, the Latgale District Court granted 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. 26. According to the applicant, it was not until 15 June 2006 that he learned, from the bailiff responsible for enforcement of the Cypriot judgment, of the existence of that judgment and of the Latgale District Court order for its enforcement. On the following day (16 June 2006) he went to the District Court, where he acquainted himself with the judgment and the order. The respondent Government did not dispute these facts. 27. The applicant did not attempt to appeal against the Cypriot judgment in the Cypriot courts. However, he lodged an interlocutory appeal (blakus sūdzība) against the order of 27 February 2006 with the Riga Regional Court, while asking the Latgale District Court to extend the time allowed for lodging the appeal. Arguing that there was nothing in the case file to confirm that he had been given notice of the hearing of 27 February 2006 or of the order issued following the hearing, he submitted that the thirty-day period laid down by the Civil Procedure Law should start running on 16 June 2006, the date on which he had taken cognisance of the order in question. 28. 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 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.]. The order further states that the defendant may 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 arguments advanced by the applicant, P. Avotiņš, to be wellfounded, to the effect 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 the 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 ... Further, the court does not share 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 change of address promptly, and that the time allowed [for lodging an appeal] should not therefore be extended. The fact that the applicant did not take the necessary legal steps concerning registration of residence is not sufficient to justify a refusal by the court to allow him 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, with the consequences this is likely to entail. ...” 29. In his grounds of appeal before the Riga Regional Court the applicant contended that the recognition and enforcement of the Cypriot judgment in Latvia breached Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Brussels I Regulation”) and several provisions of the Latvian Civil Procedure Law. He submitted two arguments in that regard. 30. Firstly, the applicant argued that in accordance with Article 34(2) of the Brussels I 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 had not been served with the document instituting the proceedings in sufficient time and in such a way as to enable him to arrange for his defence. He maintained that he had not been duly informed of the proceedings in Cyprus, although 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. In support of that allegation he submitted that he had had professional dealings with the Cypriot lawyers, who had telephoned him and sent faxes to his office, and had met the Latvian lawyers in person. Hence, they must all have been aware of his business address. He added that he could also have been reached at his home address in Garkalne, as he had a residence there that was officially declared in accordance with the law and the lawyers could have consulted the municipal land register, where the property he owned was registered under his name. However, instead of serving notice of the proceedings on him at one of those addresses, which had been known and accessible, the lawyers had given the courts an address which they should have realised could not be used. 31. Secondly, the applicant argued that, under the terms of Article 38(1) of the Brussels I Regulation and section 637(2), second subparagraph, of the Civil Procedure Law, a judgment had to be enforceable in the State of origin in order to be enforceable in the Member State addressed. In the instant case, there had been a threefold breach of those requirements. First, the claimant had only submitted the text of the Cypriot court judgment to the Latvian court and not the certificate required by Annex V to the Brussels I Regulation. In that connection the applicant acknowledged that under Article 55(1) of the Brussels I Regulation the court in which enforcement was sought could, in some circumstances, exempt the claimant from the obligation to produce a certificate. However, in the present case the Latgale District Court had not made clear whether it considered that the claimant could be exempted from that obligation and, if so, for what reason. Second, the Cypriot judgment had contained no reference to the fact that it was enforceable or to possible judicial remedies. Third, although a judgment had to be enforceable in the country of origin in order to be enforced in accordance with the Brussels I Regulation, the claimant company had not produced any documentary evidence demonstrating that the judgment of 24 May 2004 was enforceable in Cyprus. In view of all these circumstances, the applicant contended that the judgment could on no account be recognised and enforced in Latvia. 32. 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. 33. F.H. Ltd. lodged an appeal against that judgment with the Senate of the Supreme Court, which examined it on 31 January 2007. At the start of the hearing F.H. Ltd. submitted copies of several documents to the Senate, including the certificate referred to in Article 54 of the Brussels I Regulation and Annex V thereto. The certificate was dated 18 January 2007 and had been signed by an acting judge of the Limassol District Court. It stated that 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 contended that they were clearly insufficient to render the judgment enforceable. 34. In a final judgment of 31 January 2007 the Supreme Court quashed and annulled the Regional Court judgment of 2 October 2006. It granted F.H. Ltd.’s request and 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 evidence in the case file that the Limassol District Court judgment became 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 lack relevance [nav būtiskas nozīmes]. Having regard to the foregoing, the Senate finds that the judgment of the Limassol District Court (Cyprus) of 24 May 2004 must be recognised and enforced in Latvia. Article 36 of the [Brussels I] 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 that Law. ...” 35. On 14 February 2007 the Latgale District Court, basing its decision on the Supreme Court judgment, issued a payment order (izpildu raksts). The applicant complied immediately with the terms of the order 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 his property.