CASE OF BOCVARSKA v. "THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA"
Violation of Art. 6-1;Violation of P1-1;Pecuniary damage - claim dismissed;Non-pecuniary damage - award
Karel Jungwiert;Mark Villiger;Mirjana Lazarova Trajkovska;Peer Lorenzen;Rait Maruste;Renate Jaeger;Zdravka Kalaydjieva
5. The applicant was born in 1958 and lives in Skopje. 6. According to an official note of the Ministry of Finance of 1997, the applicant and Mr Angel Kupev registered Naša Kniga STD (самостоен трговски дукан, “the undertaking”, as opposed to companies incorporated under company law) through which they pursued business activities. On 17 July 1992 they ceased trading through the undertaking. On 8 February 1993 the undertaking was re-registered in the name of the applicant. The undertaking operated until 22 February 1995, when its activities were voluntarily terminated. 7. On 23 June 1993 the Skopje District Commercial Court (Окружен Стопански суд) upheld the undertaking's claim and ordered AD Gazela (“the debtor”) to pay a debt amounting to 1,393,377.70 old Macedonian denars (MKD) plus interest. The court found that the debtor and the undertaking had concluded a framework agreement under which the latter would produce paper products for the debtor. As the debtor had failed to pay for the products made, the court upheld the undertaking's claim. 8. On 10 September 1993 the Macedonia-Skopje Commercial Court (Стопански суд на Македонија), sitting as an appellate court, dismissed an appeal by the debtor and upheld the lower court's decision. On 22 March 1994 the Supreme Court dismissed an appeal on points of law (ревизија) by the debtor and upheld the lower courts' decisions. 9. On 2 October 1993 the undertaking requested enforcement of the judgment debt, proposing the following means of enforcement: transfer of the money due from the debtor's account and an inventory, evaluation and public auction of the debtor's movable and immovable property. On 8 October 1993 the Skopje District Commercial Court granted the undertaking's request and ordered the debtor to pay the debt. On 3 November 1993 it dismissed an objection by the debtor. 10. On 26 November 1993 the District Commercial Court dismissed a request by the debtor for postponement of enforcement. On 25 December 1993 the Commercial Court dismissed an appeal by the debtor and upheld its decision. 11. On 9 June 1994 the District Commercial Court upheld an objection by the debtor and discontinued the enforcement proceedings in so far as they concerned interest. 12. On 2 September 1994 the District Commercial Court ordered the Public Payment Office to require the bank in which the debtor had had its foreign currency account to transfer the balance due to the undertaking's account. It also ordered the bank not to make any payments from the debtor's account to other parties until the undertaking's claim had been completely honoured. The court established that the undertaking had received part of the judgment debt. It further noted that, as there were no other funds available in the debtor's account, on 25 July 1994 the undertaking had requested the court to satisfy its claim from other accounts belonging to the debtor. 13. On 6 October 1994 the undertaking, represented by Mr A. Kupev, and the debtor reached a court settlement (“the 1994 settlement”) concerning the means of securing payment of the remaining balance, which amounted to MKD 21,774,593.00 (844,631 German marks). The undertaking agreed to receive the balance in twelve equal instalments within a year. 14. As the debtor did not pay the debt as agreed, on 27 October 1994 the District Commercial Court ordered an inventory and public auction of the debtor's vehicles. On 30 November 1994 the Commercial Court dismissed an appeal by the debtor and upheld the lower court's decision. 15. On 12 January 1995 the District Commercial Court partly allowed a request by the debtor for postponement of the enforcement in respect of some heavy goods vehicles and a bus. On 29 January 1996 the court ordered the confiscated vehicles to be returned to the debtor as they were necessary for its work. On 29 August 1996 the Skopje Court of Appeal (Апелационен суд) upheld those decisions. 16. On 14 April 1997 the Skopje Court of First Instance (Основен суд) dismissed a request by the debtor to postpone enforcement of the 1994 settlement. 17. On 23 September 1997 the Court of First Instance upheld an objection by the debtor, who had argued that the undertaking had no legal capacity as a creditor in the proceedings as it had ceased to exist. It also stayed the enforcement proceedings and ordered the Public Payment Office to lift the charging orders on the debtor's accounts. It dismissed the applicant's arguments that she was a successor to the undertaking and that there had been a continuity of the undertaking's claims. On 30 April 1998 the Court of Appeal dismissed an appeal by the undertaking as inadmissible. 18. Pending the proceedings described above, on 14 June 1996 the Skopje Municipal Court granted the undertaking's request of 10 January 1996 and issued a charging order on one of the debtor's shops (“the shop”). On 2 September 1996 the Skopje Court of First Instance dismissed an objection by the debtor. On 31 October 1996 the Court of Appeal quashed the lower court's decision and ordered a re-examination of the case. On 21 November 1996 the Skopje Court of First Instance suspended the charging order, as the shop had been exempted from enforcement since it was necessary for the debtor's work. On 24 January 1997 the Court of Appeal quashed that decision and ordered a re-examination of the case. On 7 July 1997 the Court of First Instance dismissed an objection by the debtor. 19. On 18 February 1997 the undertaking requested the court to enforce the claim as established by the 1994 settlement. On 24 February 1997 the Court of First Instance granted the undertaking's request for the sale of the debtor's shop in respect of the principal debt, which had amounted to DM 844,631, together with interest between 11 October 1994 until settlement, plus trial costs. On 19 March 1997 the Court of First Instance partly upheld an objection by the debtor and suspended the enforcement proceedings in so far as they concerned interest. 20. On 12 June 1997 the Court of Appeal allowed an appeal by the debtor and quashed the decision of 19 March 1997. It found that the lower court had failed to determine the debtor's objection as to whether other enforcement proceedings had already been pending between the same parties on the same subject. 21. On 8 July 1997 the Court of First Instance partly upheld an objection by the debtor and suspended the enforcement proceedings in so far as they concerned interest. The order for the sale of the shop remained unaffected. 22. On 12 September 1997 the Court of Appeal dismissed an appeal by the debtor and upheld the lower court's decision. 23. On 26 November 1997 the public prosecutor lodged with the Supreme Court a request for the protection of legality (барање за заштита на законитоста) (“legality review request”) challenging the legality of the lower courts' decisions of 8 July and 12 September 1997. It argued that the 1994 settlement could not be regarded as an enforcement order (извршна исправа) as it had been concluded while the enforcement proceedings were already pending and it had merely concerned the means of enforcing payment of the outstanding debt. The public prosecutor's office further contested, inter alia, the legal capacity of the undertaking in the enforcement proceedings as it had ceased to exist before it had lodged its application for enforcement on 18 February 1997. On 1 December 1997 the undertaking made submissions in reply. 24. On 29 January 1998 the Supreme Court upheld the public prosecutor's legality review request and quashed the impugned decisions. It found that the lower courts had wrongly considered the 1994 settlement to be an enforcement order that could validly be enforced. It instructed them, inter alia, to reconsider the undertaking's legal capacity as a creditor in the enforcement proceedings. 25. On 2 April 1998 the Skopje Court of First Instance upheld the debtor's objection concerning the undertaking's capacity to take part in the proceedings as a creditor. It dismissed the undertaking's application for enforcement and ordered the proceedings to be resumed in the name of the applicant as a creditor. It held that the applicant had been the last person who had pursued business activities through the undertaking before it had ceased to exist. As the undertaking did not have the capacity of a legal entity, all its rights and obligations, including its claim against the debtor, had to be considered to have been transferred to the applicant, as the physical person who had run it. 26. On 11 June 1998 the Skopje Court of Appeal upheld the lower court's decision, finding no grounds to depart from the reasons given. 27. On 22 September 1998 the public prosecutor submitted a fresh legality review request to the Supreme Court, challenging the legality of those decisions and claiming that the applicant lacked the legal capacity to replace the undertaking and take over the enforcement proceedings as a creditor. It further disputed that the 1994 settlement could not be regarded as an enforcement order, as the enforcement proceedings had already been pending at the time when it had been concluded. On or about 29 September 1998, the applicant, who was legally represented, made submissions in reply to the public prosecutor's legality review request. 28. On 11 November 1998 the Supreme Court upheld the public prosecutor's request and quashed the lower courts' decisions. It found that they had failed to establish whether the enforcement proceedings had been pending before the 1994 settlement was concluded. It further held it to be irrelevant that the undertaking had ceased to operate, as the undertaking's founders bore its rights and obligations and it had been their responsibility to establish their status before the courts. 29. On 17 March 1999 the Court of First Instance ordered the enforcement of the 1994 settlement by sale of the shop in favour of the applicant. It held that the enforcement proceedings, which had been instituted before the 1994 settlement, had ended with the first-instance court's decision of September 1997. It further recognised the applicant's capacity to take over the undertaking's claim and to be given the status of a creditor. 30. On 13 May 1999 the Court of Appeal upheld the lower court's decision and dismissed an appeal by the debtor, which had submitted, inter alia, that the applicant had failed to establish that she had taken over the undertaking's claim. 31. On 9 June 1999 the public prosecutor lodged a third legality review request with the Supreme Court. The public prosecutor's office reiterated its earlier allegations that the 1994 settlement could not be regarded as an enforcement order and that the applicant could not automatically be considered to have taken over the undertaking's claim. 32. On 17 February 2000 the Supreme Court quashed the lower courts' decisions. It found that they had erroneously established that the applicant had taken over the undertaking's claims ipso jure as she had been the last proprietor of the undertaking. It further instructed them to verify whether there had been a valid certificate by which the undertaking's claim had been transferred to the applicant. 33. On 23 June 2000 the Court of First Instance requested the applicant to provide, in accordance with section 22 of the Enforcement Act (see paragraph 51 below), written evidence that the undertaking's claim had been transferred to her. On 29 June 2000 the applicant submitted documents to the court, including a balance sheet (биланс на приходи и расходи), bank account details, a receipt (признаница) and a certificate issued by a bank. 34. On 6 October 2000 the Court of First Instance dismissed the applicant's application for enforcement of the claim as established by the 1994 settlement. Following the Supreme Court's instructions, it held that there had been no valid certificate by which the undertaking's claim had been transferred to the applicant. It therefore concluded that the latter could not claim to have the status of a creditor. 35. On 1 March 2001 the Court of Appeal quashed the decision as the lower court had failed to establish whether the applicant had owned and run the undertaking as a sole proprietor. 36. On 15 June 2001 the Court of First Instance dismissed the applicant's request as ill-founded. It found that the documents submitted to the court on 29 June 2000 could not be regarded as a valid certificate by which the undertaking's claim had been transferred to the applicant. It concluded that the applicant could not ipso jure have taken over the undertaking's claim. 37. On 6 September 2001 the Court of Appeal overturned the decision and partly allowed the applicant's application for enforcement of the principal debt indicated in the 1994 settlement. It dismissed the applicant's request for payment of the interest. It found, inter alia: “...it is irrefutable that the creditor, Ms Bočvarska, owned the undertaking ..., which had no legal capacity... The fact that Ms Bočvarska carried out transactions on the market through the undertaking at the time when the latter still operated implied that she was responsible for all the rights and obligations arising from it... the lack of legal capacity of the undertaking ..., whose proprietor was the creditor [the applicant], means that it was not a separate legal entity, but that its capacity, regarded as a pool of rights and obligations, is vested solely in the creditor, Ms Bočvarska ... there is no transfer of the undertaking's claims to Ms Bočvarska, as the former does not have legal capacity, but the creditor [the applicant] was ... liable for the undertaking's obligations...” 38. On or about 15 January 2002 the public prosecutor lodged a fourth legality review request with the Supreme Court in respect of the Court of Appeal's decision. 39. At the public prosecutor's request, on 28 January 2002 the Court of First Instance postponed the enforcement of the order until the Supreme Court had determined the legality review request. 40. On the same date, the applicant made submissions to the Court of First Instance in reply to the public prosecutor's request. 41. On 30 May 2002 the Supreme Court upheld the public prosecutor's request, overturned the Court of Appeal's decision and upheld the first-instance court's decision of 15 June 2001. It found, inter alia, that the lower courts had established the following facts: “...the enforcement proceedings were pending before the District Commercial Court between the [undertaking] and [the debtor]. On 6 October 1994 they concluded a court settlement on the basis of which the enforcement proceedings were instituted... on 23 September 1997 the Skopje Court of First Instance stayed the proceedings... on 30 April 1998 the Court of Appeal rejected the [undertaking's] appeal as inadmissible [these decisions concern the enforcement proceedings instituted before the 1994 settlement was concluded]... on 8 February 1993 the [undertaking] was registered in the name of Ms Bočvarska.... On 22 February 1995 [the undertaking]... ceased to exist. Ms Bočvarska was the last sole proprietor of the [undertaking], which had been set up by her funds and her labour force.” 42. The court went on to conclude that the Court of Appeal had wrongly applied the substantive law for the following reasons: “In the present case, the requirements of the provision cited above [referring to section 22 of the Enforcement Proceedings Act], for the granting of enforcement at the request of a person not indicated as a creditor in the enforcement order, were not satisfied. There is no written certificate attesting that the claim was transferred from [the undertaking] to Ms Bočvarska, as a creditor. The termination of the undertaking's operations does not ipso jure entail the transfer of its claims to the last proprietor who ran it. Indeed, the Entrepreneurship Act did not contain a provision providing for ipso jure transfer of the undertaking's claims to the last proprietor who ran it ... Moreover, the court settlement of 6 October 1994 cannot be regarded as an enforcement order as it resulted from the enforcement proceedings already pending between the same creditor [meaning the undertaking] and the debtor... the subject of this settlement was the means of enforcing the outstanding debt...” 43. The decision was served on the applicant on 25 July 2002. 44. Article 101 of the Constitution provides that the Supreme Court is the highest court and that it ensures the uniform application of the laws by the courts. 45. Section 3 (1 and 3) of the Entrepreneurship Act provided that an entrepreneur could set up an undertaking (дуќан), in order to pursue business activities. The undertaking could have a legal personality. 46. Section 10 provided that an entrepreneur could set up an undertaking by submitting an application to the relevant municipal administrative body. 47. In accordance with section 16 § 1 (1) of that Act, an undertaking would cease to exist if the above application had been withdrawn. 48. Section 7 (6) of the Enforcement Proceedings Act (“the Act”), as applicable at that time, provided that a decision given on an appeal was regarded as final. 49. Under section 8 of the Act, an appeal on points of law and a request for reopening of the proceedings could not be lodged in respect of a final decision given in the enforcement proceedings. 50. Section 13 of the Act provided that the provisions of the 1998 Act applied, mutatis mutandis, to enforcement and security proceedings, unless otherwise provided for by law. 51. Under section 15 (2), an enforceable court decision and a court settlement were regarded as an enforcement order. 52. Section 22 (1) of the Act provided that enforcement might be granted at the request of a person not indicated as a creditor in an enforcement order only if that person proved, by a public or otherwise legally certified order, that the claim had been transferred to him or her. Should that be impossible, the transfer of the claim was to be proved by a final decision given in civil proceedings. 53. Section 319 of the Civil Proceedings Act (“the 1998 Act”), which was in force at the material time, provided that a decision became final when an appeal could no longer be lodged against it. 54. In accordance with section 380 (1) of the 1998 Act, in case of substantial procedural flaws, the Supreme Court quashed the first- and the second-instance decision or the second-instance decision only and referred the case back for reconsideration. 55. Section 381 of the 1998 Act provided that where the substantive law had been applied incorrectly, the Supreme Court upheld the appeal on points of law and overturned the impugned decision. In cases where the facts were erroneously established because of the incorrect application of the substantive law and where there were no grounds for overturning the impugned decision, the Supreme Court upheld the appeal on points of law and referred the case back for fresh consideration. 56. In accordance with section 387 of the 1998 Act, the public prosecutor could submit, within three months, a request for the protection of legality in respect of a final decision. When the request was lodged in respect of a second-instance decision, this term started to run from the date on which the last party was served with the decision. Where the parties concerned had lodged an appeal on points of law against the second-instance decision, the public prosecutor could submit a request for the protection of legality in respect of that decision within thirty days of the date of service of the appeal on points of law. 57. In accordance with section 390, a legality review request could be lodged either in respect of a substantial procedural flaw or an incorrect application of the substantive law. It could not be lodged where the impugned decision went beyond the scope of the claim or where the facts had been erroneously or incompletely established. 58. Section 394(2) of the Act provided, inter alia, that sections 370, 373 to 381 and 383 to 385 applied, mutatis mutandis, to proceedings concerning a legality review request. 59. The Act, which repealed the 1998 Act, does not contain any provisions concerning the legality review proceedings.