IMOBILIJE MARKETING D.O.O. AND DEBELIC v. CROATIA
Inadmissible
Anatoly Kovler;Elisabeth Steiner;George Nicolaou;Julia Laffranque;Khanlar Hajiyev;Mirjana Lazarova Trajkovska
The first applicant, Imobilije Marketing d.o.o., is a limited liability company incorporated under Croatian law, which has its registered office in Rab. The second applicant, Mr Ivan Debelić, is a Croatian national who was born in 1939 and lives in Rab. He is an advocate practising in Rab. The first applicant was represented before the Court by the second applicant. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. Stažnik. The facts of the case, as submitted by the parties, may be summarised as follows. On 14 June 1999 the applicants concluded a lease agreement with Mrs K.K. whereby they as lessors leased their business premises to her for a period of five years (from 1 April 1999 until 1 April 2004). In return, K.K. as a lessee was obliged to pay them in Croatian kunas (HRK) the counter value of 10,000 German marks (DEM) per year. For the first year K.K. agreed to pay the applicants in kunas the counter value of: (a) DEM 2,000 upon the conclusion of the agreement, (b) DEM 1,000 by 20 July 1999; and (c) DEM 7,000 by 30 August 1999. For every subsequent year K.K. agreed to pay in kunas the counter value of: (a) DEM 3,000 by 1 April of the current year for the following year, and (b) DEM 7,000 by the end of the current year for that year. The agreement was concluded in the form of a notarial deed (javnobilježnička isprava) and contained an enforcement clause entitling the applicants to directly institute enforcement proceedings against K.K. if she failed to pay the annual rent. Given that by 20 July 1999 K.K. had paid only the counter value of DEM 1,500 of the amount due by that date, on 26 July 1999 the applicants instituted enforcement proceedings before the Rab Municipal Court (Općinski sud u Rabu) with a view to collecting the unpaid amounts. By 26 October 2009 the applicants had instituted another ten sets of enforcement proceedings before the same court with a view to satisfying their claims arising from the above-mentioned lease agreement. However, even though the court had frozen K.K.’s bank account already on 1 September 1999, the applicants were unable to satisfy any of their claims owing to the lack of funds on that account. It would appear that eight out of the eleven enforcement proceedings are still pending, Meanwhile, on 23 August 1999 the applicants instituted non-contentious proceedings before the Rab Municipal Court asking the court to issue a preliminary measure (prethodna mjera) – a type of security measure (mjera osiguranja) – freezing K.K.’s bank account for the sum corresponding in kunas to the counter value of DEM 47,000, that is, the remaining amount of rent that would become due before the expiry of the lease agreement on 1 April 2004. They argued that K.K.’s behaviour, in particular her failure to pay the full amount of the rent due by 20 July 1999, suggested that it was likely that she would not pay the future instalments of the rent as they become due. On 11 April 2003 the court dismissed the applicants’ request. Following an appeal by the applicants, on 15 October 2003 the Rijeka County Court (Županijski sud u Rijeci) quashed the first-instance decision and remitted the case. In the resumed proceedings, on 4 August 2006 the Rab Municipal Court again dismissed the applicants’ request. Following an appeal by the applicants, on 23 October 2006 the Rijeka County Court again quashed the first-instance decision and remitted the case. On 24 September 2007 the Rab Municipal Court dismissed the applicants’ request for a third time. The court found the applicants’ request superfluous because their claim had been sufficiently secured. In particular, the court found that the applicants had frozen K.K.’s bank account already on 1 September 1999 in the above-mentioned enforcement proceedings. On 28 May 2009 the Rijeka County Court dismissed the applicants’ appeal and upheld the first-instance decision endorsing the reasons contained therein. It added that it was not allowed to issue a preliminary measure after the claim to be secured had become enforceable. On 1 October 2009 the applicants lodged an appeal on points of law (revizija) against the second-instance decision. It would appear that the case is currently pending before the Supreme Court (Vrhovni sud Republike Hrvatske). On 3 May 2007 the applicants lodged a request with the Rijeka County Court for protection of the right to a hearing within a reasonable time in respect of the above non-contentious proceedings. On 22 September 2009 the Rijeka County Court found a violation of the applicants’ right to a hearing within a reasonable time and awarded them each HRK 5,000 in compensation. The relevant part of the Courts Act (Zakon o sudovima, Official Gazette nos. 150/2005, 16/2007 and 113/2008), which entered into force on 29 December 2005, reads as follows: “(1) A party to court proceedings who considers that the competent court failed to decide within a reasonable time on his or her rights or obligations or a criminal charge against him or her, may lodge a request for the protection of the right to a hearing within a reasonable time with the immediately higher court. (2) If the request concerns proceedings pending before the High Commercial Court of the Republic of Croatia, the High Court for Administrative Offences of the Republic of Croatia or the Administrative Court of the Republic of Croatia, the request shall be decided by the Supreme Court of the Republic of Croatia. (3) The proceedings for deciding the request referred to in paragraph 1 of this section shall be urgent. The rules of non-contentious procedure shall apply mutatis mutandis in those proceedings and, in principle, no hearing shall be held. (1) If the court referred to in section 27 of this Act finds the request well founded, it shall set a time-limit within which the court before which the proceedings are pending must decide on a right or obligation of, or a criminal charge against, the person who lodged the request, and shall award him or her appropriate compensation for the violation of his or her right to a hearing within a reasonable time. (2) The compensation shall be paid out of the State budget within three months from the date the party’s request for payment is lodged. (3) An appeal, to be lodged within fifteen days with the Supreme Court, lies against a decision on the request for the protection of the right to a hearing within a reasonable time. No appeal lies against the Supreme Court’s decision but one may lodge a constitutional complaint.” The Enforcement Act (Ovršni zakon, Official Gazette of the Republic of Croatia, nos. 57/1996, 29/1999, 42/2000, 173/2003, 194/2003, 151/2004, 88/2005, 121/2005 and 6720/08) regulates both enforcement proceedings (ovršni postupak) in civil law matters and security proceedings (proceedings for the issuance of interim measures, postupak osiguranja). The Act provides for six types of security (interim) measure (mjere osiguranja), two of which are voluntary and four of which are compulsory. The two voluntary measures are: (a) judicial and notarial pledge security on the basis of the agreement of the parties (sudsko i javnobilježničko založnopravno osiguranje tražbina na temelju sporazuma stranaka) and (b) judicial and notarial (fiduciary) security by transferring ownership of a property or by transferring a right (sudsko i javnobilježničko (fiducijarno) osiguranje prijenosom vlasništva na stvari i prijenosom prava). The four compulsory measures are: (a) security by compulsory mortgaging of an immovable property (osiguranje zasnivanjem založnog prava na nekretnini), (b) security by anticipatory enforcement (osiguranje prethodnom ovrhom), (c) security by preliminary measures (osiguranje prethodnim mjerama), and (d) provisional measures (privremene mjere). The relevant provisions of the Enforcement Act regulating preliminary measures provide as follows: C h a p t e r t h i r t y SECURITY BY PRELIMINARY MEASURES Requirements for imposition of a preliminary measure Section 284 “(1) A preliminary measure shall be imposed with a view to securing a monetary claim on the basis of: 1. a decision of a court or an administrative authority that has not [yet] become enforceable, 2. a settlement concluded before a court or an administrative authority, if the claim determined therein has not [yet] become due, 3. a notarial deed , if the claim determined therein has not [yet] become due. (2) The court shall on the basis of the documents referred to in paragraph 1 of this section impose a preliminary measure if the requesting party [i.e. the creditor] demonstrates that without such a security [measure] there is a probable risk that the satisfaction of the claim [i.e. the collection of the debt] would be frustrated or seriously hindered.” Types of preliminary measures Section 287 “(1) A court may impose the following as preliminary measures: 1. ... 2. ... 3. A prohibition on the bank to pay the opposing party [i.e. the debtor] or a third party, at the opposing party’s order, an amount from his or her account for which the preliminary measure has been imposed. (2) ... (3) By the implementation of the preliminary measure, the requesting party [i.e. the creditor] shall acquire the right of pledge on the object of the security [measure]. (4) The sum of money deposited by the opposing party in the bank, on which the prohibition of payment has been imposed, may not be transferred from that account until the prohibition is in force, except to satisfy the secured claim.” Decision on imposition of a preliminary measure Section 289(2) “A period for which a preliminary measure is imposed may not be longer than fifteen days after the conditions for enforcement have been met.” Croatian legal scholars classify security (interim) measures (mjere osiguranja) into three main categories according to their purpose: (a) protective (conserving) measures, (b) regulatory measures, and (c) anticipatory measures. Protective measures are those measures whose purpose is to create conditions for the future satisfaction of a creditor’s claim. Judicial and notarial pledge security, judicial and notarial fiduciary security, security by compulsory mortgaging of an immovable property, all preliminary measures and the majority of provisional measures are considered as protective measures. Regulatory measures are those measures whose purpose is to temporarily regulate relations between the parties. Certain provisional measures are considered regulatory measures. Anticipatory measures are those measures whose purpose is to satisfy a creditor’s claim in advance. The anticipatory enforcement and certain provisional measures are considered anticipatory measures. In terms of their effects, Croatian legal scholars classify security (interim) measures into three main categories: (a) those that lead to (complete or partial) satisfaction of creditors’ claims (the anticipatory enforcement and certain provisional measures), and (b) those that create certain rights in rem (judicial and notarial pledge security, judicial and notarial fiduciary security, security by compulsory mortgaging of an immovable property and all preliminary measures), and (c) those that create certain quasi rights in rem or which de facto remove or reduce the risk of a future impossibility to satisfy a creditor’s claim (all provisional measures).