SIRMIUM SPOL.S R.O. v. SLOVAKIA
Inadmissible
Nicolas Bratza
The applicant is a commercial private limited liability company which was established in 1996. Its registered name is SIRMIUM, spol. s r.o. and it was represented before the Court by Ms Z. Kupcová, a lawyer practising in Bratislava. The respondent Government were represented by Mrs A. Poláčková, their Agent. The facts of the case, as submitted by the parties, may be summarised as follows. In 1993 the National Council of the Slovak Republic (“Parliament”) enacted a law (Law no. 189/1993 Coll. – “the Act”), by which it established the Fund for Children and Youth (Fond detí a mládeže – “the Fund”). The Fund had its own legal personality and its principal task was to manage State property, as defined in the Act, in order to promote children’s and youth activities. In pursuit of that task, the Fund was authorised to engage in business activities. On 22 June 2000 Parliament enacted an amendment (Law no. 220/2000 Coll.) to the Act. It entered into force on 21 July 2000. Under section 3a(1) of the amended Act, any lease of property administered by the Fund for a period of more than 5 years necessitated the approval of the Ministry of Administration and Privatisation of National Property (Ministerstvo pre správu a privatizáciu národného majetku – “the Ministry”). Pursuant to section 15a(1) of the amended Act, existing leases with a term of more than five years would be terminated automatically ex lege six months after the entry into force of the amendment, unless they were approved by the Ministry. Under section 15a(2) and (3), if a lease was terminated as described above, the tenant was to vacate the property on pain of a financial penalty equal to ten times the monthly rent for each commenced month of default. The Fund was to compensate the tenant for improvements and repairs on the leased property, provided that the Fund had approved them and had undertaken to reimburse their cost. According to the explanatory note (dôvodová správa) on the amendment, the aim of the amendment was to lay down basic rules and minimum standards for effective management of the State’s property in furtherance of the aims pursued by the Act. It was noted that the core of the Fund’s economic activities consisted in leasing out the property it managed. However, the leases had frequently been concluded on inadequate terms and for an excessive period, aspects which had to be regularised. On 18 September 2000 a group of members of parliament challenged the amendment in the Constitutional Court (Ústavný súd). They were later joined in their challenge by the Prosecutor General. On 12 October 2000 the Constitutional Court accepted the challenge for further examination. On 17 January 2002 the Constitutional Court declared the whole of section 15a and certain other sections of the Act, as amended in 2000, contrary to several provisions of the Constitution. It held, inter alia, that these provisions infringed the principles of the division of State power, the prohibition of retroactivity, legality and access to a court. It was observed that they retroactively interfered with contractual arrangement of a private-law nature and bypassed the jurisdiction of the ordinary courts. Section 3a of the amended Act remained unaffected. On 1 February 2002 the judgment (nález) of the Constitutional Court was published in the Collection of Laws. By operation of Article 125 § 3 of the Constitution, the unconstitutional provisions of the Act thus lost their legal effect. As Parliament took no steps to rectify them, six months later these provisions became void. On 30 October 2003 Parliament passed a special law repealing the whole of the Act and winding up the Fund. This law (Law no. 4562/2003 Coll.) entered into force on 1 December 2003. As a consequence, the Fund entered into liquidation. The relevant procedure is still pending. In 1996 the applicant company concluded an agreement with the Fund for the lease of commercial premises comprising a hotel for a term of 20 years. The applicant company took over the leased premises, invested substantially in their renovation, and ran a hotel in them. Following the entry into force of the 2000 amendment to the Act, the applicant company sought the Ministry’s approval of the lease. On 18 August 2000 the Ministry declined to approve the lease. Consequently, the lease expired on 21 January 2001. The applicant company then made several requests for the Fund to take over the premises. The Fund did so, but no earlier than 5 April 2001. The applicant company claims that until then it had to maintain the premises in order to prevent their deterioration and that it consequently incurred added expense and sustained material damage. The applicant company also submits that, at that time, it did not know that the amendment had been challenged in the Constitutional Court and that the challenge had been accepted for further examination. The applicant company subsequently ceased its commercial operations. Another company, E.-M., leased commercial premises from the Fund. The lease was for a fixed term of 30 years. On 7 March 2001, at the company’s request, the Bratislava I District Court (Okresný súd) indicated an interim measure ordering the Fund to allow the company to enjoy the premises peacefully. At the same time, the company was invited to bring, within 30 days, an action for a declaratory ruling that the lease agreement existed. The interim measure would stay in place until the final settlement of that action. In its rulings the District Court observed that the 2000 amendment to the Act had been challenged in the Constitutional Court and that the proceedings were still pending. The E.-M. company brought the action as it had been invited to do and the proceedings are still pending. Another company, Y., leased commercial premises from the Fund. The lease was likewise for a fixed term of 30 years and the Ministry declined to approve it. The Fund brought an action for Y. to vacate the premises. On 17 December 2004 the Bratislava I District Court dismissed the action. It observed that the 2000 amendment was aimed at terminating leases such as the one concluded by Y. However, it had no actual effect on the lease in question because it had been automatically renewed by virtue of Article 676 § 2 of the Civil Code, which provided for the renewal of leases where, as in the present case, the landlord failed to apply within 30 days of the purported expiry of the lease for the premises to be vacated. The District Court also took notice of the Constitutional Court’s judgment of 17 January 2002 and held that legal relationships could not be based on unconstitutional laws. An entrepreneur, M., leased commercial premises from the Fund. The lease was likewise for a fixed term of 30 years and the Ministry did not approve it. M. then vacated the premises. On 5 August 2003 M. brought an action against the State, in the person of Parliament. He made further submissions on 28 February 2005. Relying on the Constitutional Court’s judgment of 17 January 2002, he argued that the termination of the lease in 2001 had been unconstitutional and, as such, unlawful. He invoked the State Liability Act of 1969 (Law no. 58/1969 Coll.) and claimed damages. The action is still pending. Another company, E.-B., also had a long-term lease on premises administered by a subsidiary of the Fund. It declined to leave them, and in 2001 the Fund brought an action for its eviction. The action was dismissed by the Liptovský Mikuláš District Court on 11 September 2002 and, on appeal, by the Žilina Regional Court on 13 September 2005. The courts observed that the relevant provisions of the 2000 amendment were unconstitutional and legally void. They could therefore not be used as a basis for a finding that the lease had expired and, consequently, for an order to vacate the premises. With reference to section 41b(2) of the Constitutional Court Act (Law no. 38/1993 Coll. – see “Relevant domestic law and practice” below), the courts found that even if an eviction order had been made in the circumstances of the case, it would not have been enforceable. Article 125 of the Constitution provides: “1. The Constitutional Court shall decide on the conformity of (a) laws with the Constitution, constitutional laws and international treaties to which the National Council of the Slovak Republic has expressed its assent and which have been ratified and promulgated in the manner laid down by law, ... 3. If the Constitutional Court finds a lack of conformity between legal instruments referred to in paragraph 1, the relevant instruments, parts of them or certain of their provisions shall lose their effect. The bodies that issued these legal regulations shall be obliged to harmonise them with the Constitution, with constitutional laws and with international treaties promulgated in the manner laid down by a law, and also, in the case of instruments referred to in paragraph 1 (b) and (c), with other laws, and in the case of instruments referred to in paragraph 1 (d), with government regulations and with generally binding legal regulations issued by ministries and other central State administrative bodies within six months from the promulgation of the decision of the Constitutional Court. If they fail to do so, these instruments, parts of them or their provisions shall lose their effect six months after the promulgation of the decision.” Chapter (hlava) 2 of Part (časť) 3 lays down rules concerning the review of conformity of legislation. It contains, inter alia, the following provisions: “(1) The legal instrument, parts of it or some of its provisions shall lose their legal effect on the date on which the judgment of the Constitutional Court is published in the Collection of Laws. ... (3) The fact that a legal instrument loses its legal effect or validity on the basis of the judgment of the Constitutional Court shall not entail the renewal of the validity of any legal instruments which it repealed. However, if the original legal regulations were merely changed or amended, they shall be valid in the form prior to the [annulled] amendment. ...” “(1) If a court has delivered a judgement in criminal proceedings on the basis of a legal instrument which later lost its effect pursuant to Article 125 of the Constitution, and the judgment has become final but has not been executed, the loss of the legal effect of the said instrument shall constitute a ground for reopening the case under the relevant provisions of the Code of Criminal Procedure. (2) Other final decisions which were given in civil or administrative proceedings on the basis of a legal instrument that has lost its legal effect either totally or in part shall remain unaffected. Obligations imposed as a result of such decisions cannot, however be enforced.” Chapter 7 of Part 8 lays down rules concerning lease agreements. Section (oddiel) 3 deals with termination of leases and contains, inter alia, the following provisions: “1. A lease shall terminate on the expiry of the term for which it was concluded, unless the parties agree otherwise. 2. If the lessee uses the object of the lease after the termination of the lease and the lessor does not bring an action for restitution of the object within 30 days, the lease agreement shall be renewed on the same terms as agreed originally...” Article 80 contains general rules concerning the types and the scope of actions (návrh na začatie konania) in civil courts. It provides: “Civil actions may be aimed at obtaining rulings concerning, in particular: (a) personal status..., (b) fulfilment of an obligation which stems from law, contract or breach of law; (c) determination of whether a particular legal relationship or a right exists or does not, provided that the determination is justified by a pressing legal interest.” The scope of the Act is defined in section 1, which provides that the State is liable for damage caused by unlawful decisions by its bodies and agencies in civil proceedings, administrative proceedings, criminal proceedings (with the exception of decisions concerning detention and penalties) and proceedings before notaries. Under section 4(1), a claim for damages can be brought only if the impugned decision was quashed for being unlawful by the competent authority. Section 18(1) renders the State liable for damage caused by wrongful official conduct on the part of State bodies and authorities in carrying out their functions. A claim for compensation may be allowed where the claimant shows that he or she suffered damage as a result of a wrongful act by a public authority, quantifies its amount, and shows that there is a causal link between the damage and the wrongful act in question.