GRUŠOVNIK v. SLOVENIA
Inadmissible
Alvina Gyulumyan;Egbert Myjer;Elisabet Fura;Ineta Ziemele;Josep Casadevall
The applicant, Ms Marija Grušovnik, is a Slovenian national who was born in 1943 and lives in Šempeter. She was represented before the Court by Mr D. Teržan, a lawyer practising in Celje. The Slovenian Government (“the Government”) were represented by their Agent, Mr L. Bembič, State Attorney-General. The facts of the case, as submitted by the parties, may be summarised as follows. 1. On 30 November 1993 the applicant was injured in a car accident caused by a third person. The perpetrator had taken out liability insurance with an insurance company Z.T. (“the insurance company”). 2. On 20 October 1995 the applicant, represented by a lawyer, instituted compensation proceedings against the insurance company at the Celje Local Court (Okrajno sodišče v Celju), claiming a total amount of 2,933,487 Slovenian tolars (SIT – approximately 28,600 euros (EUR)) for pecuniary and non-pecuniary damage, together with default interest. Out of the total amount, she sought SIT 2,900,000 (approximately EUR 28,300) for the non-pecuniary damage sustained, with default interest from the date on which the compensation proceedings had been instituted. 3. On 27 December 1995 the Celje Local Court decided that it did not have jurisdiction to hear the case and submitted the case file to the Celje District Court (Okrožno sodišče v Celju). 4. On 25 February 1997 the applicant requested the court to decide promptly on the case. 5. On 12 May 1997 the first-instance court held a hearing, at which it partly upheld the applicant’s claim for compensation in the amount of SIT 1,933,487 (approximately EUR 18,900) and dismissed the remainder of the claim. Out of the total, the court awarded the applicant SIT 1,900,000 (approximately EUR 18,500) for non-pecuniary damage, together with default interest with effect from the date of the court judgment. It dismissed, however, her claim for default interest with effect from the institution of the compensation proceedings on 20 October 1995 until the delivery of the judgment on 12 May 1997. Both parties appealed. 6. On 9 April 1998 the Celje Higher Court (Višje sodišče v Celju) dismissed the applicant’s appeal and partly upheld the defendant’s appeal, by lowering the amount of compensation awarded to SIT 1,633,487 (approximately EUR 15,943), together with default interest for non-pecuniary damage with effect from 12 May 1997. 7. On 24 June 1998 the applicant lodged an appeal on points of law with the Supreme Court (Vrhovno sodišče), alleging that the amount of compensation for non-pecuniary damage had not been correctly established in view of all the non-pecuniary damage she had suffered. In addition, the applicant maintained that default interest on compensation for non-pecuniary damage should have been awarded with effect from the date on which the compensation proceedings had been instituted, as allegedly required by the Obligations Act, and not only with effect from the date on which the first-instance court judgment had been delivered. 8. On 3 March 1999 the Supreme Court dismissed the appeal as a whole, holding that the second-instance court had correctly assessed the amount of compensation for non-pecuniary damage and correctly awarded default interest from the day the first-instance court judgment had been issued. In particular, it held that the amount of compensation appeared to be just also with regard to the relatively short period of time the applicant had had to wait for the first-instance court judgment; the first-instance court judgment had been delivered one year and seven months after the applicant had instituted compensation proceedings. In this connection, the Supreme Court referred to the well-established jurisprudence to the effect that persons claiming compensation for non-pecuniary damage were not to be indemnified by an award of default interest for the period from the day the damage occurred until the day the first-instance court delivered judgment. Instead, this factor should be taken into account when determining a just amount of compensation (the principal). The Supreme Court stated that this approach had been adopted since 1987 owing to the unstable economic situation in the country and the high rate of inflation and monetary depreciation in particular. In order to preserve the real value of a compensation claim for non-pecuniary damage, the amount due was therefore determined only on the date of delivery of the judgment. Default interest was thus awarded only from that day onwards, while “Relevant domestic law and practice” below). The applicant lodged a constitutional complaint with the Constitutional Court (Ustavno sodišče). 9. On 11 June 2001 the Constitutional Court declared the complaint inadmissible. It held that the Supreme Court had reached its decision in accordance with well-established jurisprudence, valid since 1987, according to which default interest on compensation for non-pecuniary damage was to be awarded only from the day the first-instance court rendered the judgment. Such approach had been adopted because of the high rate of inflation, in order to calculate the due amount of compensation in accordance with the prices valid on the day the decision was adopted, and not on the day the court proceedings had been instituted. In the Constitutional Court’’s opinion, was generally adopted and was applicable to all disputes concerning non-pecuniary damage. Since the Constitutional Court did not find any violation of human rights, it dismissed the complaint. 10. On 4 July 2001 the Constitutional Court’s decision was served on the applicant. 11. The relevant sections of the Constitution of the Republic of Slovenia (Ustava Republike Slovenije, Official Gazette of the Republic of Slovenia, No. 33/91 and 42/97) provided at the material time: “In Slovenia everyone shall be guaranteed equal human rights and fundamental freedoms irrespective of national origin, race, sex, language, religion, political or other conviction, material standing, birth, education, social status or any other personal circumstance. All are equal before the law.” “Everyone shall be guaranteed equal protection of rights in any proceedings before a court and before any State or local authority and bearer of public authority which determines his or her rights, duties or legal interests.” “Everyone shall have the right to have his or her rights, duties and any charges brought against him or her determined without undue delay by an independent and impartial tribunal established by law. Only a judge duly appointed pursuant to rules previously established by law and by judicial regulations may try such an individual.” “The right to private property and inheritance shall be guaranteed.” 12. The following section of the Constitutional Act implementing the Basic Constitutional Charter on the Independence and Sovereignty of the Republic of Slovenia of 25 June 1991 (Ustavni zakon za izvedbo Temeljne ustavne listine o samostojnosti in neodvisnosti Republike Slovenije, Official Gazette of the Republic of Slovenia, Nos. 1/91 and 42/97) is relevant to the present case: “Until the relevant legislation of the Republic of Slovenia is enacted, the federal legislation in force in the Republic of Slovenia at the time of entry into force of this law shall be applied as legislation of the Republic of Slovenia unless it is contrary to the legal order of the Republic of Slovenia, and except as otherwise provided by this law. ...” 13. This Act served as a legal basis for the incorporation, with the necessary amendments, of legislation previously enacted under the SFRY into the legal order of the independent Republic of Slovenia, for example the 1978 Obligations Act (see below). 14. The original text of the 1978 Obligations Act (Zakon o obligacijskih razmerjih, Official Gazette of the Socialist Federal Republic of Yugoslavia, Nos. 29/78, 38/85) provided in section 401 that default interest ceased to accrue once the amount of overdue interest reached the value of the principal debt (prohibition ultra alterum tantum). In 1989 this section was abrogated (Official Gazette of the Socialist Federal Republic of Yugoslavia No. 57/89). 15. Further relevant provisions of the Act as amended read as follows: “An obligation arising from a tort shall be deemed to be payable at the moment when the damage occurs.” “... (2) Compensation for damage shall be determined according to the prices applicable at the time of the delivery of the court judgment, unless otherwise provided by law. ...” “(1) In respect of physical pain or mental anguish suffered on account of reduced (2) When considering a claim for non-pecuniary damage and determining the compensation to be awarded, the court shall consider the value of the damaged personal property and the purpose of such compensation, and shall also ensure that it does not serve interests which would be inappropriate to its nature and social significance.” “(1) A debtor who fails to perform a pecuniary obligation shall owe, in addition to the principal, default interest at a rate prescribed by federal law. (2)...” “(1) A debtor shall be in default of his pecuniary obligation if he fails to perform it within the period stipulated for its performance. (2) If no period is stipulated for performance, the debtor shall be in default where the creditor, by means of an oral or written reminder or by instituting judicial proceedings intended to secure the fulfilment of the obligation, requests the debtor to perform his obligation.” “If the object of an obligation is a sum of money, the debtor shall owe the sum of money specified at the time the obligation was entered into, unless otherwise provided by law.” 16. The Code of Obligations (Obligacijski zakonik, Official Gazette of the Republic of Slovenia, No. 83/2001) reintroduced in section 376 a provision to the effect that default interest ceased to accrue once the amount of overdue interest reached the value of the principal (prohibition ultra alterum tantum, see paragraph 14 above). It also repealed former section 277 and provided instead in section 378 that default interest was to be regulated as follows: “If a debtor is in default as regards the performance of a pecuniary obligation, he shall owe default interest in addition to the principal. The rate of default interest shall be 8% per annum, unless a special law provides otherwise.” 17. In its transitional and final provisions the new Code stated that the provisions were not to apply to obligations that arose prior to its entry into force. It also provided that the special law referred to in section 378(2) was the Statutory Default and Basic Interest Rate Act (see below). 18. Other provisions of the new Code of Obligations relevant to the present case follow the wording of the former Obligations Act. 19. The Default Interest Rate Act (Zakon o obrestni meri zamudnih obresti, Official Gazette of the Republic of Slovenia, Nos. 14/92 and 13/93) prescribed the interest rate as the retail price growth rate in the preceding month, recalculated on an annual level, and increased by a 30% real annual default interest rate. In the subsequent year the real annual default interest rate was reduced to 25%. The default interest was composed of the real index and the retail price index (adjustment index), the latter having the function of increasing the amount of the principal according to the monetary depreciation in the country. Default interest thus had a function of preserving the real value of a pecuniary obligation and hence ensuring that the purchasing power of the claim remained unchanged. 20. The Statutory Default and Basic Interest Rate Act (Zakon o predpisani obrestni meri zamudnih obresti in temeljni obrestni meri, Official Gazette of the Republic of Slovenia, No. 45/95) determined the statutory default interest rate as being equal to the basic interest rate increased by 1.8 times the general discount rate of the Bank of Slovenia (section 2), the basic interest rate being the annual interest rate for domestic-currency pecuniary obligations ensuring the preservation of their real value (adjustment) (section 3). Default interest thus formally assumed three distinctive functions: a function of adjustment of pecuniary obligations in accordance with inflation in the country, a function of payment for the use of another person’s capital, and a punitive function for a debtor in default as regards the performance of his obligation. 21. The Amendments and Supplements to the Statutory Default and Basic Interest Rate Act (Zakon o spremembah in dopolnitvah zakona o predpisani obrestni meri zamudnih obresti in temeljni obrestni meri, Official Gazette of the Republic of Slovenia, No. 109/2001) determined the statutory default interest rate as the basic interest rate increased by 13.5 percentage points (section 2), the basic interest rate being the annual interest rate for domestic-currency pecuniary obligations ensuring the preservation of their real value (adjustment) (section 3). 22. The Civil Procedure Act (Zakon o pravdnem postopku, Official Gazette of the Republic of Slovenia, No. 26/99) provided in section 2 that in civil proceedings, the court should decide only within the boundaries of the claims filed (ne eat iudex ultra et extra petita partium). A case in which the court nevertheless decided extra petitum and made an award that was higher than or did not correspond to what was claimed would, pursuant to sections 350, 375 and 381, amount to a major violation of procedural law and constitute a ground for a higher-instance court to quash the judgment in question. 23. On 29 May 1987 the SFRY Federal Court, the Supreme Courts of the Republics and Regions of the SFRY and the Federal Military Court, sitting in Bugojno (present-day Bosnia and Herzegovina), adopted a new interpretation of the provisions of the 1978 Obligations Act, which dealt with default interest on compensation for non-pecuniary damage, by issuing the following opinion: “Default interest on a pecuniary claim for non-pecuniary damage shall be payable with effect from the date of delivery of the first-instance court judgment in which the compensation was determined. When determining the amount of just pecuniary compensation, the court shall also take into account the period from the date of the occurrence of the damage until the date of the judgment, if this is justified by the time that has elapsed since the damage occurred or by ” 24. With the incorporation of the 1978 Obligations Act, enacted under the former SFRY, into the legal system of the newly established Republic of Slovenia, the Supreme Court of the Republic of Slovenia also adopted the interpretation of the relevant provisions of that Act as developed by the former SFRY Federal Court, the Supreme Courts of the Republics and Regions of the SFRY and the Federal Military Court (see paragraph 23 above). 25. The Supreme Court observed that, under the legislation in force since 1978, default interest also included interest for adjustment of a pecuniary obligation in accordance with the level of inflation. On certain occasions in the past, the default interest for pecuniary obligations therefore amounted to over 1000% of the main claim. However, in the case of claims for compensation for non-pecuniary damage, the preservation of the real value of a debt was ensured by determining its amount only on the date of delivery of the first-instance court judgment. By that date, a claim in respect of a non-pecuniary obligation therefore remained unaffected by inflation. Thus, if default interest was awarded with effect from the date on which non-pecuniary damage had occurred, this would result in a double adjustment of the compensation claim from that date until the delivery of the judgment: once by determining its amount only on the day of delivery of the judgment, and then also with the award of default interest from the day the damage occurred. In the Supreme Court’s view, this was unacceptable. 26. Furthermore, the Supreme Court consistently held that a higher amount of compensation was not to be awarded solely on the basis of the fact that the case had been decided after a longer period of time. Thus, a claimant could only claim a higher amount of compensation under that head if the length of the court proceedings was excessive, for example on account of delays caused by one of the parties to the proceedings or perhaps even abuses of his or her procedural rights (see, for example, the reasoning of the Supreme Court in II Ips 221/2001, II Ips 282/2000, II Ips 351/2003 and II Ips 664/2003). 27. Finally, the Supreme Court emphasised on several occasions that despite the fact that in recent years inflation had no longer been so high and default interest had therefore no longer included such a high adjustment index, the jurisprudence could not be changed in an isolated case where a claimant had sought default interest from the day he had sustained the damage. Such a change in jurisprudence could only be carried out in a general manner, so that it took effect with respect to a non-identifiable circle of claimants and for all claimants at the same time (see in particular II Ips 351/2003). 28. After the new Code of Obligations had been enacted in 2001, replacing the 1978 Obligations Act, the Supreme Court adopted a new legal opinion on 26 June 2002 concerning the issue of default interest, which read: “(1) From the date on which the Code of Obligations came into force (1 January 2002), the victim is entitled to default interest on a pecuniary claim for non-pecuniary damage (sections 179 to 183 of the Code of Obligations and sections 200 to 203 of the former Obligations Act), unless the default occurred at a later stage (section 299 of the Code of Obligations and section 324 of the former Obligations Act), after the entry into force of the Amendments and Supplements to the Statutory Default and Basic Interest Rate Act, as a result of which default interest is awarded: – until the date of delivery of the first-instance court judgment at the prescribed interest rate, reduced by the basic interest rate (currently 13.5%); – from the date of the first-instance court judgment onwards at the prescribed default-interest rate (section 2 of the Amendments and Supplements to the Statutory Default and Basic Interest Rate Act ). ... (3) Payments of compensation are subject to adjustment at the basic interest rate (section 3 of the Statutory Default and Basic Interest Rate Act) or at the rate agreed between the parties (section 372 of the Code of Obligations).” 29. In its reasoning on its newly adopted legal opinion, the Supreme Court observed, inter alia, that the economic situation in the country had stabilised, and the new legislation, namely the new Code of Obligations and the Amendments and Supplements to the Statutory Default and Basic Interest Rate Act, now distinguished between default interest and the interest intended for adjustment of a pecuniary obligation. In the Supreme Court’s view, these developments allowed a change in the jurisprudence concerning the awards of default interest in the case of claims for non-pecuniary damage. Thus, default interest may now be payable with effect from the date on which the damage occurred, regardless of whether it was of a pecuniary or a non-pecuniary nature. 30. The above-mentioned Supreme Court’s jurisprudence was upheld also by the Constitutional Court (see, for example, the decision of the Constitutional Court in the present case, para. 9 above). Therefore, the following provisions of the Constitutional Court Act (Zakon o Ustavnem sodišču, Official Gazette of the Republic of Slovenia, Nos. 15/94, 51/07 and 64/07) concerning legal effects of the Constitutional Court’s decisions are of particular relevance in the present case: (1.)... (2.)... (3.) “The decisions of the Constitutional Court are binding.”