CASE OF SAAREKALLAS OU v. ESTONIA
Preliminary objection dismissed (lack of authority);Violation of Art. 6-1;Violation of Art. 13;Pecuniary damage - claim dismissed;Non-pecuniary damage - financial award;Costs and expenses partial award - Convention proceedings
Peer Lorenzen
4. The applicant company is a private limited company (osaühing), registered in Estonia. 5. On 19 October 1998, T., the lawyer of K., lodged a request with the Saare County Court (maakohus) for securing a claim by K. against A. and P. According to K., she had been in the possession of six shares (corresponding to 50 per cent of the share capital) of Kallas AS, a public limited company, which had been unlawfully transformed into the applicant company, Saarekallas OÜ. The defendants had been entered in the commercial register as members of the management board of the company. K. submitted that P. intended to sell the company's buildings at 26 and 26a Pikk Street in Kuressaare. She requested the court to enter a notation in the Buildings Register prohibiting the disposal of the buildings concerned. 6. On the same date the County Court granted the request. 7. On 26 October 1998 the applicant company appealed against the interlocutory measure. 8. On 23 November 1998 the County Court annulled the interlocutory measure, as the plaintiff had not lodged the claim with the County Court within a one-month period. This decision became final on 4 December 1998. 9. On 14 December 1998 the Tallinn Court of Appeal (ringkonnakohus) took a decision concerning the appeal against the interlocutory measure. It noted that, although the appeal was well-founded, there was no need to quash the challenged decision as it had already been annulled. 10. On 11 December 1998, K.'s lawyer lodged a claim against the applicant company with the County Court. The plaintiff alleged that she had been a shareholder of Kallas AS, which had been transformed into the applicant company. However, she had not been entered on the list of shareholders of the applicant company after the transformation. She alleged that the P. was about to sell the buildings belonging to the applicant company and that this would be in breach of her rights. She requested that the management board of the applicant company be obliged to transfer to her a share in the value of 5,000 Estonian kroons (EEK) and that a notation prohibiting the disposal of the buildings at 26 and 26a Pikk Street be entered in the Buildings Register. 11. On 14 December 1998 the County Court again ordered that a notation prohibiting the disposal of the buildings at 26 and 26a Pikk Street be entered in the Buildings Register in order to secure K.'s claim. 12. The County Court scheduled ten preliminary hearings from 30 March 1999 to 9 May 2000. They were adjourned for various reasons: because of the negotiations between the parties to settle the case, the plaintiff's requests to require documents from the applicant company, the parties' or their representatives' absence, the plaintiff's applications to amend the object of the action and to bring additional claims. 13. On 9 May 2000 the judge hearing the case made a ruling concerning her withdrawal. The County Court had received copies of several petitions whereby the applicant company's statutory representatives had requested that criminal proceedings be initiated against the judge concerned and the chairperson of the Saare County Court, since they had, allegedly, continuously committed serious crimes against the petitioners, involving denial of human existence, violence and crimes against human rights. 14. On 3 July 2000 another judge of the County Court made a ruling concerning her withdrawal, since the representatives of the applicant company had made several petitions for initiating criminal proceedings also against her. On 5 September 2000 two further judges ruled on their withdrawal. 15. By a letter of 6 September 2000 the chairperson of the Saare County Court requested the chairperson of the Tallinn Court of Appeal to change the jurisdiction over the matter, since all of the judges of the County Court had withdrawn from hearing the case. The chairperson of the Court of Appeal considered the withdrawals unjustified and returned the case to the Saare County Court. 16. A preliminary hearing of the case was scheduled for 21 February 2001. However, on 20 February 2001 the plaintiff's lawyer informed the County Court that K., the plaintiff, had died on 4 February 2001. He requested that the proceedings be suspended. On 21 February 2001 the County Court decided to suspend the proceedings until ascertaining the identity of the plaintiff's successor. 17. On 3 April 2002 the County Court resumed the proceedings and invited R., K.'s heir, to act as the plaintiff. 18. On 30 April 2002 the County Court held a preliminary hearing. R. submitted to the court a request to amend the object of the action. N., member of the management board of the applicant company, asserted that he had not been authorised to represent the company. 19. On 5 June 2002 the court held a preliminary hearing. N., a member of the management board of the applicant company, again asserted that he had not been authorised to represent the company. The court agreed and decided that he could not take part in the proceedings. It heard the plaintiff's lawyer and scheduled a new hearing for 13 August 2002. 20. On 13 August 2002 the court again held a preliminary hearing. There appeared the plaintiff's lawyer; the applicant company's representatives lacked due authorisation to act on its behalf. The court concluded the preliminary hearing and scheduled the trial hearing for 23 September 2002. 21. On 23 September 2002 the County Court held a trial hearing in the presence of R. and his lawyer. N. was also present but had no authority to represent the applicant company. 22. The County Court delivered its judgment on 14 October 2002. R.'s claim was granted in part. The court obliged the management board of the applicant company to enter R. on the list of its shareholders with a share of a nominal value of EEK 5,000. 23. Both the applicant company and R. appealed against the judgment of the County Court. On 21 April 2003 the Tallinn Court of Appeal quashed the County Court's judgment and remitted the case back to it for fresh examination, since Tradeco Enterprises Inc, a shareholder of the applicant company, had not been involved in the proceedings. 24. On 10 September 2003 the Supreme Court (Riigikohus) refused the applicant company leave to appeal. 25. On 15 January 2004 the Saare County Court decided to resume the proceedings and to invite Tradeco Enterprises Inc to participate therein as a third party. It requested the plaintiff's lawyer to provide evidence concerning the status of Tradeco Enterprises Inc, including on whether this company had been dissolved and, if so, whether there was a successor. 26. In the spring of 2004 T., the plaintiff's lawyer, and the representatives of the applicant company were unsuccessfully seeking an opportunity to sell the buildings on Pikk Street. 27. The County Court held a preliminary hearing on 14 December 2004 in the presence of the plaintiff's representative and N. who had no authority to represent the applicant company. Tradeco Enterprises Inc, registered in Delaware, had refused the summonses sent by the court. The hearing was adjourned at the request of the plaintiff's lawyer in order to find out whether Tradeco Enterprises Inc was an existing legal entity. 28. On 3 February 2005 the plaintiff's lawyer informed the court that the parties had started negotiations to settle the case. By June 2005 it became evident that no agreement could be reached. 29. On 3 July 2005 and 25 January 2006 the County Court made requests to the authorities of the State of Delaware to receive information on Tradeco Enterprises Inc. 30. On 14 February 2006 the County Court received an agreement concluded between the plaintiff and the defendant company whereby they settled the case. On the same date, the County Court approved the settlement and annulled its interlocutory measure applied on 14 December 1998 to secure the action. The plaintiff and the applicant company declared that they abandon their right to appeal against the County Court's decision whereby the settlement was confirmed. 31. The relevant provisions of the Constitution of the Republic of Estonia (Eesti Vabariigi põhiseadus) read as follows: “Everyone has the right to the protection of the state and of the law. ... The law shall protect everyone from the arbitrary exercise of state authority.” “The guarantee of rights and freedoms is the duty of the legislative, executive and judicial powers, and of local governments.” “Everyone whose rights and freedoms are violated has the right of recourse to the courts. Everyone has the right, while his or her case is before the court, to petition for any relevant law, other legislation or procedure to be declared unconstitutional. The courts shall observe the Constitution and shall declare unconstitutional any law, other legislation or procedure which violates the rights and freedoms provided by the Constitution or which is otherwise in conflict with the Constitution.” “Everyone has the right to compensation for moral and material damage caused by the unlawful action of any person.” 32. The pertinent provisions of the Code of Civil Procedure (Tsiviilkohtumenetluse seadustik), applicable until 31 December 2005, read as follows: “The purpose of civil procedure is to hear and adjudicate civil matters justly and expeditiously.” “(1) A court shall decide on the acceptance of a statement of claim within twenty days after the filing thereof. ...” “(1) If a court holds a preliminary hearing, it shall be held within two months after the filing of the statement of claim. A court shall summon the participants in a proceeding to a preliminary hearing. ...” “... (3) If possible, a court session shall be held by the court within three months after the filing of a statement of claim. ...” “... (3) A court shall justify the adjournment of the hearing of a matter. The reason shall be recorded in the minutes of the court session. A new court session shall be held within a reasonable period of time. A court shall determine the time and place of a new court session, taking into consideration the opinions of the participants in the proceeding. (4) If a court adjourns the hearing of a matter for more than three months, it shall make a written ruling. (5) A participant in the proceeding may file an appeal against such ruling if the participant in the proceeding finds that the hearing of the matter is adjourned for an unreasonably long period of time. A ruling of a court of appeal concerning an appeal against such ruling is not subject to appeal.” “An appeal may be filed against a ruling on the suspension of a proceeding. A ruling of a court of appeal concerning an appeal against such ruling is not subject to appeal.” “... (3) The parties and other participants in a proceeding may file an appeal against a ruling of the court of first instance if the right to file an appeal against a ruling is prescribed in this Code, or if the court ruling hinders the further conduct of the proceeding. ...” 33. In a decision of 13 June 1997, the Administrative Law Chamber of the Supreme Court (case no. 3-3-1-18-97) held that if no specific deadline had been provided for, the public authorities – the Privatisation Agency in the case at hand – had to perform actions within reasonable time. Otherwise, Article 13 § 2 of the Constitution would be violated. It found that administrative courts were authorised to examine such complaints under Article 3 of the Code of Administrative Court Procedure (Halduskohtumenetluse seadustik). 34. In a judgment of 22 December 2000, the plenary Supreme Court (case no. 3-3-1-38-00) noted that a right to effective proceedings for one's protection was guaranteed under Articles 13, 14 and 15 of the Constitution and Article 13 of the Convention. It would be contrary to Article 15 § 1 of the Constitution to exclude some basic rights from effective judicial protection. The Supreme Court concluded that administrative courts were authorised, under Article 3 of the Code of Administrative Court Procedure, to examine whether certain procedural measures in criminal proceedings – in that case search and seizure – infringed the fundamental rights and freedoms of an individual. 35. In a judgment of 17 April 2001, the Administrative Law Chamber of the Supreme Court (case no. 3-3-1-10-01) held that even in cases where a person accused of a criminal offence had been removed from his or her office in accordance with the law but he or she was subsequently acquitted or the criminal proceedings against him or her were discontinued, he or she had to have a possibility of obtaining just compensation from the State. The court noted that although the matter was not regulated by law, this omission could not exclude the State's responsibility before the individual. It held that in such cases compensation could be claimed on the basis of general principles of law even when no specific legal provisions existed. 36. In a judgment of 6 June 2002, the Administrative Law Chamber of the Supreme Court (case no. 3-3-1-27-02) found, relying on Articles 13 § 2 and 25 of the Constitution, that unlawful act or measure – including inaction or delay – in performing public functions served as grounds for compensation for damage. Article 25 of the Constitution was considered directly applicable. This case concerned a delay by municipal authorities in privatisation proceedings.