CASE OF COMPCAR, S.R.O. v. SLOVAKIA
Violation of Article 6 - Right to a fair trial (Article 6 - Civil proceedings;Article 6-1 - Fair hearing)
Branko Lubarda;Ján Šikuta;Johannes Silvis;Josep Casadevall;Kristina Pardalos;Luis López Guerra
5. The applicant company was established in 1995 and has its registered office in Prešov. 6. In 2004 the applicant company bought real property registered on ownership certificate no. 5604 for the cadastral area of Južné mesto in the city of Košice. The seller was a State-owned enterprise (“the seller”) acting through a receiver in insolvency. 7. Prior to the sale, in a decision (uznesenie) of 8 April 1998, the Košice Regional Court (Krajský súd) acting as an insolvency court had consented to the property being sold directly as opposed to through a public auction. 8. By way of an order (opatrenie) of 9 July 2004 the insolvency court approved the sale of the property to the applicant company because it had fulfilled the conditions for the sale as set out in the decision of 8 April 1998. It observed that the proposed price was adequate in view of all the circumstances, including the fact that there were municipal and other roads situated on the land in question. 9. The order of 9 July 2004 was not amenable to appeal. It became final and binding on the same day as it was issued. 10. On 28 July 2004 the sale was registered in the land registry. The title to the property was thereby effectively transferred to the applicant company. 11. The seller was subsequently dissolved and struck out of the companies register, whereby it ceased legally to exist. 12. On 22 April 2008 the City of Košice (“the claimant”) brought an action against the applicant company seeking a ruling that it was the owner of the property. The claimant argued in principle that, by mistake, the property had not been registered as its own; that accordingly it did not belong to the seller; and that – consequently – the sale had been void. 13. The action was examined and dismissed on 27 February 2009 by the Košice I District Court (Okresný súd) and, following an appeal lodged by the claimant, on 8 October 2009 by the Regional Court. The District Court held a hearing and took complex documentary evidence and oral submissions from the parties. Both courts unanimously concluded that there was a non-rebuttable legal presumption, under Article 19 § 2 of the Insolvency Code (Law no. 328/1991 Coll., as applicable at the relevant time), that the property belonged to the insolvency estate and could be lawfully sold to third parties unless its exclusion from the estate had been claimed by way of a special action (vylučovacia žaloba), which had not happened in the present case. The applicant company had acquired the property in good faith and the present action could not be used to contest that. 14. The dismissal of the action became final and binding on 7 January 2010. 15. On 13 December 2010 the claimant filed a petition with the Office of the Prosecutor General (“the PG”) requesting the latter to exercise his discretionary power to challenge the above-mentioned judgments by way of an extraordinary appeal on points of law (mimoriadne dovolanie – “extraordinary appeal”). 16. Having decided to accede to the request and acting through his First Deputy, on 5 January 2011 the PG challenged the contested judgments in the Supreme Court (Najvyšší súd). He argued that the courts had erred in applying the said legal presumption which, in his view, only applied if the party concerned had been invited by the insolvency court to seek the exclusion of the property in question from the insolvency estate by the special action mentioned above and if that party had failed to act on the invitation. This had however not been the case in the present situation. Moreover, the PG argued that both the seller’s receiver in insolvency and the insolvency court should have flagged up and treated the property as contentious, especially in view of the fact that there were public roads on it. 17. The applicant and the claimant were both given an opportunity to comment. 18. On 30 April 2012 the Supreme Court quashed the challenged judgments and remitted the case to the first-instance court for a new determination. It referred to a precedent of 11 September 2009 in case no. 5Cdo 194/08, which had been published in the “Collection of Standpoints of the Supreme Court” in 2010 (issue 3/2010, item 25), according to which there were conditions attached to the legal presumption applied by the lower courts. The present case fell within one of the exceptions. In particular, the Supreme Court concurred with the PG’s argument that the presumption only applied on condition that the party concerned had been invited but had failed to seek to have the disputed items excluded from the insolvency estate. However, according to the Supreme Court, there was an exception to that condition, in that the latter would only apply if there were circumstances casting doubt on whether the disputed items rightfully fell within the insolvency estate. The Supreme Court found that, on the facts of the present case, the claimant had not been invited to seek to have the plots in question excluded from the estate. Moreover, there were reasons to doubt whether the seller had actually been the owner of those plots and whether the property had belonged to the seller’s insolvency estate. As the receiver and the insolvency court had failed to flag up the property as being contentious, the presumption was not applicable and the sale contract was void. Moreover, in the Supreme Court’s assessment, in view of the circumstances, the applicant company could not be considered as having been the bona fide purchaser of the property. The contested judgments were therefore wrong in law and had to be quashed. 19. Since then the case has been pending at the first instance. 20. On 3 August 2012 the applicant company lodged a complaint under Article 127 of the Constitution (Constitutional Law no. 460/1992 Coll., as amended) with the Constitutional Court (Ústavný súd). The applicant company relied, inter alia, on Article 6 § 1 of the Convention and challenged the Supreme Court’s decision. In particular, it contended that the Supreme Court had wrongfully reexamined the lawfulness of the insolvency court’s order of 9 July 2004, which was impermissible outside the framework of the insolvency proceedings. In any event, an extraordinary review of that order was also impermissible on account of the expiry of the applicable time-limits. In addition, the re-examination of that order was impermissible because it was in breach of the principle of res judicata. Lastly, the applicant company disagreed with the Supreme Court’s findings on the merits. 21. On 11 October 2012 the Constitutional Court declared the complaint inadmissible as being manifestly ill-founded. It found no constitutionally relevant arbitrariness, unfairness or irregularity in the Supreme Court’s decision and reasoning or in the underlying procedure. It added that, in so far as the applicant company could be understood as wishing to rely on the principle of res judicata with regard to the original insolvency proceedings, this principle did not apply in the present case because the insolvency proceedings had concerned the seller and not the claimant. Any rulings made in the insolvency proceedings therefore did not restrict the claimant from pursuing its own claims in the action at the origin of the present case. The Constitutional Court’s decision became final and binding on 2 November 2012.