ECHR Article 6-1
Fair hearing
Lack of proper notification of insolvency proceedings: violation
Facts – In 1997 a labour court ordered a private company to pay the applicant the salary due and applicable benefits (approximately EUR 8,350). In 1999 the judgment became final. In 2000 bankruptcy proceedings were instituted against the company. In 2005 the applicant’s claims were recognised in the bankruptcy proceedings. The receiver and the insolvency panel assured the applicant that they would inform him of progress in the case, in particular of the scheduling of hearings concerning the distribution of the estate. In 2008 a hotel complex belonging to the company was sold at public auction. Reports on the sale were published online on a web portal for accountants, on the Slovenian Press Agency website and in a daily financial newspaper. After the sale, in June 2008 the insolvency panel of the district court endorsed a draft proposal on the distribution of the bankrupt company’s estate to the 19 remaining creditors. It was proposed that they should each receive 2.85% of the claim acknowledged in the proceedings, which in the applicant’s case amounted to EUR 237. The court scheduled a further hearing in September 2008 to confirm the distribution of the estate. The district court published its decision and posted the notification of the hearing on the court’s notice board. The notification of the hearing, with its date and venue, was also published in the Official Gazette. At the hearing the district court confirmed the receiver’s distribution proposal. Its decision was posted on the court’s notice board the next day and could have been challenged within eight days. As no appeal was lodged against that decision, it became final. In November 2008 the bankruptcy proceedings were terminated. In December 2008 the applicant appealed against the decision to terminate the bankruptcy proceedings. He argued that he had not been properly informed of the September hearing on the distribution of the estate and that he should have been awarded the full amount claimed in the bankruptcy proceedings. In 2009 his appeal was dismissed and his constitutional complaint rejected.
Law – Article 6 – 1: The rules on service of summonses and decisions by posting on the court’s notice board and publication in the Official Gazette served the legitimate aim of ensuring that bankruptcy proceedings were expeditious and efficient. The rationale behind dispensing with personal service was that this type of proceedings might involve large numbers of creditors and parties. The personal service of court documents could add substantially to the costs of proceedings and, moreover, hamper their course if unsuccessful. However, under the domestic law, the hearing on the distribution of the estate represented a crucial point in the proceedings. Up to that point, the creditors could challenge the official receiver’s proposal for the distribution of the estate. They were precluded from doing so at a later stage. In that connection, the eight-day time-limit for lodging an appeal against the decision on distribution was relatively short. The applicant had been a party to the proceedings in which it had taken more than eight years for a hearing on the distribution of the bankruptcy estate to be scheduled. At that point, there had been only 19 creditors left whose names should have been known to the court. In addition, the applicant, who was not represented by a lawyer, had argued that he had been assured by the receiver that he would be informed of any progress in the proceedings. Bearing in mind the rather low number of creditors in the proceedings, the Court saw no reason why the applicant should not have trusted the receiver. Lastly, while the domestic law indeed did not provide for the personal service of summonses and court decisions in bankruptcy proceedings, it did provide for the possibility of publishing the notification of the hearing on the distribution of the estate also in the mass media. The Court regretted that in the instant case the domestic court had failed to use the latter publication option. The Court could not follow the Government’s argument that the applicant should have known about the sale of the hotel complex from online media reports. The media concerned could not be considered to have been targeted at the general public and/or to have reached the applicant (contrast Geffre v. France (dec.), 51307/99, 23 January 2003), an elderly person who said that he was unable to use a computer or access the internet. It would be unrealistic to expect the applicant to regularly consult the notice board of a court located in a different town from his place of residence or to gain access to every issue of the Official Gazette. In the circumstances, the Court was unable to conclude that the applicant had had a fair opportunity to have knowledge of the hearing on the distribution of the estate and that his failure to take part in the proceedings was due to a lack of diligence on his part (contrast Canete de Goni v. Spain, 55782/00, 15 October 2002). Moreover, it would not have been disproportionate to require the State to take additional steps to ensure that the few parties left in the proceedings, including the applicant, were informed of the hearing on the distribution and the decision taken at the hearing. By being deprived of the opportunity of taking part in the hearing of 10 September 2008, the applicant had been prevented from challenging the receiver’s plan for the distribution of the estate and thus from vindicating his right to obtain a higher percentage of his claim for unpaid wages.
Conclusion: violation (unanimously).
The Court also found a violation of Articles 6 – 1 and 13 on account of the length of the proceedings and ineffectiveness of remedies in this respect.
Article 41: EUR 12,500 in respect of non-pecuniary damage; claim in respect of pecuniary damage dismissed.
53723/13 – Legal Summary, [2015] ECHR 533
Bailii
European Convention on Human Rights
Human Rights
Human Rights, Insolvency
Updated: 30 December 2021; Ref: scu.547593