Lexploria

AS TO THE ADMISSIBILITY OF

Application No. 27917/95

by J.W.

against Poland

The European Commission of Human Rights sitting in private on

11 September 1997, the following members being present:

Mr. S. TRECHSEL, President

Mrs. G.H. THUNE

Mrs. J. LIDDY

MM. E. BUSUTTIL

G. JÖRUNDSSON

A.S. GÖZÜBÜYÜK

A. WEITZEL

J.-C. SOYER

H. DANELIUS

F. MARTINEZ

C.L. ROZAKIS

L. LOUCAIDES

J.-C. GEUS

M.P. PELLONPÄÄ

B. MARXER

M.A. NOWICKI

I. CABRAL BARRETO

N. BRATZA

J. MUCHA

D. SVÁBY

G. RESS

A. PERENIC

C. BÎRSAN

P. LORENZEN

K. HERNDL

E. BIELIUNAS

E.A. ALKEMA

Mrs. M. HION

MM. R. NICOLINI

A. ARABADJIEV

Mr. H.C. KRÜGER, Secretary to the Commission

Having regard to Article 25 of the Convention for the Protection

of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 6 June 1995 by

J.W. against Poland and registered on 20 July 1995 under file No.

27917/95;

Having regard to:

- the reports provided for in Rule 47 of the Rules of Procedure of

the Commission;

- the observations submitted by the respondent Government on

24 June 1996 and the observations in reply submitted by the

applicant on 10 September 1996;

Having deliberated;

Decides as follows:

THE FACTS

The applicant, a Polish citizen born in 1938, is a businessman

residing in Nysa. He is executive director of a limited liability

company "Janwit". Before the Commission he is represented by Mr.

Leszek Kobylinski, a lawyer practising in Nysa.

The facts of the case, as submitted by the parties, may be

summarised as follows:

In 1989 the applicant obtained a permission from the President

of the Foreign Investment Agency to establish a limited liability

company with a foreign partner. The permission provided that the

applicant would own 40 per cent of shares in the company, another

shareholder W.W. 40 per cent and a third shareholder A.S. 20 per cent.

It transpires from a list of shareholders, dated 14 October 1992,

submitted to the register of limited liability companies at the local

court, that at the time the capital of the company was 2.176.365.000

zlotys, out of which the applicant owned shares in a sum of

1.197.000.000, W.W. 544.092.000 zlotys and a third shareholder H.S.

435.273.000 zlotys.

On 24 June 1994 the Supreme Administrative Court (Naczelny S*d

Administracyjny), Wroclaw Division, quashed the decision of the

President of the Main Customs Office of 10 November 1993 as well as the

preceding decisions of the Director of the Wroclaw Customs of

24 June 1991, 12 July 1991 and 27 July 1991. The Court observed that

the applicant's company had been created under the 1988 Act on Foreign

Investment and by virtue of the 1989 Foreign Investment Agency's permit

it had been exempted for three years from an obligation to pay customs

duty on imported machinery, equipment and other supplies imported in

the exercise of the company's business as set out in the 1989 permit.

The 1988 Act was replaced by the 1991 Act on Foreign Investment. The

customs duty exemptions granted for three years in the permits issued

under the 1988 Act remained valid even after the 1991 Act came into

force. The Court relied in this respect on the Supreme Court's

resolution of 29 July 1993 (III AZP 7/93). The Court considered that

the customs duty exemption, precisely because of its exceptional

character, should be interpreted neither restrictively nor extensively.

The customs authorities in the decisions imposing customs duty on the

applicant's company under the 1991 Act proceeded from the assumption

that "other supplies needed for the company's business" referred to in

Article 37 of this Act had not included imported goods meant for

resale. The Court concluded that these decisions had been unlawful as

they had been based on a restrictive interpretation of the scope of the

1991 exemption as compared to the 1988 exemption.

Subsequently the President of the Central Tax Office filed a

request with the Minister of Justice to have an extraordinary appeal

brought on his behalf and the Minister filed such an appeal.

In the reply to the extraordinary appeal the applicant's company

pointed out that the arguments submitted by the Minister of Justice

disregarded entirely the Supreme Court's resolution of 1993, relied on

by the Supreme Administrative Court in the impugned judgment.

It transpires from a copy of the relevant entry in the register

of companies, dated 28 December 1994, that at that time the applicant

held the post of executive director and that the capital of the company

remained unchanged.

For 25 January 1995 two hearings were set before the Supreme

Court (S*d Najwyzszy) in two cases concerning the applicant's company:

one at 10 a.m. , concerning the case ARN 78/95, and the other at 10.30

a.m. in the present case ARN 79/95.

The submissions of the parties diverge at this point as to

whether a hearing was held in the case. The applicant submits that on

25 January 1995 the lawyer F.P., who represented the company in both

cases, participated in the first hearing at 10.00. The Court opened

the hearing. The judge rapporteur presented the case to the Court and

heard the parties in the first case. No hearing was held in the second

case and another lawyer, also representing the company in the latter

case, was not heard.

The Government submit that the Court first held a hearing in the

case ARN 78/95. Subsequently, having regard to the fact that in both

cases there were the same parties and a similar factual and legal

background, the President of the Court announced that the second case

would be examined. Apparently the Court later held deliberations

jointly for both cases. The representative of the applicant's company

did not object thereto.

On the same day the Supreme Court pronounced the judgment. It

found that the judgment of the Supreme Administrative Court had

misconstrued the meaning of Article 37 of the 1991 Foreign Investment

Act. In its judgment the Supreme Administrative Court had unduly

extended the scope of the original 1989 tax exemption to all goods

imported in the exercise of the applicant's company's business, whereas

the tax exemption was intended to cover only investment goods. The

Court considered that regard had to be had to the purpose of Article 37

of the 1991 Act which was a transitory provision. The purpose of

transitory provisions normally is to regulate the status of situations

which originated from the preceding law in the same field. This was

also the purpose of Article 37, which dealt with the tax exemptions

granted by virtue of the 1988 Act. Consequently, this Article could

not have been construed, as the Supreme Administrative Court had done,

so as to grant to the companies founded under the 1988 Act more

extensive tax exemptions than those already granted under this Act.

On 30 January 1995 the applicant, in his capacity of executive

director of the company, complained to the Court that the judgment had

been pronounced without a public hearing, contrary to the relevant

provisions of the Code of Civil Procedure. On 20 March 1995 and

18 April 1995 the applicant reiterated his complaint as the letter of

30 January 1995 remained unanswered.

Apparently on 7 June and 10 August 1995 the Registry of the

Supreme Court informed the applicant that his complaints as to the lack

of a hearing were unfounded as there was a practice that cases similar

as to their legal and factual background were considered jointly and

that a hearing had been held in the case.

In a letter of 19 October 1995 to the President of the Supreme

Court the applicant complained that the provisions of the Code of Civil

Procedure had been breached in that the judge rapporteur had failed to

open the hearing and to present the case to the court. The applicant's

company had been represented by one lawyer in both cases and by

another lawyer in the second case. In view of the fact that the second

case was not presented to the Court, the second lawyer was not asked

to participate in the hearing. The "practice" referred to in the

letters of the Registry was clearly contrary to the law.

In a letter of 27 November 1996 the Registry of the Supreme Court

informed the applicant's company that in the light of the relevant

legal provisions there was no remedy against the judgment of the

Supreme Court issued as a result of an extraordinary appeal. Therefore

his complaints could not be examined.

COMPLAINTS

The applicant complains under Article 6 of the Convention that

he did not have a fair hearing as in the proceedings instituted by the

extraordinary appeal of the Minister of Justice the Supreme Court did

not hold a public hearing and the case was thus decided without the

applicant being heard.

The applicant complains under Article 1 of Protocol No. 1 to the

Convention that the impugned judgment deprived him of his property

rights in that he had to pay customs duties from which he had

previously been granted exemption. He submits that the judgment was

unlawful as the Supreme Court arbitrarily interpreted the relevant

legal provisions, in a manner contrary to their obvious meaning.

PROCEEDINGS BEFORE THE COMMISSION

The application was introduced on 6 June 1995 and registered on

20 July 1995.

On 9 April 1996 the Commission decided to communicate the

application to the respondent Government.

The Government's written observations were submitted on

24 June 1996. The applicant replied on 10 September 1996.

THE LAW

1. The applicant complains under Article 6 (Art. 6) of the

Convention that he did not have a fair hearing as in the proceedings

instituted by the extraordinary appeal of the Minister of Justice the

Supreme Court did not hold a public hearing.

The applicant further complains under Article 1 of Protocol No. 1

(P1-1) to the Convention that the impugned judgment deprived him of his

property rights in that he had to pay customs duties from which he had

previously been granted exemption.

Article 6 (Art. 6) of the Convention, insofar as relevant,

provides:

"1. In the determination of his civil rights and

obligations ... everyone is entitled to a fair and public

... hearing ..."

Article 1 of Protocol No. 1 (P1-1) to the Convention reads:

"Every natural or legal person is entitled to the peaceful

enjoyment of his possessions. No one shall be deprived of

his possessions except in the public interest and subject

to the conditions provided for by law and by the general

principles of international law.

The preceding provisions shall not, however, in any way

impair the right of a State to enforce such laws as it

deems necessary to control the use of property in

accordance with the general interest or to secure the

payment of taxes or other contributions or penalties."

The Government first address the issue of the applicability of

Article 6 (Art. 6) of the Convention to the proceedings concerned. As

in the present case proceedings as to the determination of customs

duties were concerned, they did not, according to the established case-

law of the Convention organs, concern "civil rights and obligations"

within the meaning of Article 6 para. 1 (Art. 6-1) of the Convention

(No. 9908/92, Dec. 4.5.83, D.R. 32, p. 266). The Government conclude

that Article 6 (Art. 6) of the Convention is not applicable.

The applicant submits that the Government's argument as to the

inapplicability of Article 6 (Art. 6) of the Convention to the

proceedings concerned is erroneous. The imposition of customs duty in

the present case cannot be regarded as having the same character as

imposition of taxes, i. e. a public administrative duty, regard being

had to the fact that the applicant's company had been exempted from the

customs duty.

As to the substance of the complaint under Article 6 para. 1

(Art. 6-1) of the Convention, the Government submit that the

applicant's case before the Supreme Court was examined by an impartial

and independent court at a public hearing, with the applicant being

represented by a lawyer. The Government conclude that, even assuming

that Article 6 (Art. 6) of the Convention would be applicable to the

proceedings concerned, the guarantees of this provision of the

Convention were complied with.

The applicant submits that in fact the Supreme Court did not hold

a hearing, but decided the present case only on the basis of analogy

with the previous case. The Government's submissions as to a hearing

having been held are supposedly based on the judges' declarations, but

have not been substantiated by any document. The minutes of the

Supreme Court did not reflect the actual course of events.

As regards the complaint under Article 1 of Protocol No. 1 (P1-1)

to the Convention, the Government submit that the power of appreciation

of the Contracting States as regards the matters of taxation is a wide

one (No. 13013/87, Wasa Liv Ömsesidigt and others v. Sweden, Dec.

14.12.88. D.R. 58 p. 163). Further, the applicant has not shown that

the imposition on him of the tax concerned deprived him of any property

right as the anticipation or expectation of being exempted from an

obligation to pay customs duty cannot be regarded as a property right.

Under the Supreme Court's case-law it was established that in

circumstances similar to the applicant's case the relevant provisions

did not guarantee any tax exemption. Consequently, the relevant tax

matters do not fall within the ambit of Article 1 of Protocol No. 1

(P1-1) to the Convention.

However, the Government continue, if the Commission considered

that this was to be the case, in the present case the interference

complained of was justified under Article 1 of Protocol. No. 1 (P1-1)

to the Convention, second sentence.

The applicant submits that the Government's submissions in this

respect are contradictory in that they first rely on the argument that

the applicant had no property right which could have been interfered

with by the impugned decisions, and at the same time argue that under

the margin of appreciation in matters of taxation the decisions

concerned were in compliance with Article 1 of Protocol No. 1 (P1-1)

to the Convention. Moreover, the Government failed to show that these

decisions were in accordance with the law, as required by this

provision. Regard must be had in particular to the fact that the

related matters gave rise to considerable interpretation difficulties

in the practice of the tax authorities, the Supreme Administrative

Court and the Supreme Court and that a significant body of case-law,

often divergent, had been developed. Thus, the Government's argument

that there is established case-law is far from being correct.

However, the Commission is not required to examine those

arguments since the application is, in any event, inadmissible for the

following reasons.

The Government submit that it transpires from the documents

submitted by the applicant that he owns 40 per cent of the shares in

the company "JANWIT". They emphasise that it does not transpire

clearly from the application whether the applicant has lodged the

application in his own name or in the name of the company. If it was

the former case, he should have clearly stated that he lodged the

application in his own name as one of the shareholders. In the latter

case, he should have shown that he is authorised to act on behalf of

the company.

The Government further refer to the Convention organs' case-law,

according to which the word "victim", in the context of Article 25

(Art. 25) of the Convention, means the person who is personally

affected by the act or omission at issue. In reaching the conclusion

that in certain cases the applicants can claim to be victims of a

violation, the Commission took into account the number of shares

possessed by them, in principle rejecting those applications in which

the applicants were minority shareholders. This aspect provides an

important, objective indication, but other considerations may also be

relevant, regard being had to the specific circumstances of each case.

The Government further submit that the present case is identical

to these cases. They state that the judgment concerned did not oblige

the applicant to pay the customs duty himself. Consequently, he cannot

claim to be a victim of a breach of the Convention or its Protocols.

Furthermore, the applicant has not shown that he sustained any

financial prejudice as a result of the impugned judgment. The latter

argument applies with all the more force as the applicant has not shown

that the value of his shares diminished.

The Government further submit that it should not be disregarded

that the applicant and the limited liability company "Janwit"

constitute separate legal entities. The rights guaranteed by the

Convention and its Protocols which were allegedly breached in the

proceedings concerned were the rights of the company, not those of the

applicant. Likewise, the proceedings before the Supreme Court

concerned the company and not the applicant, who was not a party

thereto. Moreover, the applicant has not shown that as a result of the

impugned decisions he suffered a financial loss so severe that it could

fall within the ambit of Article 1 of Protocol No. 1 (P1-1) to the

Convention.

The Government conclude that the application should be declared

inadmissible for being incompatible ratione personae with the

Convention.

The applicant submits that he has lodged the application in his

own name and also as the company's executive director being the only

person competent to represent it and to act on its behalf. The

property structure of the company and the actual ownership of the

shares are of no significance for the case. The applicant's counsel

represents both the company and the applicant himself.

The applicant further submits that he is personally affected by

the decisions concerned as it is his personal property which

constitutes the basis of the company's capital. The applicant is

prepared to demonstrate the exact extent of pecuniary loss suffered by

him as a result of the decisions concerned. Regard must be had to the

fact that under Polish law the applicant is liable with his entire

personal property for the customs obligations of the company. The

Government's statement that the applicant is a minority shareholder is

erroneous.

The Commission recalls that as regards the locus standi of

shareholders of limited liability companies before the Convention

organs, in particular in respect of complaints under Article 1 of

Protocol No. 1 (P1-1) to the Convention, the Court held that the fall

in the value of the shares cannot be automatically considered as

conferring locus standi on the shareholders. To adopt such position

would be to run the risk of creating difficulties in determining who

is entitled to apply to the Strasbourg institutions, regard being had

to possible differences of positions and interests between the

shareholders. This would also engender considerable problems

concerning the requirement of exhaustion of domestic remedies.

Concerned to reduce such risks and difficulties the Court considered

that the piercing of the corporate veil or the disregarding of a

company's legal personality would be justified only in exceptional

circumstances, in particular where it was clearly established that it

was impossible for the company to apply to the Convention institutions

through the organs set up under its articles of incorporation (Eur.

Court HR, Agrotexim and others v. Greece judgment of 24 October 1996,

paras. 65-66).

The Commission observes that it is true in the light of documents

pertaining to the company's legal status that the applicant is the

executive director of the company, competent to act on its behalf.

However, his intention to act in the present case in the name of the

company has not been established with sufficient clarity. In his first

letter to the Commission the applicant has clearly stated that he has

lodged the application in his own name. Further, in his letters of 30

October 1995 and 10 December 1995 he referred to the case under his own

name. It was only in his reply of 10 September 1996 to the

Government's observations that he referred to the case jointly under

his own name and that of the company. The Commission thus considers

that it clearly transpires therefrom that the applicant has lodged the

application in his own name and added on the name of the company only

after it became apparent that the issue of whether he can claim to be

a victim of the alleged violations emerged in the course of the

proceedings. The Commission further considers that the applicant was

not a party to the proceedings before the Supreme Court, but the

company was. Further, he has not shown that either he or the company

sustained an excessive financial prejudice as a result of the decisions

concerned, in particular in that the value of the company's capital has

decreased.

The Commission concludes therefore that under Article 25

(Art. 25) of the Convention the applicant cannot claim to be a victim

of a violation of the Convention. It follows that the application must

be rejected in accordance with Article 27 para. 2 (Art. 27-2) of the

Convention.

For these reasons, the Commission, by a majority,

DECLARES THE APPLICATION INADMISSIBLE.

H.C. KRÜGER S. TRECHSEL

Secretary President

to the Commission of the Commission

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J.W. v. POLAND

J.W. v. POLAND