FORMER FOURTH SECTION

DECISION

Application no. 66433/13 DRUÅ TVO ZA VARSTVO UPNIKOV against Slovenia

The European Court of Human Rights (Former Fourth Section), sitting on 21 November 2017 as a Chamber composed of:

Vincent A. De Gaetano, President, András Sajó, Paulo Pinto de Albuquerque, Krzysztof Wojtyczek, Iulia Motoc, Gabriele Kucsko-Stadlmayer, Marko Bošnjak, judges, and Marialena Tsirli , Section Registrar ,

Having regard to the above application lodged on 16 October 2013,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

1 . The applicant, Društvo z a v arstvo u pnikov, is a Slovenian association based in Maribor. The applicant association was represented before the Court by Odvetniška pisarna Mayr & Pavlovič, a law firm practising in Ptuj.

2 . The Slovenian Government (“the Government”) were represented by their Agent, Ms J. Morela, State Attorney.

A. The circumstances of the case

3 . The facts of the case, as submitted by the parties, may be summarised as follows.

1. Background of the case

4 . The applicant association was founded in August 1996 by a large group of individuals (hereinafter also “the creditors”) who were amongst the clients of the private non-banking investment company Z. They had all made financial investments in the company, which had failed to meet its contractual obligations. The purpose of establishing the applicant association as a non-profit association was to pursue the joint interests of the creditors who had sustained losses which were due to the conduct of the company Z. and its owners.

5 . Following the formation of the applicant association, 1,484 creditors transferred their claims against the company Z. to the applicant association in order to authorise it to institute proceedings in respect of their claims. According to a standardised contract, on assignment of a claim the applicant association agreed, in the event of success in the proceedings, to transfer to the creditors a proportionate share of the joint amount awarded by the domestic courts, reduced for the costs of proceedings and taxes. Each creditor agreed to pay the applicant association an advance of 5,000 Slovenian tolars (SIT, approximately 25 euros (EUR)) for the costs of the proceedings, to be available to participate in proceedings, and to provide the applicant association with all the information and documentation requested.

2. The civil proceedings

6 . On 18 March 1997 the applicant association instituted proceedings against the two owners of the company Z. in respect of the claims of the above-mentioned 1,484 creditors before the Maribor District Court. The joint claim amounted to SIT 2,419,344,368.60 (approximately EUR 10,096,000).

7 . On 28 March 1997 the company Z. in liquidation requested to intervene on the side of the applicant association.

8 . On 18 May and 22 September 1998 the applicant association requested the court to schedule a hearing. On the latter date the applicant association also lodged a request for an interlocutory measure in respect of the property of the defendants.

9 . Between October 1998 and April 1999 the applicant association requested the court on four occasions to issue a decision on its request for an interlocutory measure.

10 . On 3 May 1999 the Maribor District Court upheld the request and issued the interlocutory order. The defendants objected.

11 . On 28 January 2000 the applicant association requested the court to schedule a hearing.

12 . On 7 November 2001 the first hearing was held before the Maribor District Court.

13 . On 7 March 2002 the Maribor District Court upheld in part the defendants ’ objection to the interlocutory order. All the parties appealed.

14 . On 2 September 2003 the Maribor Higher Court upheld the appeals in part, and modified the interlocutory order accordingly.

15 . On 2 July 2003 the applicant association requested that the case be given priority.

16 . On 13 November 2003 the Maribor District Court held a hearing at which it allowed the intervention of the company Z. in liquidation and decided to appoint a financial expert.

17 . On 1 July 2004 the court issued a formal decision appointing a financial expert.

18 . On 10 January 2005 the appointed expert requested additional information from the court in order to be able to prepare the opinion.

19 . On 1 December 2005 the expert reminded the court that she had not yet received the requested information.

20 . On 16 October 2006 the president of the Maribor District Court decided to give the case priority.

21 . On 21 February 2007 the applicant association lodged a supervisory appeal.

22 . On 7 March 2007 the appointed expert returned the case file to the Maribor District Court, stating that she could not prepare the opinion since the court had not provided her with access to the documents she had requested from the case file in the criminal proceedings which had been instituted against the defendants.

23 . On 29 May and 8 June 2007 the Maribor District Court held a further two hearings. On the latter date it issued its decision upholding the applicant association ’ s claim for the amount of EUR 9,855,235.19. The second defendant appealed, challenging, inter alia , the legal standing of the applicant association in respect of certain individual creditors ’ claims.

24 . On 6 August 2008 the Maribor Higher Court dismissed the appeal.

3. Proceedings concerning a claim for damages on account of the alleged delays in the above proceedings

25 . On 18 March 2008, after the judgment in respect of the first defendant had become final, the applicant association lodged an application for settlement with a view to reaching an agreement on just satisfaction on account of the delays in the civil proceedings with the State Attorney ’ s Office, as provided by the 2006 Act on Protection of the Right to a Trial without Undue Delay (“the 2006 Act”), claiming EUR 50,075.11 for non-pecuniary damage.

26 . On 28 May 2008 the applicant association amended its application for pecuniary damages and raised the amount of compensation claimed to EUR 74,200.

27 . On 29 January 2009, when the judgment in respect of the second defendant had become final, the applicant association requested the additional sum of EUR 74,200 for non-pecuniary damage.

28 . On 2 March 2009, following unsuccessful negotiations with the State Attorney ’ s Office, the applicant association lodged a claim with the Maribor District Court, seeking compensation in the amount of EUR 74,200 for non-pecuniary damage and EUR 158,136 for pecuniary damage incurred as a result of the length of the civil proceedings against the first defendant.

29 . On 18 September 2009 the Maribor District Court disjoined the proceedings in respect of pecuniary damage from the proceedings in respect of non-pecuniary damage, referring the latter to the Celje Local Court.

30 . On 3 March 2011 the Celje Local Court found that the applicant association ’ s right to a trial within a reasonable time had been violated in the civil proceedings at issue and awarded it compensation for non-pecuniary damage in the amount of EUR 2,880 and EUR 50.94 in respect of the costs of proceedings. In reply to the applicant association ’ s argument that the right to an expeditious trial had been breached not only in respect of the association but also of all the individual creditors who had transferred their claims to it, and that that fact should be taken into consideration in the determination of the compensation, the Local Court held that the individual creditors had not been parties to the civil proceedings and thus could not be considered victims of the violation of the “reasonable time” requirement. According to the Local Court, since the applicant association had acted on its own behalf and account, and not as a representative of the individual creditors, the latter ’ s rights could not have been violated in the civil proceedings.

31 . On 15 March 2011 the applicant association lodged an appeal. It argued, inter alia , that the court should have taken into account the fact that the proceedings in question actually concerned 1,484 individual claims, which had been joined solely to facilitate faster proceedings. It further argued that the ceiling of EUR 5,000 for non-pecuniary damages, as provided for in the 2006 Act, could not be considered sufficient in respect of the length of the present proceedings.

32 . On 12 October 2011 the Celje Higher Court upheld the applicant association ’ s appeal in part, raised the amount of compensation to EUR 4,500 and awarded the applicant association a further EUR 74.40 in respect of costs of proceedings. Emphasising that it had taken the courts in the civil proceedings almost five years to decide on the applicant association ’ s request for an interlocutory order, that the first hearing had been held four years after the civil action had been lodged, and that the first-instance judgment had been rendered ten years after the institution of the proceedings, the Higher Court did not consider the compensation awarded in the first instance to be sufficient. Nevertheless, the Higher Court confirmed that the number of individual members of the association was not a factor to be taken into account in determining the amount of compensation, stating that only the association had been a party to the civil proceedings and was, as such, entitled to compensation for the violation of the right to a trial within a reasonable time.

33 . On 29 December 2011 the applicant association lodged a constitutional complaint and an initiative for review of the constitutionality of section 16 of the 2006 Act, challenging the EUR 5,000 ceiling.

34 . On 23 April 2013 the Constitutional Court rejected both the constitutional complaint and the initiative for review of constitutionality of section 16 of the 2006 Act.

B. Relevant domestic law and practice

1. The 2006 Act

35 . Section 16, which provides for a compensatory remedy in cases of a violation of the right to a trial without undue delay, reads as follows:

“(1) Monetary compensation shall be payable for non-pecuniary damage caused by a violation of the right to a trial without undue delay. Strict liability for any damage caused shall lie with the Republic of Slovenia.

(2) Monetary compensation for individual finally resolved cases shall be granted in an amount of 300 to 5,000 euros.

(3) When deciding on the amount of compensation, the criteria referred to in section 4 of this Act shall be taken into account, in particular the complexity of the case, the actions of the State, the actions of the party, and the importance of the case for the party.”

36 . For a detailed presentation of the 2006 Act, see, inter alia , Žunič v. Slovenia , (dec.) no. 24342/04, §§ 16-26, 18 October 2007, and Žurej v. Slovenia (dec.), no. 10386/03, §§ 14-15, 16 March 2010.

2. The Associations Act (as applicable at the material time)

37 . According to section 2 of the Associations Act, an association is an organisation of people joined in pursuit of jointly determined interests. As regards its legal status, an association is a legal entity governed by private law whose purpose and tasks are defined by its charter. As regards the funding of an association, section 21 of the Associations Act provides that an association may acquire funding for its operation from different sources. Any surplus of income over expenditure may only be spent on activities for which an association was established, while any distribution of its assets between its members is deemed void.

COMPLAINTS

38 . The applicant association complained under Article 6 § 1 of the Convention that the civil proceedings at issue had been excessively lengthy, and that the compensation awarded by the domestic authorities for non-pecuniary damage sustained as a result was insufficient, having regard to the particularities of its case. Furthermore, relying on Article 13 of the Convention, the applicant association argued that the EUR 5,000 ceiling for compensation provided by the 2006 Act was not sufficient and appropriate.

THE LAW

A. Complaint under Article 6 of the Convention

39 . The applicant association complained that the length of the civil proceedings had been incompatible with the “reasonable time” requirement. It relied on Article 6 § 1 of the Convention which provides, in so far as relevant:

“In the determination of his civil rights and obligations ... everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal ...”

1. The arguments of the parties

(a) The Government

40 . The Government argued that the applicant association had lost the status of victim of the alleged violation within the meaning of Article 34 of the Convention, since it had been awarded compensation in the domestic proceedings in the amount of EUR 4,500 and a further EUR 74.60 for the costs of proceedings.

41 . They submitted that, in assessing the level of compensation that the applicant association had received in the domestic proceedings, the Court could not take into account the number of creditors who had transferred their claims to the applicant association. The applicant association was one single legal entity and the only party to the domestic proceedings in which it had not represented the aforementioned creditors but had been the sole plaintiff and had acted on its own behalf and on its own account, pursuing claims which had been transferred to it. The Government, relying on the agreements made by the applicant association with the individual creditors, pointed out that the agreements expressly provided that the applicant association had received the claims “for collection”, and argued that it had therefore become their sole owner. In this connection, they pointed out that according to Slovenian legal theory, a transfer based on “an assignment for the purpose of collection” ( odstop v izterjavo ) was complete, meaning that the transferred claims changed ownership. The Government further claimed that it was precisely for that reason that the applicant association had had legal standing in the domestic proceedings.

42 . The Government maintained that since the applicant association had been the only party to the domestic proceedings it was only the applicant association which had been the victim of the violation of the right to a trial within reasonable time, and not also its creditor members.

43 . Lastly, the Government dismissed the argument of the applicant association (see paragraph 45 below) that if it had divided the compensation among its members each of them would have received only EUR 3. They referred in this respect to section 21 of the Associations Act (see paragraph 37 above), according to which it was explicitly not allowed for an association to distribute profit between its members. The Government claimed that the relationship between the applicant association and its members should be separated from the relationship established through the conclusion of individual assignment agreements between the applicant association as the assignee and the members as the assignors.

(b) The applicant association

44 . The applicant association maintained that it was still a victim of the alleged violation, as it had not been awarded sufficient compensation. It submitted that its purpose and objectives, as laid down in its Statute, were to coordinate the recovery of its members ’ claims and to provide legal assistance in that regard. The applicant association had not instituted proceedings on its own behalf, but had lodged the claims on account of all the creditors who had transferred their claims to it for the purpose of collection. The agreements with the creditors were a form of assignment of claim whereby the claim had legally been transferred to the assignee for the purpose of collection of a claim by instituting judicial proceedings; however, in financial terms the claim remained with the initial creditor. Indeed, that type of assignment – which was known in the Slovenian legal order as assignment inkasso – had not been expressly provided for in domestic law at the time of the conclusion of the assignment agreements; however, contractual arrangements were governed by the principle of party autonomy, thus the contractual parties were not prevented from concluding such agreements.

45 . Therefore, the applicant association argued that in awarding compensation for the length of the proceedings the domestic courts should have taken into account the fact that it was actually representing 1,484 individuals, and that the right to a trial within a reasonable time had been violated in respect of all its creditor members who had transferred their claims to it for the purpose of collection of the claim. If divided among its members who had transferred their claims to it, each would have received only approximately EUR 3 in compensation.

46 . The applicant association further claimed that if the creditors had not behaved rationally in transferring their claims, the domestic courts would have been overwhelmed by 1,484 claims, lodged separately by each creditor, which would have further contributed to the length of the proceedings. If they had each separately claimed compensation for length of proceedings, they would also each separately have been awarded an amount of compensation comparable to that received by the applicant association on behalf of all of them.

47 . Finally, the applicant association dismissed the Government ’ s allegations (see paragraph 43 above) that it was not allowed to transfer its profit to its members. It argued that the cited provision of the Associations Act concerned the financing of an association. The compensation awarded to it in judicial proceedings could however not be considered as the association ’ s profit since it was, on the basis of contractual agreements, obliged to divide the compensation between the members who had transferred their claims to it.

2. The Court ’ s assessment

48 . The Court notes that the present case raises the issue of whether the applicant association can still claim to be a victim of the alleged violation of Article 6 § 1 of the Convention, considering that it had been awarded compensation for non-pecuniary damage in the amount of EUR 4,500 by the domestic courts.

49 . In this connection, the Court reiterates that a decision or measure favourable to an applicant is not in principle sufficient to deprive him of his status as a “victim” unless the national authorities have acknowledged, either expressly or in substance, and then afforded redress for, the breach of the Convention (see, for example, Cocchiarella v. Italy [GC], no. 64886/01, § 71, ECHR 2006-V ).

50 . The Court observes that the Celje Local Court had expressly acknowledged that there had been a breach of the applicant association ’ s right to a trial within a reasonable time in the civil proceedings at issue (see paragraph 30 above) and, accordingly, awarded it compensation under the 2006 Act. The Celje Higher Court confirmed the ruling on the merits and increased the amount of compensation awarded in the first instance (see paragraph 32 above). In the Court ’ s opinion such an acknowledgment satisfies the first condition laid down in the Court ’ s case-law.

51 . The applicant association ’ s status then depends on whether the redress afforded was adequate and sufficient having regard to just satisfaction as provided for under Article 41 of the Convention (see, among other authorities, Scordino v. Italy (no. 1) [GC], no. 36813/97, §§ 178-213 , ECHR 2006 ‑ V , and Cocchiarella , cited above, §§ 72-98).

52 . Turning to this second condition, the Court notes that the applicant association was awarded EUR 4,500 as compensation for the length of civil proceedings which lasted more than eleven years at two levels of jurisdiction (see paragraph 32 above). In order for the Court to be able to answer whether this amount might be regarded as appropriate and sufficient, it must first ascertain whether a case involving multiple claimants joined in an association which acts as a single party to the proceedings should be dealt with in the same manner as cases involving one individual claimant; or, alternatively, whether the interests of individual members of the association should be taken into account for the purposes of determining the amount of just satisfaction for non-pecuniary damage arising from the violation of the “reasonable time” requirement.

53 . As regards the awards of compensation in cases involving multiple applicants, the Court held in the cases of Arvanitaki-Roboti and Others v. Greece and Kakamoukas and Others v. Greece ([GC] nos. 27278/03 and 38311/02 respectively, 15 February 2008) that, where common proceedings have been found to be excessively long, it must take account of the manner in which the number of participants in such proceedings may influence the level of distress, inconvenience and uncertainty affecting each of them. Thus, a high number of participants will very probably have an impact on the amount of just satisfaction to be awarded in respect of non-pecuniary damage. Such an approach is based on the fact that the number of individuals participating in common proceedings before the domestic courts is not neutral from the perspective of the non-pecuniary damage that may be sustained by each of them as a result of the length of those proceedings when compared with the non-pecuniary damage that would be sustained by an individual who had brought identical proceedings on an individual basis. Membership of a group of people who have resolved to apply to a court on the same factual or legal basis means that both the advantages and disadvantages of common proceedings will be shared. In addition, where joint proceedings are handled and coordinated by the same representative, the costs and fees are usually lower for each applicant than they are in the case of proceedings brought by an individual, which simplifies the process of applying to the courts. Equally, the grouping together of applications usually enables a court to join related cases and may thus facilitate the proper administration of justice; it may also enable proceedings to be conducted more speedily. At the same time however, these last characteristics of common proceedings may in turn give rise on the part of the persons concerned to an expectation that the State will act diligently in dealing with their case. Unjustified delay in this area is therefore likely to exacerbate any prejudice sustained (see Arvanitaki-Roboti and Others , cited above, § §§ 29-30 , and Kakamoukas and Others , cited above, § §§ 41-42 ).

55 . It is true that the applicant association was established with the sole purpose of recovering the individual creditors ’ claims (see paragraph 4 above) and does not appear to have any aim beyond responding to its members ’ joint interests. In this context, the Court notes that the creditors concluded agreements by which they transferred their claims to the association; the latter was, in turn, to transfer to each of the creditors a proportionate share of the amount obtained in the civil proceedings (see paragraph 5 above). Given the nature of the relationship between the applicant association and its individual members, the Court can accept that while the individual claims were legally assigned to the applicant association, in terms of their financial value they indeed remained with the initial creditors.

56 . However, the creditors did not bring individual cases against company Z. Hence the main point of contention between the parties that the Court is called upon to decide is precisely whether there exist compelling reasons to take into account the individual creditors ’ position and interests in the determination of the amount of compensation for the excessive length of proceedings in which they did not participate.

57 . In this connection, the Court would first emphasise that the creditors were free to choose whether they would each institute a separate set of proceedings or, for their convenience, transfer their claims to an association. They chose to do the latter, instead of, for example, bringing separate claims through a joint representative acting on behalf of each of them individually. By doing so, they explicitly agreed not to be a party to the proceedings and not to be directly involved in them, even though these proceedings affected their civil rights. They also accepted both the positive and negative implications of their decision to attempt to obtain (at least partial) repayment of their investments by transferring the claims to a different entity.

58 . As regards the latter ’ s characteristics, the applicant association has a separate and distinct legal status from its members (see paragraph 37 above), similarly to that of a company and its shareholders. However, in the Court ’ s opinion, it is not necessary to examine in detail to what extent the relationship of a company and its shareholders may be compared with that of the applicant association and its members, given that the applicant association does not call into question a distinction which is, in principle, made between the rights of a corporation and those of its members (in this regard see, for example, Agrotexim and Others v. Greece , 24 October 1995, §§ 65-66, Series A no. 330 ‑ A). Nevertheless, the Court reiterates that an act infringing only the company ’ s rights does not involve responsibility towards its shareholders, even if their interests are affected (see Olczak v. Poland (dec.), no. 30417/96, § 59, ECHR 2002 ‑ X (extracts)).

59 . In the context of the present case it was argued by the applicant association that the particular features of the assignment agreements by which the individual creditors had transferred their claims to the association justified taking into account their individual interests. However, it cannot be overlooked that any particularities regarding the transfer of the claims concerned solely the internal relationship between the applicant association and its members, while the association operated as a separate entity with its own legal rights and obligations in its relations with third parties and in judicial proceedings. This is further confirmed by the Government ’ s submission that an award for non-pecuniary damage arising from a violation of the applicant association ’ s right to a trial within a reasonable time could not be divided among its members (see paragraph 43 above). In this connection, even assuming that, as claimed by the applicant association (see paragraph 47 above), a judicial award was not to be considered as the association ’ s profit – which under the national law could not be divided –, the Court cannot consider the applicant association as merely an aggregate of its members ’ individual interests. The very nature of its existence as a separate legal personality meant that the interests claimed in the civil and the ensuing compensation proceedings were perceived and decided by the domestic courts as its own interests. In this light, the Court considers that the applicant association could not legitimately expect those same interests to be taken into account twice; once as its own interests, and once as the interests of its members.

60 . Therefore, the Court finds that the manner in which the amount of just satisfaction for non-pecuniary damage caused by excessive length of civil proceedings was determined in the compensation proceedings at issue, that is without taking account of the interests of individual members of the applicant association, did not contravene the requirements of Article 6 § 1 of the Convention.

61 . Turning to the actual sum awarded to the applicant association by the domestic courts, the Court notes that the compensation granted in the present case is lower compared with the sums awarded for comparable delays in the Court ’ s case-law. In such circumstances, the Court can accept the amount awarded to the applicants in so far as it is not manifestly unreasonable having regard to what the Court generally awards in similar cases against the respondent State (see, a contrario , Cocchiarella , cited above, §§ 106 and 107). Whether the amount awarded may be regarded as reasonable, however, falls to be assessed in the light of all the circumstances of the case. These include not merely the duration of the proceedings in the specific case but the value of the award judged in the light of the standard of living in the respondent State, and the fact that under the national system compensation will in general be awarded and paid more promptly than would be the case if the matter fell to be decided by the Court under Article 41 of the Convention. The domestic procedures are also closer and more accessible than the proceedings before the Court and are processed in the applicant ’ s own language, they thus offer an advantage that needs to be taken into account (see Cataldo v. Italy (dec.), no. 45656/99, 3 June 2004, and Zajc and 4 Others v. Slovenia , nos. 13992/03, 33814/03, 37190/03, 3088/03 and 38847/04, § 38, 6 May 2008).

62 . In the light of the material in the file and having regard to the particular circumstances of the case, the Court considers that the sum awarded to the applicant association can be considered sufficient and therefore appropriate redress for the violation suffered.

63 . The Court therefore concludes that the applicant association can no longer claim to be a “victim”, within the meaning of Article 34 of the Convention, of the alleged violation of its right to a trial within a reasonable time.

B. Complaint under Article 13 of the Convention

65 . The applicant association considered that the statutory ceiling of EUR 5,000 provided for by section 16 of the 2006 Act rendered any remedy against the length of proceedings ineffective in the circumstances of its case.

66 . It invoked Article 13 of the Convention, which reads as follows:

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity. ”

67 . The Court reiterates that Article 13 requires the State to provide an effective legal remedy to deal with the substance of an “arguable complaint” under the Convention and to grant appropriate relief (see Sürmeli v. Germany [GC], no. 75529/01, § 98, 8 June 2006). Considering that the complaint about the excessive length of the proceedings is inadmissible, the Court finds that the applicant association did not have an arguable claim for the purposes of Article 13, which is therefore not applicable to its case.

68 . It follows that this part of the application is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3, and must be rejected pursuant to Article 35 § 4.

For these reasons, the Court, by a majority,

Declares the application inadmissible.

Done in English and notified in writing on 14 December 2017 .

Marialena Tsirli Vincent De Gaetano Registrar President