THIRD SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 38841/97

by Georgios KLAVDIANOS

against Greece

The European Court of Human Rights ( Third Section ) sitting on 21 September 1999 as a Chamber composed of

Sir Nicolas Bratza, President ,

Mr C. Rozakis, Mr J.-P. Costa, Mr L. Loucaides, Mr P. KÅ«ris, Mr W. Fuhrmann, Mrs H. S. Greve, Judges

with Mrs S. Dollé, Section Registrar ;

Having regard to Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 25 November 1997 by Georgios Klavdianos against Greece and registered on 2 December 1997 under file no. 38841/97;

Having regard to the report provided for in Rule 49 of the Rules of Court;

Having regard to the observations submitted by the respondent Government on 13 January 1999 and the observations in reply submitted by the applicant on 8 March 1999 and 20 August 1999;

Having regard to the parties' oral submissions at the hearing on 21 September 1999;

Having deliberated;

Decides as follows:

THE FACTS

The applicant is a Greek citizen, born in 1943. He is a civil engineer and resides in Athens. Before the Court the applicant is represented by Mr Nikos Alivizatos, professor of law at the University of Athens and member of the Athens Bar, and Mr Nikos Stavropoulos, lecturer at Mansfield College, Oxford, and member of the Athens Bar.

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

A. Particular circumstances of the case

From 1973 to 1984 the applicant was employed in Nigeria by the joint venture ( κoιvoπραξία ) EDOK-ETER, which was at the time the largest Greek construction consortium, specialising in public works.

The joint venture comprised two partners, the limited companies "EDOK S.A." and "ETER S.A.". It was agreed that the joint venture would be managed by the applicant's father, who had interests in EDOK, and another person, Mr N.S., who had interests in ETER. The managers had full and unrestricted powers over the management of the joint venture and therefore of its members. The members' offices, warehouse and equipment were pooled. In 1969, it was further agreed that the members of the joint venture were prohibited from undertaking any activity whatsoever independently or with a third party. The joint venture was liable throughout for debts arising out of its activities.

In March 1984 the applicant, succeeding his father whose engineering licence expired due to his age, was appointed as Chairman of the Board of Directors and Managing Director of EDOK. He continued, nevertheless, to work and reside in Nigeria most of his time (where he had lived since 1974) until 1985, just before the joint venture collapsed. According to a document issued by the Athens Prefecture, on the request of the Government, in 1985 the applicant held 50 400 shares out of a total of 336 000, that is 15 % of the stock.

In 1985, following the oil crisis in the Middle East and the Iran-Iraq war, the joint venture started facing major financial problems, aggravated by the joint venture's employees blockade of its headquarters, which began in late December 1985, and the National Bank of Greece's reneging on an original agreement to refinance and rescue the joint venture. Consequently, all members of the board of directors of EDOK resigned, one by one, beginning in March 1986. The company's board quickly lost its quorum, and thereby its capacity to be legally represented. The applicant was the last to resign on 12 May 1986. The venture's creditors petitioned for bankruptcy on 9 May 1986 and the hearing of the petition before the First Instance Court ( Πoλυμελές Πρωτoδικείo ) of Athens was held on 21 May 1986.

On 16 June 1986 the First Instance Court found the venture bankrupt, the consequences of which were, according to Greek law, the bankruptcy and dissolution of EDOK and ETER. The proceedings concerning the liquidation of the assets of both the joint venture and its partners are still pending.

On 23 September 1986, following a decision of the competent Tax Office, an order to seize the applicant's house in Athens ( έκθεση αvαγκαστικής κατάσχεσης ) was issued in respect of a debt of 25 000 964 drachmas, which corresponded to income tax retained by EDOK out of employees' salaries from 1983 to 1985. According to Greek law, managing directors of Greek limited companies are held personally responsible for the payment of taxes owed by their companies (see below "Relevant domestic law").

On 30 September 1986 the applicant challenged ( αvακoπή ) this order. In particular, the applicant claimed that he could not be held responsible for the payment of this debt, first because he had resigned from the Board of Directors before the dissolution of EDOK and, secondly, because this debt had arisen prior to his nomination as its Managing Director. By decision No. 2447/1987 the First Instance Administrative Court ( Μovoμελές Διoικητικό Πρωτoδικείo ) of Athens dismissed the applicant's claims.

On 22 December 1986 the State issued a liquidation schedule, in order to liquidate the applicant's property through enforced auction. On 10 February 1987 the applicant applied to suspend and correct the auction schedule but on 24 February the Athens Administrative Court of First Instance (Interim Measures Chamber) dismissed the application. The State further secured its claim by mortgages on the applicant's property.

On 20 May 1987 the applicant appealed against this decision.

On 30 June 1988 the First Instance Administrative Court of Athens, acting as an appeal court ( Τριμελές Διoικητικό Πρωτoδικείo ), granted the applicant's appeal and held that the order to seize his house was invalid. In particular the Court held that the resignation of the applicant from the Board of Directors of EDOK before its dissolution led automatically to his removal from the post of Managing Director. Therefore he could not be held responsible for the payment of the company's debts. In addition, the Administrative Court valued a plot of land owed by EDOK at a minimum of 23 billion drachmas (GRD) and granted permission for the sale of that land free of the restrictive rules governing enforced public auctions.

On 25 July 1988 the Greek State appealed against this decision ( αίτηση αvαίρεσης ) to the Supreme Administrative Court ( Συμβoύλιo της Επικρατείας ).

On 21 October 1996 the five-member bench of the competent Chamber of the Supreme Administrative Court, being deeply split among its voting members as to the interpretation of the relevant legislation and the decision to be taken, decided to refer the case to the seven-member bench of the Chamber.

In his memoranda to the Supreme Administrative Court, the applicant submitted that an extensive interpretation of Article 10 of Law N o 542/1977 would not be permissible given the exceptional and detrimental nature of that provision. He emphasised that such an interpretation leads to severe infringements of civil rights, as in his case, and deplored inter alia the fact that the seizure was effected on his personal property and, in particular, his family residence. He added that the criteria for interpreting and applying the law should not only be the need of the State to collect taxes, but also “the need to protect the individual right of a citizen not to take part in an activity when he does not wish to do so; consequently, the decision of the company's constitutive organ which elected a general manager for one year should not be distorted”. He also stated that he had been “subjected for 12 years to terrible repression - with incessant prosecutions, the seizure of his property, a prohibition on emigration, the threat of detention and a denial of a tax status certificate”. Finally, he pointed out that “no-fault liability was incompatible with the law of a member State of the European Union” and wondered whether “a foreign national, who undertakes the management of Greek companies, would be persecuted in case of a liquidation, by the seizure of his personal property abroad, for debts to the Greek State”.

On 26 May 1997 the Supreme Administrative Court held, by five votes to two, that a manager of a company who has resigned prior to its dissolution continues to be liable if at the time of dissolution the new management has not taken office. To hold otherwise would be to leave the company's manager, who presumably knows the state of the company's business best, free to resign and avoid his liability during the crucial period. Such a release was obviously not intended by Article 17 of Law n o 3843/1958 (as replaced by Article 10 of Law N o 542/1977), whose aim is to secure the State's claims. Consequently, the Supreme Administrative Court quashed the disputed decision and referred the case back to the First Instance Administrative Court of Athens for further consideration. The case is still pending before this court where the hearing has been adjourned four times (on 5 May 1998, 20 November 1998, 19 February 1999 and 7 May 1999 and finally until 1 October 1999) on the applicant's request and in view of the decision of the European Court.

Two judges, in the minority of the Supreme Administrative Court judgement, expressed the opinion that “the State, for the protection of its interests, ought to pursue its claims in good time, seeking the persons liable as above, not the persons who happen to be managing the limited company when the said claims are pursued, bearing in mind that any interpretation to the contrary would lead to the imposition of a quasi-objective liability, something the legislator would have expressly provided for, should it have wanted to, which is not the case”.

The applicant claims that from 1985 onwards he faced more than 250 charges for EDOK's debts and had to appear 634 times before criminal, civil and administrative Courts. He stresses that he was cleared of all possible criminal charges connected with the debt in question.

On 30 April 1998, the Court of Appeal of Athens, in a decision appointing the National Bank of Greece as the receiver, found that the total confirmed and finally accepted claims by the State against EDOK by that date amounted to approximately 212 000 000 GRD, dismissing arguments to the contrary.

B. Relevant domestic law

Article 10 of Law No. 542/1977 reads as follows:

"Directors, administrators or managing directors and liquidators, who are in charge of Greek limited companies ( αvώvυμες εταιρίες ) at the time of their dissolution or merger, are personally and jointly liable for the payment of taxes owed by these companies irrespective of the time of assessment of the said taxes."

COMPLAINTS

1. The applicant complains that the seizure of his house in order to secure the payment of a debt owed by a company from which he had resigned before its dissolution violates his right to property, in breach of Article 1 of Protocol No. 1. The applicant also complains that he was discriminated against in the enjoyment of his rights on the ground of nationality, in breach of Article 14 of the Convention. In particular the applicant notes that Law No. 542/1977 refers to managing directors of Greek limited companies only. Should he have been the manager of a non-Greek corporation operating in Greece, his house would not have been seized in order to secure the payment of this company's debts.

2. The applicant further complains that despite his resignation he was compelled to remain in office against his will. He relies on the interpretation of Article 10 of Law No. 542/1977 in the binding decision of the Supreme Administrative Court, which implies that, as regards the payment of taxes owed by Greek limited companies, resigning managing officers ought to be considered as remaining in place until new managers take office. In the applicant's view this amounts to forced or compulsory labour, in breach of Article 4 § 2 of the Convention.

3. The applicant also maintains that the seizure of his residence, followed by its liquidation by public auction, constitutes degrading treatment contrary to Article 3 of the Convention because it unrelentingly placed his family life and security in jeopardy. He claims that the seizure was ordered in addition to several other degrading measures such as a prohibition on travelling abroad, the refusal of a tax status certificate, which prevents him from pursuing any profession, and a permanent threat of incarceration for debts to the State.

4. The applicant lastly complains that his case was not heard within a reasonable time, in breach of Article 6 § 1 of the Convention.

PROCEDURE

The application was introduced before the European Commission of Human Rights on 25 November 1997 and registered on 2 December 1997.

On 10 September 1998, the Commission decided to communicate the application to the respondent Government.

The Government's written observations were submitted on 13 January 1999, after an extension of the time-limit fixed for that purpose. The applicant replied on 8 March 1999 and submitted additional observations on 20 August 1999.

On 1 November 1998, by operation of Article 5 § 2 of Protocol No. 11 to the Convention, the case fell to be examined by the Court in accordance with the provisions of that Protocol.

On 22 June 1999 the Court decided to invite the parties to a hearing on the admissibility and merits of the case. This hearing was held on 21 September 1999. The Government were represented by Mr Mihaïl Apessos, senior legal adviser at the Legal Council of State, delegate of the Government agent, and Mr Konstantinos Georgiadis, legal assistant at the Legal Council of State, adviser. The applicant was represented by MM. Alivizatos and Stavropoulos, mentioned above, as well as by Ms Eleousa Kiousopoulou, an Athens barrister, as an adviser.

THE LAW

1. The applicant alleges violations of Article 1 of Protocol No. 1 and of Articles 6 § 1, 3, 4 § 2 and 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1.

Article 1 of Protocol No. 1 guarantees property rights. Article 6 § 1 provides inter alia for the judicial determination of civil rights and obligations “within a reasonable time”. Articles 3 and 4 prohibit respectively inhuman and degrading treatment, and forced or compulsory labour. Article 14 prohibits discrimination in the enjoyment of Convention rights and freedoms.

As regards Article 1 of Protocol N o 1, the applicant submits that the Supreme Administrative Court applied Article 10 of Law N o 542/1977 in his case although he had no managerial authority at all throughout his appointment. EDOK had no business activity of its own. All its activities were in tandem with ETER and management was without exception carried out by the joint venture's appointed directors, amongst whom was his father. They withheld the taxes due. In this respect, the Athens Court of First Instance acquitted him of all charges brought by the Industrial Companies Fiscal Service for non payment of taxes and social security allowances, and ordered proceedings against his father who had actually managed the company at the material time. EDOK's management had collapsed months before its dissolution and the applicant had formally resigned prior to the dissolution. The applicant, being a minority shareholder (15 % of the shares), could only benefit from a small part of the company's positive results; his liability was confined, according to the fundamental principle of limited liability companies, to the value of his contribution to the capital of the company. He did not foresee, and did not accept, any risk related to the company's debts. The applicant alleges that in fact he was held liable for failing to secure the appointment of a successor.

As regards Article 14 of the Convention, the applicant claims that Article 10 of Law N o 542/1977, by providing for the personal liability of managers of Greek companies only, entails discrimination with respect to national origin. Any foreign company subject to Greek tax would have tax obligations identical to its Greek counterparts save in one respect - its manager, Greek or non-Greek, would bear no liability for the company's tax debts.

2. The Government allege that the applicant has not exhausted domestic remedies, as required by Article 35 § 1 of the Convention. More precisely, it transpires from the applicant's submissions before the one-member and three-member Administrative Court of Athens, as well as before the Supreme Administrative Court, that the applicant never invoked any violation of his rights under the Convention, either expressly, indirectly or in abstract terms; his submissions before the domestic courts were based exclusively on the domestic legislation. Even if the domestic courts were able to examine the case ex officio in the context of the Convention, the applicant would not be relieved of his obligation to invoke the Convention before these courts or at least to draw their attention to the matters he intended to raise subsequently before the European Court. Following the judgment of the Supreme Administrative Court of 26 May 1997, a new hearing will take place before the First Instance Administrative Court of Athens and the applicant will be offered an opportunity to submit all his complaints relevant to any violations of the Convention. It is probable that the case will be again submitted to the Supreme Administrative Court, which this time will be called to consider it in the light of the complaints relating to the Convention.

The applicant contends that he has exhausted domestic remedies, having consistently raised the substance of his Convention complaints before the domestic courts.

The Court reiterates that the purpose of the rule referred to in Article 35 § 1 of the Convention is to afford the Contracting States the opportunity of preventing or putting right – usually through the courts – alleged violations of substantive Convention provisions before such allegations are submitted to the Court. That rule must be applied “with some degree of flexibility and without excessive formalism”; it is sufficient that the complaints intended to be made subsequently in Strasbourg should have been raised, “at least in substance and in compliance with the formal requirements and time-limits laid down in domestic law”, before the national authorities (see the Castells v. Spain judgment of 23 April 1992, Series A no. 236, p. 19, § 27, and the Akdivar and Others v. Turkey judgment of 16 September 1996, Reports 1996-IV, pp. 1210-11, §§ 65-69).

The Court recalls that the Convention forms an integral part of the Greek legal system, where it takes precedence over every incompatible provision of the law (Article 28 § 1 of the Constitution) and its provisions are directly applicable; the applicant could therefore have relied on the Convention in the Greek courts and complained of a violation thereof in his case.

In this respect, the Court notes that the object of the proceedings before the Supreme Administrative Court was the interpretation of the rule providing for a manager's personal liability for corporate debts, and its application to the applicant. However, at no time did the applicant rely on the relevant provisions of the Convention, or on arguments to the same or like effect based on domestic law, in the courts dealing with his case. It transpires from the memoranda which the applicant submitted to the Supreme Administrative Court that he had only argued on the limited basis of the interpretation of Article 10 of Law N o 542/1977 and had claimed the right to freedom of economic and entrepreneurial activity and its corollary, the right to resign. His reference to the seizure of his property was purely incidental to his main arguments relating to his economic activities in his capacity as a member of the board of EDOK. In so doing, the applicant cannot be considered to have formulated a complaint which was linked to the alleged violations of Articles 1 of Protocol No. 1 and 14 of the Convention.

Accordingly, the Court considers that the applicant did not invoke before the Supreme administrative Court, “at least in substance”, the complaints relating to the above-mentioned Convention provisions. The applicant has not, therefore, exhausted the remedies available under Greek law. It follows that this part of the application must be rejected pursuant to Article 35 §§ 1 and 4 of the Convention.

3. As regards the alleged violation of Article 4 § 2 of the Convention, the Government allege that the decision of the Supreme Administrative Court and the interpretation it gave to Article 10 of Law N o 542/1977 simply served to extend the term of the applicant's liability in connection with the company's debts; under no circumstances was the applicant required to perform labour against his will.

The applicant submits that the extension of liability entailed the compulsory extension of managerial duties, a manager's liability for company debts being intimately connected to his obligation to perform such duties.

The Court recalls that the applicant resigned from EDOK in May 1986 and did not exercise any functions afterwards. The application of Article 10 of Law N o 542/1977 to him was the result of the interpretation of that provision by the Supreme Administrative Court for tax collection purposes. The decision of that Court, or even the expectancy of such a decision, could not entail for the applicant any obligation to remain in office or a dissuasion from resigning. He was not forced to continue working.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It must therefore be rejected pursuant to Article 35 § 4.

4. As regards the alleged violation of Article 3 of the Convention, the Government refer to their arguments rebutting the applicant's allegations under Article 1 of Protocol No. 1.

The applicant maintains that the interference with his right to the peaceful enjoyment of his possessions is in the circumstances of the case degrading treatment, because he and his family live under the threat of imminent eviction, and they have lived thus for the last thirteen years. Moreover, the seizure was effected in the context of several other degrading measures: a prohibition on travelling abroad, the refusal of a tax status certificate, a prohibition on pursuing any business or profession, and a permanent threat of incarceration for debts to the State.

The Court recalls that, according to its case-law, a punishment is only degrading if the humiliation and debasement involved attains a particularly severe level, taking into account the nature of the punishment and the manner of its execution (see the Tyrer v. the United Kingdom judgment of 25 April 1978, Series A n o 26, p. 15, § 30).

However, the Court notes that the measures taken against the applicant were those usually taken by the administrative and judicial authorities in the context of proceedings for tax evasion. More specifically, the seizure of the applicant's house was confirmed by a judgment of the Supreme Administrative Court and, as such, cannot be considered to be degrading treatment within the meaning of Article 3 of the Convention. Furthermore, the applicant has occupied his house throughout the proceedings and has not been evicted as yet. As to the anguish and stress felt by the applicant during the long period which elapsed between the appellate decision and the final judgment, the Court considers that they do not attain the level of severity proscribed by Article 3 to be qualified as degrading treatment.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It must therefore be rejected pursuant to Article 35 § 4.

5. As regards the alleged violation of Article 6 § 1 of the Convention, the Government maintain that no such claim was raised by the applicant in his application. The simple presentation of the background of the applicant's case before the courts does not permit the examination of his application under the “reasonable length” requirements of this provision.

The applicant emphasises that he did in fact write to the Commission on 9 June 1998 expressly to complain of the infringement of Article 6 § 1. In his letter he pointed out facts already set out in his application and expressly subsumed them under the relevant head of the Convention. Nearly nine years elapsed between the appellate decision and the final ruling of the Supreme Administrative Court, leaving the applicant uncertain as to whether the seizure was indeed illegal or not, in order to adjust his plans regarding his family residence accordingly.

The Court notes that when the applicant first applied to the Commission he did not expressly assert that the proceedings before the administrative courts were unduly prolonged. However, the Court has to take account not only of the original application but also of the additional documents intended to complete the latter by eliminating initial omissions or obscurities (see the Foti v. Italy judgment of 10 December 1982, Series A n o 56, p. 15, § 44). In this respect the Court notes that in his letter of 9 June 1998 the applicant stated that “in filing his application ..., he had omitted to expressly mention an additional violation, that is the violation of his right to be heard within a reasonable time”. Furthermore, in his original application, the applicant had clearly indicated the long time which had elapsed before the Supreme Administrative Court gave judgment in his case. He thus gave the Court the opportunity to consider that the facts adduced by him potentially involved an issue of undue length of proceedings.

In addition, the Court recalls that the excessive length of proceedings which are still pending before the domestic courts is not a momentary, but a continuing potential violation of Article 6 § 1, in respect of which there is no remedy which triggers the running of the six-month period provided for in Article 35 § 1 of the Convention (N o 36153/97, Decision of 20 May 1998, D.R. 93-B, p. 104).

The Court further notes that the parties do not dispute that the proceedings in question involved a determination of the applicants' civil rights and obligations. Given that the proceedings concerned the seizure of the applicant's property, the Court considers that Article 6 § 1 of the Convention is applicable.

As to the substance of the complaint, the Court considers that it raises serious issues of fact and law under the Convention, the determination of which should depend on an examination of the merits. It follows that this part of the application cannot be dismissed as manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other ground for declaring it inadmissible has been established.

For these reasons, the Court, by a majority,

DECLARES ADMISSIBLE , without prejudging the merits, the applicant's complaint under Article 6 § 1 of the Convention;

DECLARES INADMISSIBLE the remainder of the application.

S. Dollé N. Bratza

Registrar President