FOURTH SECTION

DECISION

Application no . 45879/09 SC RED CREDIT SRL against Romania

The European Court of Human Rights (Fourth Section), sitting on 24 May 2016 as a Chamber composed of:

András Sajó , President, Boštjan M. Zupančič , Paulo Pinto de Albuquerque , Krzysztof Wojtyczek , Egidijus Kūris , Iulia Motoc , Gabriele Kucsko-Stadlmayer , judges, and Fatoş Aracı , Deputy Section Registrar ,

Having regard to the above application lodged on 19 June 2009 ,

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

Having deliberated, decides as follows:

THE FACTS

1. The applicant company, SC Red Credit SRL , was a Romanian legal entity based in Constanța , founded in 2002. It was initially represented before the Court by its administrator, V.D. From 2013, after the case was communicated to the Government, submissions in respect of the case were made by Ms L. Memet , a legal adviser practising in Constanța .

2. The Romanian Government (“the Government”) were represented by their Agent, M s C. Brumar , from the Ministry of Foreign Affairs .

A. The circumstances of the case

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

1 . I nspection carried out by the Constanța Consumer Protection Agency

4. The applicant company was authorised to operate as a jewellery pawn brokers.

5. According to the Single Control Register , on 25 September 2007 the applicant company had gold stock weighing 3,624 grams .

6. On 26 September 2007 the Constanța Tax Agency (“the CTA”) and the Constanța Consumer Protection Agency (“the CCPA”) carried out an inspection of the activities of the applicant company and other companies sharing the same commercial space.

7. On the same date the CCPA produced an inventory report of the applicant company ’ s jewellery stock which had been on display for sale. The report was drawn up in the presence of a representative of the applicant company , who had stated that some of the jewellery had been sold at different price s depending on quality.

8 . On 3 October 2007 the CCPA produced a contravention report fining the applicant company 7,000 lei (RON – approximately 2,100 euros (EUR)) because on 26 September of that year it had displayed gold jewellery for sale without a licence to sell precious metals, alloys or stones. In addition, it ordered that the gold jewellery that had been on display for sale, which weigh ed 2,527 grams and was worth RON 111,683 (approximately EUR 33,140) , be confiscated.

9 . According to the contravention report , the CCPA had cooperate d with the Constanța Tax Agency (“the CTA”) to produc e it.

10. The representative of the applicant company who signed the contravention report objected to it on the ground s that the measure taken had been unjust .

2 . Court proceedings

11. The applicant company challenged the report of 3 October 2007 in the domestic courts .

12. On 4 July 2008 the Constanța District Court allowed the applicant company ’ s action, set aside the report of 3 October 2007 and ordered the return of the confiscated jewellery . It held that according to the European Court of Human Rights ’ (“the Court”) case - law , proceedings seeking to challenge contravention reports fall under the criminal head of Article 6 of the European Convention of Human Rights (“the Convention”) and therefore the domestic authorities had to comply with the procedural guarantees set out in th at Article with regard to criminal proceedings, including the right to be presumed innocent. The court further held that the fine had been imposed on the applicant company under general legal provisions and had been intended as a punishment to deter it from reoffending. Consequently, the burden of proof with regard to the applicant company ’ s guilt was on the CCPA. However, the agency had not submitted any evidence which proved the applicant company ’ s guilt.

13 . The CCPA lodged an appeal on points of law ( recurs ).

14. By a final judgment of 23 December 2008 the Constanța County Court allowed th at appeal, quashed the judgment of the lower court and upheld the report of 3 October 2007. It held that according to the documents available, on 26 September 2007 the applicant company had only been authorised to hold precious metals. However, it had only obtained authorisation to sell them on 2 October 2007. Moreover, according to the inventory report signed by the applicant company ’ s representative without any objection, the report had concerned the items which had been on display for sale . Also, according to the Court ’ s case-law , the contravention proceedings had to comply with the procedural requirements provided for under the criminal head of Article 6 of the Convention , wh ich concerned both the rebuttal of the right to be presumed innocent and a relative presumption of truth in favo u r of the contravention report drafted by a State authority following its own perception of the events. Consequently, the burden of proof would have been on the State authority which had drafted the contravention report and the report could have been set aside only if the State authority ’ s representatives had not been present when the contravention had happened and it had failed to prove the statements made in the report . But the representatives of the said authority had been pr esent when the contravention had been committed and the report had reflected their own perceptions. T he report therefore had to be presumed to reflect the truth and the burden of proof had been reverted to the applicant company in order to rebut that presumption.

15 . The court further held that in the inventory report the applicant company ’ s representative had stated that some of the jewellery had been sold at different prices depending on quality. Furthermore , the contravention report had been signed by the applicant company ’ s administrator , who had objected to it on the ground s that the measure taken had been unjust , but had not contested the fact that he had been selling jewellery . The contravention report had been lawful and had contained all the lawfully required information. Moreover, the contravention and inventory reports contained similar information about the quantity and value of the items mentioned in them and had been signed by both parties without any objection in this respect . Furthermore, these inconsistencies would not have rendered the contravention report null and void and the applicant company had not proven that it had incurred damage that could have been remedied solely by setting aside the report . Furthermore, absence from the contravention report of information that the fine could have been p aid immediately or within forty -eight hours had not rendered the report unlawful.

16 . Lastly, the court held that all of the reasons outlined above rendered the applicant company ’ s argument that the contravention had not existed inadmissible , because it had never intended to sell the jewellery that it had been holding.

3. The applicant company ’ s merger by acquisition

17. On 10 September 2009 the applicant company signed a merger by acquisition ( fuziune prin absorbție ) with another company, namely SC IFN Master Credit SRL. They agreed , inter alia , that the latter company would acquire the applicant company that day and take over the applicant company ’ s assets and liabilities. V.D. was an associate of SC IFN Master Credit SRL .

18 . On 28 September 2010 the applicant company was struck off ( radiat ă ) the Constanța Register of Commerce following the merger.

19 . On 1 October 2013 Ms Memet submitted to the Court a power of attorney signed by the former administrator of the applicant company authorising her to represent it.

20. I n 2014 SC IFN Master Credit SRL changed its name to S.C. Master Credit Stand-By SRL and then to SC Master C. Stand-By SRL.

21. In January and March 2014, part of the observations on the admissibility and merits of the case were submitted by Ms Memet in a document head ed “SC Master Credit Stand-By SRL v. Romania”. She did not submit within any of the time-limit s allotted by the Court a power of attorney or any other document authorising her to represent SC IFN Master Credit SRL , SC Master C redit Stand-By SRL or SC Master C. Stand-By SRL. Furthermore, n either she nor the companies submitted within the relevant time-limits any documents signed directly by any of the companies themselves or by V.D. expressly stating that they wish ed to continue the application.

B. Relevant domestic law and international law

1. Government Emergency Ordinance no. 190/2000 on precious metals, alloys and stones

Article 18

“Carrying out unauthorised operations with precious metals and stones is a contravention punishable by a fine of 5,000 [EUR 1,515] to 10,000 lei [EUR 3,030] and by confiscation of the goods subject to the contravention.”

...”

22. The relevant legal provisions concerning the amendments to the legal rules applicable in respect of legislation concerning contraventions are set out in the case of Anghel v. Romania (no . 28183/03, §§ 35-39, 4 October 2007).

23 . Article 250 of Law no. 31/1991 on commercial companies provided , inter alia , that following a merger the assets and debts of the acquired company were transferred to the acquiring company in accord ance with the terms of the merger plan .

24 . Rule 47 § 7 of the Rules of Court (former Rule 47 § 6) provides that applicants shall keep the Court informed of any change of address and of all circumstances relevant to the application.

COMPLAINTS

25. The applicant company complained under Article 6 of the Convention that the proceedings seeking to challenge the contravention report and confiscation had been unfair and had breached its right to be presumed innocent .

26. The applicant company complained under Article 1 of Protocol No. 1 to the Convention that all the jewellery the company had in stock had been confiscated, which almost led it to bankruptcy.

THE LAW

27. The app licant company complained about the unfairness of the proceedings in so far as the domestic courts had failed to properly examine the arguments and evidence adduced by it and had breached its right to be presumed innocent by reverting the burden of proof to it without admitting any additional evidence. It also complained that its right of property had been breached in so far as the judgment of the last- instance court had allowed all the jewellery the company had in stock to be confiscated , which had almost led it to bankruptcy. It relied on Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention . The relevant parts read as follows:

Article 6

“1. In the determination of ... any criminal charge against him, everyone is entitled to a fair and public hearing ... by an independent and impartial tribunal established by law ...

2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.

...”

Article 1 of Protocol No. 1

“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.”

A. The parties ’ submissions

1. The Government

28. The Government argued t hat the present application had to be dismissed as an abuse of application because the applicant company had knowingly failed to provide all the facts relevant for the examination of the case and to cooperate with the Court to ensure the proper administration of justice , in breach of Rule 44 A, Rule 44C § 1 and Rule 47 § 7 of the Rules of Court.

29 . The Government submitted that according to the Court ’ s case-law , an application could be dismissed for abuse of the right of application within the meaning of Article 35 § 3 of the Convention if it had been knowingly based on untrue facts or incomplete and therefore misleading information had been submitted to the Court, particularly if that information had concerned the core of the case and the applicant had failed to provide a sufficient explanation as to why he had omitted to divulge it .

30 . The Government argued that in a number of cases lodged against Romania, in particular Marinescu v. Romania ( ( dec. ), no. 21122/02, 10 April 2007 ) , Predescu v. Romania ( no. 21447/03, § 25, 2 December 2008 ) , Vasile Cir v. Romania ( ( dec. ), no. 52330/07, 26 January 2010 ) and Ştefănuț v. Romania ( ( dec. ), no. 28713/05, 4 September 2012 ) , the Court had considered that the applicants ’ failure to submit information which had been essential for the examination of the cases had amounted to an abuse of the right of application or had cast doubt on their good faith and had declared the applications or part thereof inadmissible. Furthermore , in the case of Gardean and S.C. Grup 95 S.A. v. Romania ( no. 25787/04, 30 April 2013 ) the Court had decided to accept the Government ’ s request for a review of the judgment and had declared the application inadmissible on the ground s that it had been an abuse of application after it had been established that the applicant company had been struck off the commercial register , had lost its legal personality, had ceased to exist and had failed to inform the Court about these aspects , which had had a decisive impact on the outcome of the case.

31 . The Government contended that like in the cases mentioned above , in the instant case the applicant company had failed to inform the Court of facts that had been essential for the examination of the case. In particular, on 28 September 2010, after lodg ing its application with the Court, the applicant company had been struck off the Constanța Register of Commerce following its merger by acquisition by another company. Consequently, from 28 September 2010 the applicant company had no longer had legal personality and had legally ceased to exist. Although under Article 47 § 7 of the Rules of Court the applicant company ’ s former representative had had a duty to inform the Court of any fact s relevant for the examination of the case, he had failed to submit any information about the applicant company ’ s plans to let itself be acquired by another company. Moreover, he had failed to indicate any reason which could have prevented him from presenting this essential information to the Court.

32 . The Government acknowledged that on the date of lodg ing its application with the Court the applicant company could have claimed to be a victim of a violation of its rights guaranteed by the Convention and Protocol No. 1. However, they considered that the applicant company could no longer have raised such a claim after it had been struck off the Constanța Register of Commerce on 28 September 2010 . Consequently, it had lost its locus standi in the present case.

33 . The Government submitted that the legal entity which had acquired the applicant company had not requested that the proceedings pending before the Court be continued or submitted any contract attesting that it had taken over the litigious rights concerning these proceedings . In any event, a simple request to continue the proceedings would have been insufficient for the acquiring legal entity to claim to be a victim of a breach of its rights guaranteed by the Convention in the absence of clarification concerning its status, particularly since the legal entity had not been party to the domestic proceedings.

34 . The Government contended that to ensure proper development of the proceedings before the Court, the applicant company should have described the legal consequences of the merger in which it had been involved.

35 . The y submitted that according to the Court ’ s case-law , only a person whose rights had been directly affected by the action s or inaction of the domestic authorities could lodge an application with the Court. The existence of a victim that had been personally affected by the alleged violation was an indispensable condition for the Convention mechanism to work. T he Court sh ould therefore also dismiss the present application as incompatible ratione personae with the provisions of the Convention .

36 . The Government also submitted that Article 6 of the Convention had not been applicable to the proceedings in the instant case. They considered that it had not concerned a “criminal charge” within the meaning of that provision of the Convention. According to the relevant domestic rules concerning precious metals , the ir unauthorised sale amounted to a contravention which did not fall within the sphere of criminal law. Furthermore , potential complaints about contravention reports were examined by the civil courts. Moreover, th e criminal head of Article 6 had been inapplicable in respect of unauthorised commercial acts. Furthermore, the fine imposed on the applicant company had not been unreasonable and according to the evidence available , it had not paid it. Furthermore , in the absence of any clarification or evidence from the applicant company, the Court should not speculate on the punitive nature of the confiscation.

2. The applicant company

37 . Ms L. Memet acknowledged that on 28 September 2010 the applicant company had been struck off the commercial register and had ceased to exist following its acquisition by another company, namely SC IFN Master Credit SRL. However, according to the relevant merger documents, SC IFN Master Credit SRL had taken over all the applicant company ’ s assets and liabilities. Ms Memet therefore contested the Government ’ s argument that the applicant company had lost its legal status and could not have continued its application before the Court. She considered that all the rights and obligation s incumbent on the applicant company, including its rights arising from the proceedings before the Court, had been taken over by the acquiring company and had not disappeared.

38 . In a document head ed “S C Master Credit Stand-By SRL v. Romania”, Ms Memet argued that in the circumstances , under Article 250 of Law no. 31/1990, a contract attesting the sale of litigious rights had been unnecessary as the rights and obligations outlined above had been taken over by the acquiring company by effect of Romanian law and as a result of the express provision made in the two companies ’ merger plan. The a pplicant company ’ s situation had been similar to that of individuals who had died while their application had been pending before the Court and their right had been taken over by their successors. Moreover, the representative of SC Master Credit Stand-By SRL had signed a power of attorney authorising her to act before the Court.

39 . Ms Memet submitted that it was unlikely that the applicant company ’ s failure to inform the Court in a timely manner of its imminent removal from the commercial register had influence d the proceedings at that stage and had not been a critical issue that could have led the Court to a different conclusion. Moreover, the Rules of Court had not specified a time ‑ limit for providing the information. It could therefore have been provided at any stage of the proceedings, without affecting in any way the examination of the case.

B . The Court ’ s assessment

40. The Court considers that it is not necessary to examine all the preliminary objections raised by the Government, because even assuming that some of them would be dismissed, the application is in any event inadmissible for the reasons given below.

42 . The Court considers that the applicant company ’ s acquisition and removal from the Register of Commerce amounted to factual circumstances which had a decisive impact on the outcome of the case since the applicant company had lost its legal personality and had ceased to exist. Even assuming that at the time it had lodged its application with the Court the applicant company could have claimed to be a victim of a violation of its rights guaranteed by the Convention and its Protocols, it could no longer have done so after its removal from the Constanța Register of Commerce on 28 September 2010 (see Gardean a nd S.C. Grup 95 S.A. , cited above, § 16 ).

43 . The Court further notes that according to the merger plan signed in September 2009, SC IFN Master Credit SRL acquired the applicant company and took over all its assets and liabilities. Without speculating on the le gal consequences of their agreement and on whether SC IFN Master Credit SRL had a right to pursue the applicant company ’ s application before it, the Court notes, however, that the acquiring company neither signed any of the claims or observations submitted to it after the date of the merger no r any other document that could have allowed the Court to determine the company ’ s unequivocal intention of pursuing the application.

44 . The Court notes that part of the observations on the admissibility and merits of the case were submitted by a legal adviser , Ms Memet , on a document headed “SC Master Credit Stand-By SRL v. Romania”. It also notes that the only power of attorney submitted by her to the Court within the allotted time-limit s had been issued by the former representative of the applicant company in July 2013 when it had already ceased to exist. However, Ms Memet had not submitted within the time-limit s allotted by the Court a power of attorney or any other document authorising her to represent SC IFN Master Credit SRL , SC Master Credit Stand-By SRL or SC Master C. Stand-By SRL.

45 . The Court reiterates that disregarding a company ’ s legal personality as regards the question of being the “person” directly affected will be justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Court through the organs set up under its articles of incorporation or – in the event of liquidation or bankruptcy – through its liquidators or trustees in bankruptcy (see FiÅ¡manas and Griflit Ltd. v. Lithuania ( dec. ), no. 23523/05, § 62, 5 November 2013; Camberrow MM5 AD v. Bulgaria ( dec. ), no. 50357/99, 1 April 2004; and Agrotexim and Others v. Greece , 24 October 1995, § 66, Series A no. 330 ‑ A). There is nothing in the case file to suggest that any exceptional circumstances existed which would allow the Court to disregard the legal personality of the acquiring company.

46 . Moreover, the Court notes that Ms Memet did not argue in any of her submissions to the Court that she would be entitled to pursue on her own behalf the applicant company ’ s application.

47 . It follows that neither the acquiring company nor Ms Memet can be considered to hav e expressed a valid intention to have the application lodged with the Court pursued and to be bound by the proceedings before it. That being so, their potential complaints of unfairness in the proceedings and a violation of their property rights following the confiscation of part of the applicant company ’ s gold stock by the authorities must be dismissed for lack of standing.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 16 June 2016 .

FatoÅŸ Aracı András Sajó              Deputy Registrar President