SECOND SECTION

DECISION

Application no. 9205/19 LOGOS TREND D.O.O. against Slovenia

The European Court of Human Rights (Second Section), sitting on 16 March 2021 as a Committee composed of:

Aleš Pejchal, President, Egidijus Kūris, Carlo Ranzoni, judges, and Hasan Bakırcı, Deputy Section Registrar ,

Having regard to the above application lodged on 13 February 2019,

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

Having regard to the comments submitted by the German Government who had exercised their right to intervene (Article 36 § 1 of the Convention and Rule 44 of the Rules of Court),

Having deliberated, decides as follows:

THE FACTS

1 . The applicant company Logos Trend d.o.o. is a limited liability company incorporated under Slovenian law which has its registered office in Trzin. It was represented before the Court by a law firm, Odvetniška družba Čeferin in partnerji from Grosuplje.

2 . The Slovenian Government (“the Government”) were represented by their Agent, Mrs B. Jovin Hrastnik, State attorney.

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

4 . On 20 June 2017, company D submitted to the Ljubljana District Court a request for recognition of the Croatian Chamber of Commerce ’ s Permanent Arbitration Court ’ s award obliging the applicant company to pay company D the amount of 601,945.92 Croatian kunas (approximately 80,000 euros) in compensation (hereinafter referred to also as “the arbitration decision”). The award related to a business contract which included an arbitration clause.

5 . The applicant company, represented at that time by lawyer T., objected to the recognition of the foreign arbitration award. It argued, among other things, that the arbitration court had exceeded its powers by deciding on the compensation claim, and that the court should have requested the company D to submit the arbitration agreement pursuant to Section 105 of the Private International Law and Procedure Act (hereinafter “the PILP Act”, see paragraph 11 below).

6 . On 9 January 2018 the Ljubljana District Court upheld the company D ’ s request. It explained that the recognition of a foreign arbitration award should be decided pursuant to the Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter “the New York Convention”). It explained that the Arbitration Act had replaced the PILP Act ’ s chapter on the recognition and enforcement of foreign arbitration awards (see paragraph 11 below). It further explained that it had not requested the company D to submit the arbitration agreement because the applicant company had not disputed that such agreement had existed. It further held that the content of the arbitration clause, as understood also by the applicant company, covered the disputes relating to the payment of compensation in the case of an uniliteral withdrawal from the contract.

7 . On 30 January 2018, the applicant company filed an appeal through its lawyer T. It invoked, among other things, the following complaints:

-The first-instance court disregarded the PILP Act. It should have requested the company D to submit the arbitration agreement because section 105 of the PILP Act so required. This obligation did not depend on whether there was a dispute regarding the existence of such agreement.

- The arbitration court had exceeded its powers and its decision was erroneous.

- The first-instance court was not in a position to assess whether the arbitration agreement was valid because it did not know its content.

- The arbitration decision did not contain reasons concerning the determination of compensation, which was in breach of the right to equal protection of rights under Article 22 of the Constitution (see paragraph 12 below).

8 . On 5 June 2018, the Supreme Court dismissed the appeal. It reiterated the Ljubljana District Court ’ s observation that the Arbitration Act not the PILP Act applied to the proceedings in question. It also noted that the first ‑ instance court had had no doubt that the arbitration agreement had existed since the applicant company had participated in the arbitration.

9 . On 4 September 2018 the applicant company, through another counsel – the law firm Čeferin and Partners o.p., d.o.o. – submitted a constitutional complaint to the Constitutional Court, alleging a violation of Article 22 of the Constitution (see paragraph 12 below). It pointed out “that it had in the course of the [...] proceedings exhausted in substance the allegations of violation of its constitutionally guaranteed rights caused by the impugned decisions.” It submitted that, based on section 42 of the Arbitration Act (see paragraph 11 below) and the New York Convention, the first-instance court should have asked for a copy of the arbitration agreement whenever the latter ’ s existence was in dispute. The first-instance court should have considered the applicant company ’ s objection to the validity and scope of the arbitration agreement as in substance representing an objection to the existence of the arbitration agreement. By failing to do so, the first instance court placed a disproportionate burden on the applicant company and thereby prevented its active participation.

10 . On 26 October 2018, the Constitutional Court ’ s panel of three judges rejected ( zavrgel ) the constitutional complaint. The decision reads, in so far as relevant, as follows:

“The panel rejected the constitutional complaint because the legal remedies have not been exhausted.

The Panel of the Constitutional Court adopted this decision on the basis of point five of section 55b (1) of the Constitutional Court Act (...) and point one of section 46 (3) of the Rules of Procedure of the Constitutional Court (...) in the [following] composition: the president of the panel ..., and the members ... The decision was adopted unanimously.”

11 . The Arbitration Act (Official Gazette no. 45/08 ) has been in force since 10 August 2008. It provides that a foreign arbitration award becomes effective when it is recognised by a court (section 42 (2)). It also provides that it suffices for the recognition of the award that the requesting party submits its original or its copy. If requested by a court, the requesting party must also submit an original or a certified copy of the arbitration agreement (section 42 (2)). With the entry into force of the Arbitration Act, the provisions of the PILP Act (Official Gazette no. 56/99) governing the recognition and enforcement of foreign arbitration awards ceased to be in force. Among them was section 105 which provided that the foreign arbitration award could be recognised if the request for recognition was accompanied by, among other things, the original or certified copy of the arbitration agreement.

12 . The Constitution of the Republic of Slovenia provides that everyone shall be guaranteed equal protection of rights in any proceedings before, inter alia , a court (Article 22 of the Constitution). Pursuant to Article 160 of the Constitution, unless otherwise provided by law, the Constitutional Court decides on a constitutional complaint only if legal remedies have been exhausted. The Constitutional Court decides whether to admit a constitutional complaint for adjudication based on criteria and procedures provided by law.

13 . The following provision of the Constitutional Court Act (Official Gazette no. 64/07, including the 2007 amendments) are relevant to the present case.

Section 51

“(1) A constitutional complaint may be lodged only after all legal remedies have been exhausted. “

Section 55b

“(1) A constitutional complaint is rejected ( zavrže ):

...

- [point 5] if all legal remedies have not been exhausted...;

...”

Section 55c

“(1) The panel decides on the rejection or acceptance of the constitutional complaint unanimously by a decision.

(2) If the panel is not unanimous with regard to whether the conditions referred to in the first paragraph of Article 55b are fulfilled, the constitutional complaint is rejected if any five Constitutional Court judges decide in favour of rejection in writing within 15 days.

...

(4) If the panel does not decide otherwise, the statement of reasons of the decision on the rejection or non-acceptance of the constitutional complaint includes only a reason referred to in the first or second paragraph of the preceding section of this Act and the composition of the Constitutional Court.”

14 . Section 46 of the Rules of Procedure of the Constitutional Court sets out rules concerning the order of dealing with cases. It provides, inter alia :

“(3) The Constitutional Court may decide to consider the following types of cases as priority cases:

- simpler cases which can be considered and decided in the examination procedure phase or in the preparatory procedure phase;

...”

15 . In 2007 the Constitutional Court Act was amended by, inter alia , the aforementioned Section 55c. The Government submitted a relevant part of the explanatory text of the draft Act Amending the Constitutional Court Act. It reads as follows:

"Particularly noteworthy is the novelty which is modelled ... on the German and Spanish regulations, where the rulings rejecting or not admitting constitutional complaints for consideration do not have to be explained.... This proposed solution should enable the Constitutional Court to perform [its] function effectively. ... Such solutions have already, in the experience of some other Member States of the European Union, successfully contributed to a more effective disburdening of the Constitutional Court ....”

16 . In its decision of 14 February 2013 (no. U-I-60/11 and Up-349/11) the Constitutional Court noted that there was no right to constitutional complaint and that the Constitutional Court panel ’ s decision under section 55c (4) did not entail a review of the merits. Section 55c (4) reflected the precedential role of the Constitutional Court and at the same time was a prerequisite for its effective realisation.

17 . It follows from the Constitutional Court ’ s case-law submitted by the Government that the requirement of exhaustion of domestic remedies contained in section 51 of the Constitutional Court Act concerned “formal exhaustion” (that is a use of a remedy) as well as “substantive exhaustion” (invoking the alleged violations of human rights in substance). They submitted copies of decisions, some of which were issued prior to the 2007 Amendment (see paragraph 15 above). It follows from the submitted decisions that the Constitutional Court required the complainants to invoke before the lower courts or authorities the reasons underpinning their constitutional complaints (decisions Up-144/00 of 26 February 2002 and Up-866/17 of 26 October 2017). A complainant was required to invoke before the lower courts exactly those violations of human rights he or she intended to invoke subsequently in the constitutional complaint. This applied to both procedural and substantive matters (Up-33/05 of 6 March 2008). The Constitutional Court should interfere only when the alleged violations had not been remedied before the lower courts (Up-139/99 of 30 May 2000 and Up-39/95 of 16 January 1997).

18 . The Government further submitted fifteen Constitutional Court ’ s decisions rejecting constitutional complaints for non-exhaustion of domestic remedies, which contained only a reference to the relevant provision of the Constitutional Court Act and the information on the composition of the Constitutional Court ’ s panel without any further explanation. They also submitted copies of seven Constitutional Court ’ s decisions rejecting complaints for failing to lodge a particular remedy (“formal non ‑ exhaustion”) which included more detailed reasoning in this regard; four of them were adopted unanimously by a panel of three judges.

19 . By way of example, the applicant company submitted the decision no. U-I-86/17, Up-471/17 of 30 January 2020 in which the Constitutional Court explained that the complainant had not invoked the alleged violations in substance before the lower court.

COMPLAINTS

20 . The applicant company complained under Article 6 § 1 of the Convention that the Constitutional Court had deprived it of an opportunity to have its constitutional complaint determined on the merits. It further complained that the Constitutional Court ’ s decision in its case was manifestly erroneous, arbitrary and did not explain what the applicant company had failed to do in order to exhaust domestic remedies.

THE LAW

21 . The applicant company relied on Article 6 § 1 of the Convention, which, in so far as relevant, reads as follows:

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

22 . The Government pointed out that the impugned decision was adopted by the highest court in the country and no appeal was available against it. The Constitutional Court Act allowed the decision rejecting the constitutional complaint to refer only to the relevant provision and it made no distinction in this respect between “substantive” or “formal non ‑ exhaustion”. The case-law of the Constitutional Court confirmed that detailed reasoning was included when that was necessary with respect to either “formal” or “substantive non-exhaustion”. The aim of section 55c (4) of the Constitutional Court Act was to increase the efficiency of the Constitutional Court which in 2018 received 2,157 and resolved 1,678 cases.

23 . The Government disputed the applicant company ’ s argument that the decisions without detailed reasoning submitted by them (see paragraph 18 above) concerned only “formal non-exhaustion”. As regards the case-law on “substantive non-exhaustion” (see paragraph 17 above), it did not show that the Constitutional Court should have issued a detailed decision in the present case.

24 . The Government further stressed that it was clear from the Constitutional Court ’ s case-law that not just “formal” but also “substantive exhaustion” of domestic remedies was required and that this was confirmed by the Court in SAZAS v. Slovenia (dec.), no. 53257/13, § 26, 10 October 2017. The applicant company, who was legally represented thorough the proceedings, should have been aware of this. However, its arguments before the Constitutional Court and before the lower courts were substantially different.

25 . The applicant company argued that the impugned Constitutional Court ’ s decision did not allow it to understand whether its constitutional complaint had been rejected because it had failed to lodge a particular remedy or because it had failed to pursue certain arguments before the lower courts. It thus lacked predictability.

26 . In the applicant company ’ s view, the Constitutional Court ’ s case-law (see paragraphs 17 and 26 above) showed that detailed reasoning was provided in cases of “substantive” non-exhaustion. It therefore considered that its constitutional complaint had been erroneously rejected due to the “formal non-exhaustion” of remedies. It argued that the decisions without any detailed reasoning submitted by the Government (see paragraph 18 above) appeared to concern only “formal non-exhaustion”.

27 . The applicant company also argued that its submissions before the lower courts and the Constitutional Court were essentially the same; throughout the proceedings it had argued that the arbitration agreement should have been submitted to the courts deciding the matter.

28 . As regards the German Government ’ s submissions (see paragraph 29 below) the applicant company clarified that it did not argue that the constitutional courts should have always given reasons for their decisions on admissibility but that it should have done so in the present case because of its particular circumstances.

29 . In their comments submitted under Article 36 § 2 of the Convention and Rule 44 § 3 of the Rules of Court, the intervening party, the German Government , pointed out that, pursuant to the Federal Constitutional Court Act, the German Federal Constitutional Court could decide not to admit for consideration a complaint which did not raise a fundamental issue, was manifestly ill-founded and/or did not fulfil the formal requirements. No reasons were required for such decision, which was taken unanimously by a chamber of three judges or by at least six votes of a senate composed of eight judges. In the German Government ’ s view, the lack of reasoned decision did not therefore mean that the complaint was not thoroughly assessed. The Federal Constitutional Court exercised only a control function and no appeal lied against its decision. The limits with respect to its reasoning were aimed at allowing it to focus on the important cases.

30 . There is no doubt in the present case that the applicant company ’ s constitutional complaint was rejected for a failure to comply with one of the admissibility criteria, namely the requirement that the legal remedies be exhausted, which is set out in section 55b (1) of the Constitutional Court Act (see paragraphs 10 and 13 above). The Constitutional Court therefore provided a reason for the rejection of the constitutional complaint but did not provide any further explanation supporting it. Two intertwined issues were raised by the applicant company in this respect (see paragraphs 20 , and 25 to 28 above). Firstly, had the Constitutional Court considered that the applicant company failed to invoke the relevant complaints in substance before the lower courts it should have provided explanation to this effect. Secondly, the Constitutional Court allegedly erred in its decision because the remedies had in fact been exhausted in the “formal” as well as in the “substantive” sense (for the explanation of these terms see paragraph 17 above).

31 . The Court reiterates that for the national superior courts – such as the Constitutional Court – it suffices, when declining to admit or rejecting a complaint, simply to refer to the legal provisions governing that procedure if the questions raised by the complaint are not of fundamental importance (see, among many other authorities, Annen v. Germany , no. 3690/10, § 77, 26 November 2015, and Greenpeace e.V. and others v. Germany (dec.), no. 18215/06, 12 May 2009) or do not have any prospects of success (see Talmane v. Latvia , no. 47938/07, § 29, 13 October 2016; Burg and Others v. France (dec.), no. 34763/02, ECHR 2003 ‑ II, and El Khalloufi v. the Netherlands (dec.), no. 37164/17, § 55, 26 November 2019 – concerning courts of cassation). This being said, the Court must ascertain that decisions of national courts are not flawed by arbitrariness or otherwise manifestly unreasonable, this being the limit of the Court ’ s competence in assessing whether domestic law has been correctly interpreted and applied (see, for example, Talmane , cited above, § 31, and El Khalloufi (dec.) , cited above, § 55).

32 . The Court observes that in the present case the applicant company ’ s arguments against the recognition of the arbitration award were assessed at two levels of jurisdiction. In this connection, a substantial explanation was provided by both the Ljubljana District Court and the Supreme Court. There is no indication that that explanation was flawed by arbitrariness or was otherwise manifestly unreasonable (compare and contrast Pavlović and Others v. Croatia , no. 13274/11, §§ 46-49, 2 April 2015, and Gheorghe v. Romania , no. 19215/04, §§ 48-50, 15 March 2007). As regards the Constitutional Court ’ s finding that the applicant company had failed to exhaust the available remedies, the Court takes note of the Constitutional Court ’ s case-law (see paragraphs 17 to 19 above) which clearly indicated that for the complainant to comply with this requirement he or she must raise the relevant allegations in substance before the lower courts. In fact the Court itself has already had an opportunity to find that it was the Slovenian Constitutional Court ’ s established practice to require complainants to raise the alleged violations of the Constitution in their submissions before the lower courts (see SAZAS (dec.), cited above, § 26 ).

33 . In the present case the Constitutional Court ’ s decision indicated that the applicant company had failed to exhaust the available remedies but it did not specifically mention that, in fact, the applicant company had failed to pursue the relevant complaints in the remedies it had used. However, having regard to the case-file, it is reasonable to assume that the applicant company ’ s constitutional complaint was rejected because the remedies had not been exhausted “in substance”. The Court notes in this connection that the applicant company did not invoke before the Supreme Court the complaint that the first-instance court had acted disproportionately or otherwise in breach of the applicant company ’ s constitutional rights because it had not considered its arguments as amounting to the objection to the existence of the arbitration agreement (see paragraphs and 7 and 9 above). Nothing prevented the applicant company from raising this issue, which was central to its constitutional complaint, before the Supreme Court and thereby giving the latter an opportunity to address it. Instead, the applicant company, which was represented by a qualified lawyer, argued before the Supreme Court that the first-instance court should have obtained a copy of the arbitration agreement based on the provisions of the PILP Act, which – as explained already by the first-instance court – were in fact not applicable in the case (see paragraphs 6 and 7 above).

34 . In view of the above the Court does not find the Constitutional Court ’ s rejection of the applicant company ’ s constitutional complaint based on the non-exhaustion of domestic remedies manifestly unreasonable or arbitrary. It remains to be examined whether in the particular circumstances of this case the Constitutional Court was required to provide further reasons for its decision (see paragraphs 20 , 26 and 28 above).

35 . The Court notes that the purpose of dispensing the Constitutional Court from the obligation of providing reasons in support of its decisions on inadmissibility was to enhance its efficiency (see paragraphs 15 and 16 above). This was clearly a legitimate aim. It further observes that in Suhadolc v. Slovenia ((dec.), no. 57655/08, 17 May 2011) it found manifestly ill-founded the complaint about the limited reasoning of the Slovenian Constitutional Court ’ s decision rejecting the applicant ’ s constitutional complaint. In that case the Court referred to the above ‑ mentioned principles concerning the special position held in this respect by the national superior courts (see 31 above).

36 . The Court sees no reason to depart from these principles in the present case. It notes that the Constitutional Court Act ’ s provisions on limited reasoning did not make any distinction between “formal” and “substantive exhaustion” of domestic remedies (see paragraph 13 above). It also observes that “substantive exhaustion” was a logical component of the admissibility requirement that the available legal remedies should be used before the complaint was brought to the Constitutional Court (see paragraph 17 above).

37 . As regards the domestic case-law, the material submitted to the Court is not sufficient to show that the Constitutional Court has, as a matter of an established practice, provided further explanation for the rejection of constitutional complaints in cases concerning “substantive non-exhaustion” (see paragraphs 17 to 19 above). It is important to note that pursuant to the Constitutional Court Act, the panel could decide to provide explanation in such cases. However, this was an exception falling within the panel ’ s discretion (see paragraph 13 above). Referring to its above conclusion (see paragraph 34 above) and reiterating that its duty is limited to ensuring the observance of the engagements undertaken by the Contracting Parties to the Convention (see García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999 ‑ I), the Court finds no reason to call into question the panel ’ s decision not to exercise the aforementioned discretion and provide further explanation for the rejection of the constitutional complaint in the present case.

38 . In view of the above, the Court finds no appearance of a violation of the right protected by Article 6 § 1 on the grounds alleged by the applicant company. The application should therefore be rejected as manifestly ill ‑ founded under Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 8 April 2021 .

Hasan Bakırcı Aleš Pejchal Deputy Registrar President