FIFTH SECTION

CASE OF KOHLHOFER v. THE CZECH REPUBLIC

( Application no. 22915/07 )

JUDGMENT

STRASBOURG

1 3 October 2011

This judgment is final but it may be subject to editorial revision.

In the case of Kohlhofer v. the Czech Republic ,

The European Court of Human Rights ( Fifth Section ), sitting as a committee composed of:

Mark Villiger , President, Karel Jungwiert , Isabelle Berro-Lefèvre , judges, and Stephen Phillips , Deputy Section Registrar ,

Having deliberated in private on 20 September 2011 ,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1 . The case originated in an application (no. 22915/07) against the Czech Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Austrian national, Mr Bruno Kohlhofer (“the applicant”), on 17 May 2007 .

2 . The applicant was represented by Ms A. Straubova , a lawyer practising in Brno . The Czech Government (“the Government”) were represented by their Agent, Mr V. A. Schorm, of the Ministry of Justice.

3 . On 30 August 2010 the President of the Fifth Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time a s its admissibility (Article 29 § 1).

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

4 . The applicant was a minority shareholder of YTONG, a.s ., a joint stock company incorporated under Czech law.

5 . On 24 June 2003 the general meeting of that company adopted, by votes of the main shareholder, a resolution on the winding up of the company and the transfer of all its assets to the main shareholder. The transfer contract included an arbitration clause by which any disagreement of minority shareholders with the settlement amounts was to be decided in arbitration.

A. Proceedings on the deletion of the company from the Companies Register

6 . On 11 July 2003 the court in charge of the commercial register approved the registration of the transfer. No hearing was held before that decision, which was not served on the applicant as he did not have standing to participate in the proceedings. Based on this decision the company YTONG, a.s . was deleted from the com mercial register on 1 September 2003.

7 . On 11 December 200 3 the Olomouc High Court ( vrchní soud ) dismissed the applicant ’ s appeal contesting that decision. It ruled that since the applicant did not have standing to take part in the impugned proceedings, he was not entitled to appeal their outcome.

8 . On 9 November 2006 the Constitution al Court ( Ústavní sou d ) dismissed the applicant ’ s constitutional appeal, in which he claimed an impairment of h is right to a fair trial and the right to property in the registr ation proceedings because he had not been allowed to be a party in the proceedings that by Article 220h §§ 3 and 4 of the C ommercial C ode create d an irreversible situation. The Constitutional Court held that the C ommercial C ode had not impair ed h is right of access to a court because apart from the registration proceedings there we re other proceedings where he could have assert ed h is rights.

B. Proceedings to set aside the resolution of the general meeting an d on the adequacy of financial compensation

9 . On 2 September 2003 the applicant lodged with the Brno Regional Court ( krajský soud ) an action to have the winding-up resolution set aside and, in eventum , he asserted that the compensation paid for the transfer had not been adequate and claimed the remainder thereof.

10 . On 18 January 2007 the Regional Court rejected the applicant ’ s claim to set aside the resolution referring to Article 220h § 3 of the Commercial Code by which an action to set aside a general meeting resolution on merger could not be lodged if a registration of the merger into the commercial register had been already allowed by a court in charge thereof. The court further terminated the proceedings in respect of the compensation holding that it had no jurisdiction over the dispute because of the arbitration clause in the transfer contract.

11 . On 12 December 2008 the Olomouc High Court dismissed the applicant ’ s appeal.

12 . The applicant lodged an appeal on points of law, which is pending.

C. Arbitration proceedings

13 . On 7 October 2005 the applicant lodged with the Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultura l Chamber of the Czech Republic ( Rozhodčí soud při Hospodářské komoře České republiky a Agrární komoře České republiky ) an action whereby he asserted that the compensation for the transfer had not been adequate and claimed the remainder thereof.

14 . On 19 September 2006 the Arbitration Court terminated the proceedings holding that it could not deal with the matter until the above mentioned court proceedings regarding the same issue of compensation would be finished.

15 . On an unspecified date the applicant lodged a new action with the Arbitration Court . On 17 February 2011 the court discontinued the proceedings . Referring to the judgment of the Court in Suda v. the Czech Republic , no. 1643/06 , 28 October 2010 , it held that it had no jurisdiction to decide on the merits of the claim.

II. RELEVANT DOMESTIC LAW AND PRACTICE

16 . The relevant domestic law and practice are set out in the Court ’ s judgment Kohlhofer and Minarik v. the Czech Republic , nos. 32921/03, 28464/04 and 5344/05 , § § 40-70 , 15 October 2009 .

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION

17 . The applicant complained that he had not been able effectively to challenge the resolution on the winding up of the company because the courts had been precluded by the Commercial Co de to review the merits of his claim. He further complained that both the courts and the Arbitration Court rejected to decide on the issue of adequacy of financial compensation .

He relied on Article 6 § 1 of the Convention, which reads as follows:

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

18 . The Government asked the Court to asses the admissibility and merits of the application at its own discretion .

A. Admissibility

19 . The Court observes that the proceeding s on the issue of adequacy of financial compensation are pending before the Supreme Court. Accordingly, this part of the application must be rej ected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.

20 . On the contrary, t he Court considers that the complaint regarding access to a court to challenge the resolution on the winding up of the company and the transfer of all its assets to the main shareholder is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds (see Minarik v. the Czech Republic , no. 46677/06 , § § 17-24 , 10 Febru ary 2011 ) . It must therefore be declared admissible.

B. Merits

21 . The Court notes that the issue in the present case is identical to th at in the case of Minarik v. the Czech Republic , cited above , where i t found, like in Kohlhofer and Minarik v. the Czech Republic, cited above , a violation of Article 6 § 1 of the Convention on the same ground as is the complaint in the present application . Having examined all relevant circumstances , the Court does not see any reason to hold otherwise in the present case.

22 . There has accordingly been a breach of Article 6 § 1 of the Convention as regards the applicant ’ s lack of access to a court regarding his claim that the resolution of the general meeting on the winding up of the company was unlawful.

II . APPLICATION OF ARTICLE 41 OF THE CONVENTION

23 . Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

24 . The applicant claimed 715,115 Czech korunas ( CZK ) for costs and expenses incurred in the domestic proceedings and CZK 134,008.19 before the Court.

25 . The Government considered the amount excessive and maintained that only those costs should be awarded that had been incurred in causal connection with the violation found. In particular they maintained that costs incurred in the compensation proceedings should not be reimbursed and therefore eventually only approximately CZK 85,000 should be awarded. Regarding the claimed costs before the Court the Government questioned whether the y had been all necessary and reasonable as to quantum and supported by relevant documents.

26 . According to the Court ’ s settled case-law, costs and expenses will not be awarded under Article 41 unless it is established that they were actually and necessarily incurred and are also reasonable as to quantum. Furthermore, legal costs are only recoverable in so far as they relate to the violation found (see Scordino v. Italy (no. 1) [GC], no. 36813/97, § 283, ECHR 2006-V).

27 . Accordingly , the Court considers that only those domestic costs and expenses incurred in the proceedings on the deletion of the company from the Companies Register and the proceedings to set aside the resolution of the general meeting can be awarded . R egard being had to the documents in its possession, the Court considers it reasonable to award the sum of EUR 3,450 for the applicant ’ s costs and expenses incurred before domestic courts .

28 . As to the costs and expense s incurred in the proceedings before the Court, the Court observes that the applicant submitted four invoices adding up to the amount claimed. Neverthe less, with the exception of CZK 33.380,69 for submitting the application, the applicant failed to anyhow specify for what purposes these costs were incurred. R egard being had to the documents in its possession , to the above criteria and other cases raising the same issue (see Kohlhofer and Minarik v. the Czech Republic , cited above , § 119 and Minarik v. the Czech Republic , cited above , § 42) the Court considers it reasonable to award the sum of EUR 2,500 for the applicant ’ s costs and expenses incurred in the proceedings before the Court.

29 . Consequently, the Court awards the applicant EUR 5 , 950 .

30 . The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT UNANIMOUSLY

1 . Declares the complaint concerning access to a court to challenge the resolution on the winding up of the company and the transfer of all its assets to the main shareholder admissible and the remainder of the application inadmissible;

2 . Holds that there has been a violation of Article 6 § 1 of the Convention;

3 . Holds

(a) that the respondent State is to pay the applicant , with in three months EUR 5 , 950 ( five thousand nine hundred and fifty eur os ) , plus any tax that may be chargeable, in respect of costs and expenses , to be converted into Czech korunas at the rate applicable at the date of settlement ;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4 . Dismisses the remainder of the applicant ’ s claim for just satisfaction.

Done in English, and notified in writing on 1 3 October 2011 , pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

             Stephen Phillips Mark Villiger Deputy Registrar President