Information Note on the Court’s case-law 56

September 2003

Stockholms Försäkrings- och Skadeståndsjuridik AB v. Sweden - 38993/97

Judgment 16.9.2003 [Section II]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Deprivation of property

Obligation to pay bankruptcy costs from bankruptcy estate despite bankruptcy having been declared erroneous: violation

Facts : The applicant is a company w hich instituted proceedings against a forwarding agent concerning the damage of its goods The forwarding agent was subsequently declared bankrupt but its compensation rights emanating from an insurance policy were assigned to the applicant. However, the Di strict Court found that the rights had been assigned invalidly and ordered the applicant to pay the litigation costs incurred by the insurance company. With a view to recovering its litigation costs, and given the lack of seizeable assets of the applicant, the insurance company filed a bankruptcy petition against the applicant. The District Court declared the applicant bankrupt. The declaration of bankruptcy was upheld by the Court of Appeal but subsequently quashed by the Supreme Court, which found that th e transfer of rights under the insurance to the applicant had been valid. Following the Supreme Court’s ruling, the District Court fixed the fees to be paid to the official receiver who had been in charge of the applicant’s bankruptcy. The applicant appeal ed, arguing that liability to bear the bankruptcy costs would violate its property rights. The appeal was dismissed by the Court of Appeal, and the Supreme Court refused leave to appeal. The assets of the bankruptcy estate were used to cover the receiver’s fees.

Law : The Government’s preliminary objection (non-exhaustion): proceedings against the State under the Tort Liability Act can be brought only when there has been a wrongful act or omission, and there were no indications that the declaration of bankr uptcy by the District Court had been made arbitrarily or negligently: objection dismissed.

Article 1 of Protocol 1 – The assets used to pay the receivers’ fees were the applicant’s “possessions”. The “appropriation” took place after the Supreme Court had quashed the declaration of bankruptcy and under those circumstances it amounted to a deprivation of property. Thus, although the interference could be considered to have been pursued “in the public interest” – to contribute to efficient bankruptcy proceedi ngs – it was not proportionate, bearing in mind that it stemmed from a previous erroneous declaration of bankruptcy.

Conclusion : violation (unanimously).

Article 6 § 1 – This provision was not applicable: under Swedish law liability for fees remains even i f bankruptcy has been quashed, so there was no arguable right to be relieved of that liability.

Conclusion : no violation (unanimously).

Article 13 – The Court of Appeal dismissed the applicant’s appeal without an examination on the merits. A claim for damages against the State would not have constituted an effective remedy and there was no evidence of any other remedy.

Conclusion : violati on (unanimously)

Article 41 – The Court awarded the applicant 200 euros in respect of pecuniary damage. It also made an award in respect of costs and expenses.

© Council of Europe/European Court of Human Rights This summary by the Registry does not bind t he Court.

Click here for the Case-Law Information Notes