Resolution CM/ ResDH (2012) 90 [1]

Execution of the judgment of the European Court of Human Rights

Lánchíd Hítel és Faktor Zrt . against Hungary

(Application No. 40381/05, judgment of 2 November 2010, final on 2 February 2011)

The Committee of Ministers, under the terms of Article 46, paragraph 2, of the Convention for the Protection of Human Rights and Fundamental Freedoms, which provides that the Committee supervises the execution of final judgments of the European Court of Human Rights (hereinafter “the Convention” and “the Court”),

Having regard to the final judgment transmitted by the Court to the Committee in the above case and to the violation established (see document DH-D D (2012) 3 71E );

Recalling that the respondent State ’ s obligation under Article 46, paragraph 1, of the Convention to abide to by all final judgments in cases to which it has been a party and that this obligation entails, over and above the payment of any sums awarded by the Court, the adoption by the authorities of the respondent state, where required :

- of individual measures to put an end to violations established and erase their consequences so as to achieve as far as possible restitutio in integrum ; and

- of general measures preventing similar violations;

Having invited the government of the respondent state to inform the Committee of the measures taken to comply with its above mentioned obligation;

Having examined the action report provided by the government indicating the measures adopted in order to give effect to the judgment, including the information provided regarding the payment of the just satisfaction awarded by the Court (see document DH-DD(2012)371E );

Having satisfied itself that all the measures required by Article 46, paragraph 1, have been adopted;

DECLARES that it has exe r cised its functions under Article 46, paragraph 2, of the Convention in this case and

DECIDES to close the examination thereof.

Action Report of 2 August 2011

Appl. No. 40381/05

Lánchíd Hitel és Faktor Zrt ., judgment of 02/11/2010, final 02/02/2011 (Revised)

Introductory case summary

The applicant, Lánchíd Hitel és Faktor Zrt ., is a Hungarian private limited company based in Budapest . It complained that certain debts – in particular social security contributions – which had been assigned by the tax authorities in 2001 and 2002 were declared non- enforceable by the Hungarian courts. It relied in particular on Article 1 of Protocol No. 1 (protection of property) to the Convention. The Court concluded that no “fair balance” has been struck between the demands of the general interests of the community – namely, the integrity of the treasury – and the requirements of the individual ’ s fundamental rights.

There has accordingly been a violation of Article 1 of Protocol No. 1.

I. Payment of just satisfaction and individual measures

Details of just satisfaction

Just satisfaction rewarded to the applicant was paid on 29 April 2011 (pecuniary damage 310.000 €, costs and expenses 40.000 €). Therefore, considering the nature of the violations found in this case, and relevant facts of the case, no special individual measures are necessary in the execution process.

II. General measures

a) Legislation

Section 3(3) c) of the (Old) Taxation Order Act 1990 (no. XCI of 1990) (as in force at the material time) provided that the Act was to be applied to the payment of social security contributions. Section 25(2) f) provided that, if a taxpayer failed to pay the tax and it could not be recovered from that taxpayer, the Tax Authority was entitled to the adoption of a decision establishing vicarious liability to cover the outstanding debt. Sections 6(1) and 6(2), 35(2)f) and 120(1)a) of the (New) Taxation Order Act 2003 (no. XCII of 2003) contained identical rules.

The interpretation that assignees could not claim in civil courts outstanding taxes from those with vicarious liability was established by the Supreme Court in Uniformity Decision no. 2/2004.PJE.

The legislation was subsequently repealed by Act no. LVI of 2005. According to the reasoning of the bill, the interpretation of the Supreme Court in Uniformity Decision no. 2/2004.PJE – an economically unjustified misconception of the law running counter to the intentions of the lawmaker – rendered unenforceable and thus worthless those tax debts which could not be recovered in the liquidation of the original debtors. Therefore the legal avenue of a civil action was to be opened for the assignees of such claims vis-à-vis those with vicarious liability, so as to restore constitutionality in terms of t he right to access to a court in this context.

b) Publication and dissemination

The judgment was published on the website of the Government ( www.kor m any.hu ).

III. Con clusions of the respondent state

The Government considers that the measures adopted have fully remedied the consequences for the applicant of the violation of the Convention found by the Court in this case, that these measures will prevent similar violations and that Hungary has thus complied with its obligations under Article 46, Paragraph 1 of the Convention.

Budapest , 20 March 2012

Zoltân Tallódi

Co-Agent of the Government of the Republic of Hungary

[1] Adopted by the Committee of Ministers on 6 June 2012 at the 11 44 th Meeting of the Ministers’ Deputies .