FIFTH SECTION

Application no. 31765/08 Andrej LAMOVEC against Slovenia lodged on 23 June 2008

STATEMENT OF FACTS

The applicant, Mr Andrej Lamovec , is a Slovenian national, who was born in 1970 and lives in Ljubljana . He is represented before the Court by Ms V. Holec , a lawyer practising in Ljubljana .

A. The circumstances of the case

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

The applicant was a stockbroker working as a head of trading for a brokerage firm.

On 3 December 2003 the Securities Market Agency (hereinafter “the Agency”), an independent authority vested with supervisory powers in the field of securities market operations, initiated proceedings for the revocation of the applicant ’ s stockbroker licence on the ground that in the period between 4 December 2000 and 20 December 2001, he had allegedly executed twenty-one fictitious securities transactions. In each of these transactions, the brokerage firm had acted as both the seller and buyer of shares, all of them involving concurrent orders of several clients to buy shares under equal conditions, which had been followed by concurrent orders of the same clients to sell the shares they had bought shortly before. In some cases the brokerage firm itself had bought shares from clients and subsequently sold them back to them. The concurrent orders had been executed simultaneously by means of a special (“user cross”) function key which had ensured that transactions could be executed between two distinct parties. The differences between the purchase prices and the subsequent sale prices had been insignificant and the transactions had only benefited the brokerage firm which had received its commission. Based on this, the Agency considered that the transactions in question had been pre-arranged and that the applicant, who had executed them, must have been aware of their content.

In his reply to the Agency ’ s “statement of the reasons for instituting proceedings of revocation of a stockbroker licence”, on 13 January 2004 the applicant contested the facts alleged by the Agency as well as the application and interpretation of the substantive and procedural law. As regards the facts, the applicant argued, inter alia , that he had not been acquainted with the details of the transactions in question, as the concurrent orders had been made by another department, whereas the trading department had only executed them. The applicant maintained that in the four-day period from 14 to 19 December 2000, in which four of the controversial transactions had been made, the trading department had executed 559 securities transactions. Thus, the applicant alleged that he had not known, nor had he been required to verify, whether each of these transactions was made in a regular manner. Moreover, he contested the Agency ’ s powers of investigation and adjudication of the stock exchange rules and pleaded expiry of the statute of limitations. Finally, the applicant disagreed with the Agency ’ s interpretation of the notion “fictitious transactions”. He proposed that the manner of executing the controversial transactions be examined by an expert in securities operations and that an oral hearing be conducted in this respect.

On 14 January 2004 the applicant lodged an initiative for the review of constitutionality of certain provisions of the Securities Market Act applicable to his case before the Constitutional Court . He challenged, inter alia , a number of provisions regulating the proceedings before the Agency and the judicial review proceedings, including the one providing that the Agency ’ s decision were, in principle, rendered without holding a hearing.

On 21 January 2004 the Agency, without giving any reasons, dismissed the applicant ’ s request for an oral hearing and the appointment of an expert.

On 11 February 2004 the Agency revoked the applicant ’ s stockbroker licence on the ground that he had executed eleven fictitious securities transactions and thereby repeatedly breached the trading rules. The Agency, dismissing the applicant ’ s objections as to the facts, considered that the fictitious nature of transactions executed by the applicant had been sufficiently established by documentary evidence resulting from the stock-exchange trading system. Moreover, the Agency held that that the trading records saved in the stock-exchange trading system excluded any possibility of coincidence; therefore, in the Agency ’ s opinion, the applicant had known that the transactions in question had not been intended to produce any effects. All the other applicant ’ s objections were dismissed as well.

The applicant lodged a request for judicial review before the Supreme Court which had the power to decide both the questions of law and fact. In his request, the applicant essentially repeated the pleas made in his reply to the statement of reasons of 13 January 2004 and added a number of new complaints. Moreover, he requested that an oral hearing be held, although a hearing in these proceedings was excluded by law. Nevertheless, the applicant argued that the statutory exclusion was unconstitutional and proposed that this issue be raised before the Constitutional Court .

On 13 October 2004 the Constitutional Court rendered a decision on the review of constitutionality of certain provisions of the Securities Market Act, in which it joined several applications regarding the same matter. Some of the challenged provisions of the Act were found to be unconstitutional; however, they did not pertain to procedural matters.

On 14 February 2006 the Supreme Court dismissed the applicant ’ s action for judicial review without having conducted an oral hearing. Moreover, the court made no findings with respect to the applicant ’ s request to appoint an expert and hold an oral hearing. As regards the facts of the case, the Supreme Court agreed with the Agency that the applicant must have been aware of the irregularity of the transactions in question, considering the short intervals between the purchase and sales orders.

The applicant lodged a constitutional appeal against the judgment of the Supreme Court.

On 6 December 2007 the Constitutional Court dismissed his appeal, finding, inter alia , that although no hearing had been held before the Supreme Court, the applicant ’ s right to be heard had not been affected, as he had had an opportunity to present his submissions in written form. Moreover, as the applicant ’ s request for an oral hearing before the Supreme Court had been inadmissible, the court had not been required to comment on it.

B. Relevant domestic law

At the time of the events at issue, the securities market operations and the powers of the Securities Market Agency in respect thereof were regulated in the Securities Market Act. As regards the revocation of a stockbroker licence, the Act provided as follows:

Article 112

“(1) The Agency shall withdraw the licence to provide services:

...

7. if a stockbroker acts in severe contravention of the rules pertaining to the organised market (Article 247).

(2) As severe violation of the provisions referred to in items 6 and/or 7 of the first paragraph shall be deemed the following:

...

2. recurrent violation of the said provisions.”

Article 247

“In providing services with regard to the securities on the organised securities market, the stock exchange shall be obliged to comply with the trading rules and other general acts of the stock exchange and with the requirements of the responsible bodies of the stock exchange.”

With regard to oral hearing in the proceedings conducted by the Agency, the Act provided as follows:

Article 315

“(1) The Agency shall adopt decisions without a hearing.

(2) Notwithstanding the first paragraph, the president of the senate may convene a hearing if he or she considers that this is necessary in order to explain or establish relevant facts.

(3) The president of the senate may, without a hearing, hear parties to the action and other persons if he or she considers that this is necessary in order to explain or establish relevant facts.”

As regards the oral hearing in the proceedings of judicial review, Article 331 of the Act explicitly excluded such a possibility.

COMPLAINT

The applicant complains under Articles 6 and 13 of the Convention about the lack of equality of arms and the lack of an oral hearing in the proceedings of revocation of his stockbroker licence, which prevented him from participating effectively in the proceedings.

QUESTION TO THE PARTIES

Did the applicant have a fair hearing in the determination of his civil rights and obligations, in accordance with Article 6 § 1 of the Convention? In particular, having regard to the fact that the applicant contested the facts as established by the Securities Market Agency and to what was at stake for him, did the fact that no oral hearing was held violate his right to participate effectively in the proceedings of revocation of his stoc kbroker licence?