Information Note on the Court’s case-law 35

October 2001

Saggio v. Italy - 41879/98

Judgment 25.10.2001 [Section II]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Delay in payment of debt due to lack of financial means of debtor rather than length of winding-up procedure: no violation

Article 13

Effective remedy

Winding-up procedure lasting more than four years, during which no action was open to individual creditors to seek payment of debts or contest the action of liquidators: violation

Facts : The applicant was employed by the F. company until July 1995, when he resigned because he had not been paid since Janua ry 1995. In June 1995 the courts declared that F. was unable to discharge its debts. In a decree of June 1995 the Minister for Industry placed F. in “extraordinary liquidation”, authorised it to continue operating for two years and appointed two liquidator s. The applicant was notified and was told that no enforcement proceedings could be brought against the company while it was in extraordinary liquidation and that none of its creditors would be paid until the liquidators distributed its assets. On an unspe cified date the applicant was paid part of the sum owed to him by the company. However, on account of the company’s considerable debts, the liquidators stated in a memorandum that they could not foresee whether the applicant would be entitled to a share in its assets when they came to be distributed. In February 2001 the extraordinary liquidation proceedings were still pending before the liquidators.

Law : Article 1 of Protocol No. 1 – Future income constituted a “possession” within the meaning of this provi sion if it had already been earned or where an enforceable claim to it existed. In the instant case, since the debtor company had itself acknowledged the applicant’s right to payment of a sum of money, the applicant had a claim to a possession within the m eaning of the provision. The institution of extraordinary liquidation proceedings had amounted to control of the use of property. The procedure had been designed to ensure the fair administration of the assets of the company after it had gone into liquidat ion, with a view to affording equal protection to all its creditors. The interference in question had therefore pursued legitimate aims that were consistent with the general interest, namely the proper administration of justice and the protection of the ri ghts of others. As to whether the interference had been proportionate, a system of temporarily suspending payment of the debts of a commercial company that was in financial difficulty but had been authorised to continue production in the national interest was, in principle, not open to criticism in itself, having regard, in particular, to the margin of appreciation permitted under the second paragraph of Article 1. However, such a system carried the risk of imposing on creditors an excessive burden in terms of their ability to recover their property and consequently had to provide certain procedural safeguards so as to ensure that the operation of the system and its impact on individuals’ property rights were neither arbitrary nor unforeseeable. However, the Italian system at the material time had suffered from a degree of inflexibility. Not until the liquidators filed the final statement of affairs and the plan for the distribution of assets had creditors been able to bring proceedings in the civil courts to contest the sums that had been awarded to them. It had been impossible for them to apply to the courts individually once the extraordinary liquidation proceedings had begun or to monitor the work of the liquidators. It remained to be determined whether, i n view of F.’s financial position and the particular circumstances of the case, the length of the extraordinary proceedings had infringed the applicant’s property rights. The main reason for the delay in the payment of the sum owed to the applicant had not been the length or nature of the liquidation proceedings but rather the debtor company’s lack of financial resources and the applicant’s difficulty in recovering the money he was owed; the State could not be held liable for those circumstances. Accordingl y, the State had not failed to strike the necessary balance between the protection of the right of individuals to the peaceful enjoyment of their possessions and the requirements of the general interest.

Conclusion : no violation (five votes to two).

Article 6 § 1 – The essence of the applicant’s complaint was the fact that until the final statement of affairs had been filed it was impossible to apply to a national court to obtain payment of sums due or to challenge measures taken by the liquidator. Th is complaint warranted examination under Article 13 in view of the more general obligation on States under that Article to provide an effective judicial remedy in respect of a violation of the Convention.

Conclusion : no need to examine (unanimously).

Artic le 13 – For approximately four years and two months after the extraordinary liquidation proceedings had been instituted, the applicant had been unable to apply to any authority to assert his right to recover the sums owed to him or to challenge the measure s taken by the liquidator; nor had he had any other effective means of obtaining an examination of the matter. The rules that had governed extraordinary liquidation proceedings until the end of August 1999, together with the length of time taken to inspect the statement of affairs, had constituted an unjustified interference with the applicant’s right to an effective remedy.

Conclusion : violation (unanimously).

Article 41 – The Court awarded 10,000,000 Italian lire for non-pecuniary damage and a specified sum for costs and expenses.

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

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