Legal summary

June 2023

FU QUAN, s.r.o. v. the Czech Republic [GC] - 24827/14

Judgment 1.6.2023 [GC]

Article 6

Civil proceedings

Article 6-1

Access to court

Domestic courts’ failure to examine the merits of a claim, subsuming case facts under relevant law provision under the principle jura novit curia, absent arguments to this effect from the claimant: inadmissible

Article 1 of Protocol No. 1

Article 1 para. 2 of Protocol No. 1

Control of the use of property

Company’s failure to duly raise before domestic courts complaints of authorities’ failure to take good care of its seized property and undue delay in lifting the seizure: inadmissible

Facts – The applicant company’s merchandise was seized in the context of criminal proceedings against its managing director and associate. In a judgment of 17 March 2022, a Chamber of the Court considered that the main object of the application was the impossibility of recovering compensation for damage to merchandise that had lost its value owing to its seizure for five years and the passing of time. It dismissed the Government’s preliminary objection on exhaustion of domestic remedies and, by five votes to two, found a breach of Article 1 of Protocol No. 1, holding that there had been no justifiable reasons to retain the applicant company’s merchandise for almost a year and a half after the acquittal of its managing director and associate.

On 5 September 2022 the case was referred to the Grand Chamber at the Government’s request.

Law – Article 6 § 1:

(1) Introductory remarks – The applicant company had complained, under Article 6 § 1 and Article 13 of the Convention, that it had been denied access to a court on account of a formalistic and restrictive interpretation of national law by the domestic courts. Even though the Chamber had found a violation of Article 1 of Protocol No. 1 and held that there had been no need to give a separate ruling on the complaints under Articles 6 § 1 and 13, the Grand Chamber found it appropriate to deal first with those complaints, which had been the applicant company’s main complaints in its application to the Court.

The applicant company’s complaint under Article 13 should be considered to be absorbed by its complaint under Article 6 § 1, especially as the State Liability Act (the Act) provided for a possibility of obtaining compensation for damage caused by a failure by the authorities to take due care of seized property or undue delay in lifting the seizure.

(2) The Court’s assessment –

The applicant company, which had been represented by a lawyer, had brought its civil action for compensation for damage caused by the State without expressly specifying whether the damage had been caused by an unlawful decision or by irregular official conduct, the two possible causes of action under the Act. In its submissions before the domestic authorities, focusing on the unlawful character of the prosecution and detention of its managing director and other member, the applicant company had not even once mentioned irregular official conduct. At the same time, it had repeatedly referred to the provision of the Act, which set a time-limit for submitting claims for compensation for damage caused by an unlawful decision. In those circumstances, the first-instance court had treated the applicant company’s action as an action against an unlawful decision and had dismissed it for lack of locus standi because only parties to the proceedings from which the unlawful decisions originated could claim compensation from the State. In its subsequent remedies, the applicant company had not argued that the lower court(s) had misconstrued its civil action. In sum, it had neither based its civil action on irregular official conduct, nor argued that the courts should have treated it as an action based on irregular official conduct.

Further, when raising the excessive formalism complaint at the domestic level, the applicant company had stated that “in the situation at issue, the company had been also, figuratively speaking, in custody because its entire human capital had been remanded in custody”. That argument suggested that the alleged excessive formalism had consisted of the refusal of the domestic courts to disregard the applicable statutory provision and grant the applicant company locus standi for its action for compensation for damage caused by the decision on custody.

By contrast, in its subsequent submissions before the Chamber of the Court, the applicant company had adopted a totally different attitude by arguing that the excessive formalism consisted of the domestic courts’ failure to treat its civil action as one based on irregular official conduct, rather than an unlawful decision. However, parties could not validly put forward before the Court arguments which they had never made before the domestic courts.

The Chamber had held, albeit in the context of exhaustion of domestic remedies regarding the complaints under Article 1 of Protocol No. 1, that it had been up to the domestic courts, applying the principle jura novit curia , to subsume the facts of the case as described by the applicant company under the relevant provisions of the Act in order to deal with the merits of its claims. However, the Chamber had reached that conclusion without taking into account the fact that the facts as presented by the applicant company in its civil action might have prevented the domestic courts from treating its action as being based on irregular official conduct. In the circumstances of the case, the domestic courts could not be blamed for not treating the applicant company’s action as an action based on irregular official conduct.

Lastly, even after the dismissal of the applicant company’s civil action, it could have brought a new action specifying irregular official conduct as the cause of the damage. That option had been available to the applicant company for a further four months after the decision in the compensation proceedings had become final.

Conclusion : inadmissible (manifestly ill-founded).

Article 1 of Protocol No. 1:

(1) The scope of the applicant company’s complaints under this Article – Having ascertained what facts had constituted the violation the applicant company complained of and what legal arguments underpinned them, the Grand Chamber concluded that the applicant company had raised altogether three complaints under Article 1 of Protocol No. 1. However, the Chamber had addressed only the complaint of undue delay in lifting the seizure. The Grand Chamber, therefore, considered all the three.

(2) Admissibility –

(a) Complaint of undue delay in lifting the seizure after the acquittal of the applicant company’s managing director and other member – The Court recalled that the applicant must complain that a certain act or omission had entailed a violation of the rights set forth in the Convention or the Protocols thereto, in a manner which should not leave the Court to second-guess whether a certain complaint had been raised or not. Ambiguous phrases or isolated words did not suffice for it to accept that a particular complaint had been raised, as also followed from Rule 47 § 1 (e)-(f) and § 2 (a) of the Rules of Court concerning the contents of an individual application.

In the application form, the applicant company had mentioned that the merchandise had been seized for five years. However, it had done so only to highlight the extent to which the functioning of the company had been paralysed by the allegedly unlawful decision remanding both of its members in custody. In the Grand Chamber’s view, this mention of the five-year storage of the merchandise was too ambiguous to be interpreted as raising the complaint about the prolonged seizure of that merchandise. Had it been the wish of the applicant company at that stage to complain of the prolonged seizure of its property, it should have stated so in its application form in a clear manner. Therefore, this complaint had not been raised in the applicant company’s application to the Court. It had been formulated for the first time in the applicant company’s observations before the Chamber submitted in June 2016. It followed that this complaint had been submitted more than six months after the compensation proceedings ended (in 2013).

In any event, even if this complaint had been lodged within the six-month time-limit, it followed from the Court’s findings concerning the access-to-court complaint that it was inadmissible for non-exhaustion of domestic remedies. The applicant company had not properly availed itself of the possibility of obtaining compensation for the damage resulting from any undue delay in lifting the seizure of its property after the acquittal of its managing director and other member.

By way of observation and in response to the argument that it had been up to the domestic courts, applying the principle jura novit curia , to subsume the facts of the case under the relevant provisions of the Act, the Grand Chamber also referred to the following two principles established in its case-law in the context of exhaustion of domestic remedies.

Even in those jurisdictions where the domestic courts in civil proceedings were able, or even obliged, to examine the case of their own motion (that is, to apply the principle of jura novit curia ), applicants were not dispensed from raising before them a complaint which they might intend to subsequently make to the Court, it being understood that for the purposes of exhaustion of domestic remedies the Court must take into account not only the facts but also the legal arguments presented domestically.

Likewise, it was not sufficient that a violation of the Convention was “evident” from the facts of the case or the applicant’s submissions. Rather, he or she must actually complain (expressly or in substance) of such a violation in a manner which leaved no doubt that the same complaint that had been subsequently submitted to the Court had indeed been raised at the domestic level. That, clearly, could not be said to have been the situation in the case under consideration.

Conclusion : inadmissible (non-exhaustion of domestic remedies).

(b) Complaint relating to the damage to the applicant company’s property following the unwarranted prosecution and detention of its managing director and other member – This complaint had been raised in the application form, but not examined by the Chamber.

The applicant company had considered the criminal proceedings against its managing director and other member and their detention to have been “unlawful” because the persons concerned had eventually been acquitted. Indeed, for the purposes of obtaining compensation from the State, the relevant domestic-law provisions characterised as “unlawful” any judicial decision which had been ultimately quashed or overturned, and any detention of the accused where the criminal proceedings had not ended in his or her conviction. In the applicant company’s view, the decision to seize its property in the context of those criminal proceedings had also been “unlawful”, as a consequence of the acquittal. That argument presupposed that the State should, under Article 1 of Protocol No. 1, be liable for any damage to property resulting from criminal proceedings in which the accused had been eventually acquitted.

However, under the Court’s well-established case-law it did not follow from Article 1 of Protocol No. 1 that an applicant’s acquittal of the criminal charges or the discontinuance of the criminal proceedings must automatically give rise to compensation. This applied a fortiori in the present case, where the applicant company had not been a party to the criminal proceedings against its managing director and other member and thus could not have been convicted or acquitted.

Any such entitlement to compensation did not derive from Article 1 of Protocol No. 1 but from national law. Under the relevant provision of the Act, only the parties to the proceedings in which an unlawful decision had been adopted were entitled to compensation for the damage caused by that decision. Therefore, the applicant company’s compensation claim had not had a sufficient basis in national law. The guarantees of Article 1 of Protocol No. 1 did not apply to that claim.

Conclusion : inadmissible (incompatible ratione materiae ).

(c) Complaint of failure by the domestic authorities to take due care of the applicant company’s seized property – This complaint had been raised in the application form, but not examined by the Chamber. As followed from the Court’s findings concerning the applicant company’s access-to-court complaint, the applicant company had not properly availed itself of the possibility of obtaining compensation for the damage resulting from the State authorities’ alleged failure to keep its seized property in relatively good condition.

Conclusion : inadmissible (non-exhaustion of domestic remedies).

(See also Radomilja and Others v. Croatia [GC], 37685/10 and 22768/12, 20 March 2018, Legal summary ; FU QUAN, s.r.o. v. the Czech Republic , 24827/14 , 17 March 2022)

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

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