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You are here: BAILII >> Databases >> European Court of Human Rights >> GRANOS ORGANICOS NACIONALES S.A. v. GERMANY - 19508/07 [2012] ECHR 517 (22 March 2012) URL: http://www.bailii.org/eu/cases/ECHR/2012/517.html Cite as: [2012] ECHR 517 |
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FIFTH SECTION
CASE OF GRANOS ORGANICOS NACIONALES S.A. v. GERMANY
(Application no. 19508/07)
STRASBOURG
22 March 2012
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Granos Organicos Nacionales S.A. v. Germany,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Dean Spielmann, President,
Boštjan
M. Zupančič,
Mark Villiger,
Ann
Power-Forde,
Ganna Yudkivska,
Angelika
Nußberger,
André Potocki, judges,
and
Claudia Westerdiek,
Section
Registrar,
Having deliberated in private on 21 February 2012,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
3. The applicant company alleged that the refusal to grant legal aid in civil proceedings was discriminatory and violated its right of access to a court.
4. By a decision of 12 October 2010 the Court declared the application admissible.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
II. RELEVANT DOMESTIC LAW
Section 110 (security for costs of proceedings)
“(1) Plaintiffs who do not reside in a Member State of the European Union or in another State party to the Agreement on the European Economic Area have, at the other party’s request, to provide a security for the costs of the proceedings.”
Section 114 (preconditions)
“Parties who on account of their personal and economic circumstances are unable to pay the costs of litigation, or who can only pay these costs in part or in instalments shall, upon their application, be granted legal aid if the intended litigation of the case offers sufficient prospects of success and does not appear wanton. ...”
Section 116 (legal persons)
“Upon their application, legal aid shall be granted to
...
(2) legal persons or associations capable of being a party founded or based in another Member State of the European Union or in another State party to the Agreement on the European Economic Area if the costs can be paid neither by them nor by those financially involved in the object of the legal dispute and if non-litigation of the case would run counter to the general interest. Section 114, last part of first sentence, shall apply.”
Section 12 (civil proceedings)
“In civil legal disputes the action shall not be served until the fees for the general proceedings have been paid ...”
Section 14 (exception to contingency)
“Section 12 ... shall not apply where
1. the plaintiff has been granted legal aid,
2. the plaintiff is exempt from paying fees, or
3. the intended litigation of the case does not lack prospects of success and does not appear wanton, and where it can be substantiated that
(a) in view of the plaintiff’s financial situation or other reasons, immediate payment of the costs would cause difficulties or
(b) delaying litigation would cause damage to the plaintiff that could not be compensated, or only with difficulty; the declaration of the authorised counsel is deemed to be sufficient substantiation.”
Section 67 (appeal against the order for advance payment)
“An appeal can be lodged against the decision to make the court action contingent upon the advance payment of costs and against the amount of the fees ...”
III. PERUVIAN LAW
“Legal aid is granted to natural persons who would risk, upon payment or guarantee of the costs of the proceedings, to no longer be able to maintain themselves or their dependents.”
IV. INTERNATIONAL TREATY LAW
“In civil and commercial matters, nationals of the Contracting States shall be granted free legal aid in all the other Contracting States, on the same basis as nationals of these States, upon compliance with the legislation of the State where the free legal aid is sought.“
Article 31 of the Hague Convention provides that any State may accede to the convention, unless a State or several States which have ratified the convention object.
The Federal Republic of Germany ratified the Hague Convention on 2 November 1959. The Republic of Peru is not a State party to that convention.
V. COMPARATIVE LAW
THE LAW
I. THE GOVERNMENT’S PRELIMINARY OBJECTION
19. In their submissions filed on 25 February 2011, the Government contested that the applicant company still existed. They submitted that the applicant company had failed to submit unequivocal proof that it was currently in existence. Also, it was not clear whether the applicant company had filed for insolvency proceedings to be instituted, which might have resulted in the managing director’s lacking authority to appoint counsel in the proceedings before the Court.
20. The applicant company submitted that the Government’s arguments in this regard could no longer be heard following the Court’s finding that the instant complaint was admissible on 12 October 2010. They further submitted that the applicant company was still in existence and was registered both in the Peruvian Register of Legal Persons and with the revenue authority. The applicant company was inactive, as it lacked the means to engage in business, but it had not filed for insolvency.
21. The Court reiterates that it is not precluded from examining, where appropriate, issues relating to the admissibility of an application under Article 35 § 4 of the Convention, as that provision enables the Court to dismiss applications it considers inadmissible “at any stage of the proceedings”. According to Rule 55 of the Rules of Court, any plea of inadmissibility must, however, in so far as its character and the circumstances permit, have been raised by the respondent Contracting Party in their observations on the admissibility of the application, submitted as provided in Rule 54. Only exceptional circumstances, in particular, where the reason prompting an objection to admissibility became known only at a later stage, may dispense a Government from the obligation to raise their objection in their observations before the adoption of the Chamber’s admissibility decision (see Mooren v. Germany [GC], no. 11364/03, § 57, 9 July 2009, with further references).
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
23. The applicant company complained that the refusal to grant legal aid had violated its right of access to a court. It relied on Article 6 of the Convention, which, in so far as relevant, reads as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
1. Submissions by the Government
24. The Government submitted that neither the national provisions concerning the granting of legal aid to legal persons, nor their concrete application in the instant case, violated the applicant company’s Convention rights. The legal restrictions imposed on the granting of legal aid were legitimate and did not violate the applicant company’s right of access to a court. Having regard to the fact that a legal person’s liability, particularly that of a limited company, was limited, it was justified to set more restrictive requirements for legal persons with regard to the granting of legal aid. Furthermore, even a domestic company in the applicant company’s position would not have been granted legal aid, as the applicant company had not submitted that the non-litigation of the case would run counter to the general interest, as required under section 116 § 1 (2) of the Code of Civil Procedure.
31. The decisions taken in the applicant company’s individual case had not violated its right of access to a court. The applicant company had been free to pursue its claim by filing a request to be exempted from the obligation to advance the court costs under section 14 § 3 (a) of the Court Fees Act. This provision was based on the prerequistes that the intended claim appeared neither devoid of prospects of success nor wanton and that the plaintiff could not raise the funds for the advance payment. The standards applied by the courts with respect to prospects of success and wantonness were identical to those applied in the examination of a legal aid claim under section 116 of the Code of Civil Procedure. The legal consequences were not placed at the discretion of the trial court. The purpose of this provision was to guarantee that parties had access to a court in situations in which they were unable to raise funds for the advance payment. As the German courts interpretated the procedural law in line with the procedural rights set out by the Basic Law and by the Convention, a positive decision would have been to be expected from the Hamburg Regional Court. Solely the applicant company was responsible for having chosen not make use of this available means.
32. In so far as the applicant company faced any impending damage, such as its claim becoming statute-barred, it could have been released from the obligation to make advance payment of the court costs under section 14 § 3 (b).
33. The applicant company had not been prevented from bringing a claim before the Hamburg Regional Court by the fact that representation by counsel was compulsory before that court. Under the relevant provisions of the Federal Code of Attorneys’ Fees, payment for counsel became due only after the appeal stage had been completed. The fact that counsel were allowed to request advance payment had clearly not posed a problem for the applicant company as it had obviously been able to find a lawyer who was willing to represent it before all court instances without requesting payment. Under the current law, the applicant company could even have come to an agreement with its counsel regarding the payment of a success fee, or could have turned to a commercial litigation finance provider.
34. The applicant company had not been prevented from lodging its claim by the obligation under section 110 of the Code of Civil Procedure to provide security for the costs of the proceedings. Defendants only rarely filed a request under that provision. It could not be speculated upon whether the defendant party would have had recourse to this provision and it was unlikely that the Hamburg Regional Court would have granted such a request.
2. Submissions by the applicant company
35. The applicant company contested these arguments. It emphasised from the outset that the instant case was of general relevance for the effective legal protection of small third-world companies doing business in Germany and Europe. As German companies were typically financially stronger than their third-world partners they were, as a rule, in a position to dictate German law and a German venue for their contractual relationships. The denial of legal aid would, therefore, be an incentive for them to drive their third-world counterparts into bankruptcy, as they would be protected from legal prosecution by the denial of legal aid.
38. It was not correct that German law drew a distinction between no profit making and profit-making legal persons. German courts had consistently granted legal aid to commercial legal persons, and there was no known decision where a legal person had been denied legal aid on account of the fact that it pursued profit. It followed that the Government could not rely on such a distinction before the Court. Nor could the different treatment of legal persons be justified by tax advantages, as those advantages were enjoyed by legal persons and natural persons carrying on business alike.
39. It was not correct that the applicant company would have obtained release from the obligation to advance the court fees if it had filed a request to that effect. Moreover, this argument had already been dismissed by the Court in its decision on admissibility. It was left to the discretion of the courts whether to dispense parties from the advance payment of court fees. In view of the decisions given by the German courts on the applicant company’s application for legal aid, it appeared highly unlikely that the same courts would have granted the applicant company release from the advance payment.
40. Even if this had been the case, it would not have solved the applicant company’s problems of submitting a guarantee for legal costs under section 110 of the Code of Civil Procedure amounting to some 90,020 euros for each of the defendant parties, and paying its own lawyer’s fees. The obstacle of providing a guarantuee for legal costs would in any case have been impossible for the applicant company to overcome. Contrary to the Government’s submissions, no defendant in Germany had ever failed to ask for such a guarantuee from non-European plaintiffs. There was, furthermore, no doubt that the Regional Court would have granted such a request. The consequence would have been that the claim would have been dismissed as inadmissible. Moreover, it was not true that the applicant company’s counsel had waived his right to a lawyer’s fee. In the interest of litigation, he had merely agreed not to demand payment of any fees while the application for legal aid was pending.
41. The Government could not validly rely on the argument that the refusal of legal aid under section 116 of the Code of Civil Procedure had been motivated by the wish to encourage non-European countries to join the Hague Convention. In none of the decisions denying the applicant company legal aid had the German courts relied on this argument. The point had merely been made that legal aid should be made available to legal persons from those countries which granted German legal persons legal aid in return. The applicant company’s enjoyment of its human rights could not be made dependant on the Republic of Peru joining the Hague Convention, since the Hague Convention ruled on many different issues, of which legal aid was only one. There might be, therefore, a number of reasons for a State not to accede the Hague Convention.
42. The Peruvian law granted full legal aid to national and foreign legal persons alike and did not have a requirement of providing security to the defendant party for the costs of litigation. A German legal person in a similar situation to the applicant company’s would thus have been granted legal aid in Peru. Even though section 179 of the Code of Civil Procedure expressly provided for legal aid to be granted to natural persons only, the Constitutional Court of Peru had, in its decision of 4 August 2006 in case no. 4972-2006-PA/TC, expressly ruled that the fundamental right of equal treatment and to effective protection by the courts also applied to legal persons. In accordance with this ruling, legal aid was granted in Peru to legal persons if both the legal person and its shareholders were indigent, as could be seen from four decisions granting legal aid to legal persons by Peruvian courts. There was no indication that Peru denied legal aid specifically to foreign legal persons. As far as could be seen, there was no case-law on the granting or denying of legal aid to foreign legal persons in Peru which led to a conclusion that legal aid had so far either been granted to legal persons straight away or not asked for in view of the fact that the maximum amount to be paid when filing a lawsuit was low (approximately 120 euros).
43. It was not correct that the applicant company had been free to bring a claim by agreeing to a success fee with its attorney, because this option became lawful only after the relevant events and the relevant claims had become time-barred. Even if this had not been the case, no lawyer was obliged to enter into such arrangement and it would, furthermore, not have solved the problem of having to provide security for the legal costs, which neither the applicant company nor its shareholders were in a position to do.
44. The applicant company could not have obtained effective legal protection by turning to a commercial litigation finance provider, as it was unlikely that such a provider would have been found to finance the case before the claim became time-barred. Furthermore, the applicant company could not have been expected to give up some 30% of its claim in order to gain access to the courts.
3. Assessment by the Court
45. The Court reiterates that the right to a court, of which the right of access constitutes one aspect, is not absolute but may be subject to limitations. Nevertheless, the limitations applied must not restrict the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with Article 6 § 1 if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved (see, among other authorities, Khalfaoui v. France, no. 34791/97, § 35, ECHR 1999 IX; Papon v. France, no. 54210/00, § 90, ECHR 2002 VII; and Paykar Yev Haghtanak Ltd v. Armenia, no. 21638/03, § 44, 20 December 2007).
51. In determining whether the restriction on the right of access to a court can be regarded as proportionate to the aims pursued, the Court considers that specific weight has to be attached to the procedural safeguards provided in the domestic law. The Court observes that the German legal system, under section 14 § 3 (a) of the Court Fees Act, provides for the possiblity to lodge a request to be exempted from the obligation to advance payment of the court fee if the case does not lack prospects of success and does not appear wanton, and where it can be substantiated that immediate payment of the costs would cause difficulties to the applicant company. The Court notes that the possiblity to lodge such a request is open to natural and legal persons alike and does not differentiate between domestic and foreign legal entities. It thus appears that the applicant company would have been in a position to lodge such a request, but refrained from doing so. The Court further observes that it appears from the wording of section 14 § 3 (a) that this provision, unlike the possibility to appeal under section 67 of the Court Fees Act primarily adressed by the Court in its admissiblity decision in the instant case, does not appear to grant any discretion to the trial court if the intended litigation of the case does not lack prospects of success and does not appear wanton and where it can be substantiated that immediate payment of the costs would cause difficulties for the applicant company.
52. The Court takes note that a possible exemption from the obligation to make advance payment does not liberate a plaintiff from the necessity to satisfy their own counsel’s request for advance payment. Furthermore, there remains the possiblity for the defendant to request the plaintiff to provide security for the payment of court fees under section 110 of the Code of Civil Procedure. The Court observes, however, that advance payment of lawyer’s fees is not compulsory under German law. It further observes that it has not been established by the applicant company that the question of providing security was raised during the proceedings in the instant case.
53. Having regard to the above, and in the absence of a consensus among the State Parties to the Convention on the granting of legal aid to legal persons, the Court considers that the limitations imposed on the applicant company’s right of access to a court were proportionate to the aims pursued.
It follows that there has been no violation of the applicant company’s right of access to a court under Article 6 § 1 of the Convention.
III. ALLEGED VIOLATION OF ARTICLE 6 § 1 IN CONJUNCTION WITH ARTICLE 14 OF THE CONVENTION
54. The applicant company further complained that it had been discriminated against in its capacity as a foreign legal person. It relied on Article 6 § 1 in conjunction with Article 14 of the Convention, which reads as follows:
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
55. Referring to its submissions on the alleged violation of Article 6 § 1 of the Convention, the Government submitted that the different treatment of natural and legal persons with respect to legal aid served a legitimate aim and was proportionate. Furthermore, the different treatment of foreign legal persons was justified by the principle of reciprocity. Lastly, the Government submitted that a domestic company likewise would have been refused legal aid for lack of a public interest, had it filed a petition for such aid in similar circumstances to those in which the applicant company found itself.
56. The applicant company contested these arguments.
57. Having regard to its findings above, the Court considers that the Government have submitted relevant reasons for the different treatment of natural and legal persons – in particular the necessity to control the use of public funds for financing litigation by private companies – and between domestic and foreign legal entities, in particular the principle of reciprocity. It follows that there has been no violation of Article 6 § 1 in conjunction with Article 14 of the Convention.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Rejects the Government’s preliminary objection;
2. Holds that there has been no violation of Article 6 § 1 of the Convention;
3. Holds that there has been no violation of Article 6 § 1 in conjunction with Article 14 of the Convention.
Done in English, and notified in writing on 22 March 2012, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia
Westerdiek Dean Spielmann
Registrar President