SECOND SECTION
CASE OF SACE ELEKTRİK TİCARET VE SANAYİ A.Ş. v. TURKEY
(Application no. 20577/05)
JUDGMENT
STRASBOURG
22 October 2013
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 Sace Elektrik Ticaret ve Sanayi A.Ş. v. Turkey,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
Guido Raimondi, President,
Danutė Jočienė,
Peer Lorenzen,
Dragoljub Popović,
Işıl Karakaş,
Nebojša Vučinić,
Paulo Pinto de Albuquerque, judges,
and Stanley Naismith, Section Registrar,
Having deliberated in private on 1 October 2013,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
The case originated in an application (no. 20577/05) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish company, Sace Elektrik Ticaret ve Sanayi A.Ş. (“the applicant company”), on 7 June 2005.
The applicant company was represented by Mr S. Erdoğan, a lawyer practising in Ankara. The Turkish Government (“the Government”) were represented by their Agent.
On 5 March 2008 notice of the application was given to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
On an unspecified date, the applicant company signed a loan agreement with Yurtbank and registered a mortgage in respect of a plot of land measuring 20,827 sq.m in Istanbul. In 1999, following the applicant company’s delay in its monthly payments, the bank initiated enforcement proceedings. By a decision dated 21 December 1999, the Banking Regulation and Supervision Agency (Bankacılık Düzenleme ve Denetleme Kurulu) decided to transfer the management and control of Yurtbank to the Savings Deposit Insurance Fund (Tasarruf Mevduat Sigorta Fonu - hereinafter referred to as “the Fund”).
At the end of the enforcement proceedings, the Enforcement Court decided that the land in question would be sold at public auction. Before the auction, the Kartal Enforcement Office ordered an expert’s report, and the market value of the land was established at 6,555,945,000,000 Turkish liras (TRL).
On 19 February 2001 the Fund decided that Yurtbank be merged into Sümerbank, a State-owned bank.
The Enforcement Office announced two dates of public auction, namely 27 February and 9 March 2001, for the sale of the land. Since a bid amounting to at least 60% of the market value of the land, as determined by the experts, could not be obtained during the first auction, the land was sold at the second auction to the sole bidder, namely Sümerbank, which offered TRL 2,623,070,000,000, corresponding to slightly more than 40% of the market value.
On 15 March 2001 the applicant company applied to the Kartal Enforcement Court to obtain the annulment of the public auction, alleging that there had been several procedural shortcomings in its organisation. In this respect, the applicant company maintained in the first place that there had been an error in the notice of the public auction. While the correct plot number was 111/4, in the notice the number had been written as 11/4. Furthermore, according to the applicant company, the holding of the second auction on a legal holiday had had a negative impact on attendance.
On 22 October 2002 the court found for the applicant company and annulled the public auction held on 9 March 2001.
On 3 February 2003 the Court of Cassation held that the first instance court’s reasoning in annulling the auction had not been in line with domestic law. In this connection, it maintained that the typing error regarding the plot number of the land was minor and that in the notice the location of the land had been described in detail, thus avoiding any confusion. As a result, the typing error in the notice did not require the annulment of the auction. The court further made a distinction between public and legal holidays. It stated that contrary to public holidays, government agencies continued to work on legal holidays. In the instant case, 9 March 2001 had been declared a legal holiday by the Council of Ministers, but this fact did not necessitate the postponement of the auction.
The Court of Cassation nevertheless ruled that the auction should in any event be annulled, because in order to be able to sell the land to the bidder, the bid in the second auction should have covered 40% of the market value of the land, together with the costs and expenses incurred for the sale of the land. The Court of Cassation calculated that the expenses amounted to TRL 875,875,000. As a result, it stated that a valid bid should have amounted to at least TRL, 2,623,253,875,000. It accordingly amended the reasoning for the annulment, but upheld the judgment of the first-instance court.
On 11 March 2003 the defendant declared in writing that it waived any claim in respect of the costs and expenses incurred for the sale of the land. Relying on this declaration, on 14 March 2003 it requested the rectification of the decision of 3 February 2003.
On 21 May 2003 the Court of Cassation upheld the defendant’s argument and decided to quash the decision of 3 February 2003.
The case was accordingly remitted to the Enforcement Court. On 11 November 2003 the first-instance court decided to maintain its initial decision. Consequently, the case was brought before the Joint Civil Chambers of the Court of Cassation. On 24 March 2004 the Joint Civil Chambers supported the reasoning of the relevant chamber of the Court of Cassation and quashed the decision of the Enforcement Court.
On 21 September 2004 the first-instance court decided to abide by the decision of the Joint Civil Chambers of the Court of Cassation. It consequently dismissed the case and ordered the payment of a fine amounting to 10% of the object of the dispute, namely TRL 262,307,000,000 (approximately 140,000 euros (EUR)).
On 14 January 2005 the Court of Cassation rejected the applicant company’s request for an appeal and this decision was notified on 10 February 2005.
According to the information received from the applicant company, as of 5 July 2007 the applicant company had not yet paid the fine in question.
II. RELEVANT DOMESTIC LAW AND PRACTICE
Section 134(2) of the Enforcement and Bankruptcy Act (Law no. 2004) provides that a fine amounting to 10% of the value of the bid is imposed when a debtor unsuccessfully seeks to obtain the annulment of a public auction.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION
The applicant company alleged that the fine imposed on it pursuant to section 134 of Law no. 2004 had constituted a breach of its right of access to a court, since it should be construed as a penalty for having exercised its right to bring a case before the domestic courts. It relied on Article 6 § 1 and Article 13 of the Convention.
The Court considers that this part of the application should be examined from the standpoint of Article 6 § 1 of the Convention, of which the relevant part reads:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
A. Admissibility
The Government asked the Court to reject this part of the application for failure to comply with the requirement of exhaustion of domestic remedies on the ground that the applicant company had failed to raise this complaint before the domestic authorities.
The Court observes that the fine imposed on the applicant company was mandatory, pursuant to section 134 of Law no. 2004. As a result, it could not have been expected to raise an objection to this issue before the national courts. Accordingly, the Court rejects the preliminary objection of the Government.
The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
The applicant company alleged that the heavy fine imposed pursuant to section 134(2) of Law no. 2004 had constituted a breach of its right of access to a court, since it should be construed as a penalty for having exercised its right to bring its case before the domestic courts.
The Government contested the allegation. In their submission, the applicant company had been able to bring its case before the domestic courts. The purpose of the fine in question was to avoid unjust objections intended to delay the payment of debts.
The Court reiterates at the outset that Article 6 § 1 secures to everyone the right to have any claim relating to his civil rights and obligations brought before a court or tribunal. However, the “right to a court” is not absolute and it may be subject to limitations permitted by implication, because the right of access by its very nature calls for regulation by the State. Guaranteeing to litigants an effective right of access to a court for the determination of their “civil rights and obligations”, Article 6 § 1 leaves the State a free choice of the means to be used towards this end but, while the Contracting States enjoy a certain margin of appreciation in that respect, the ultimate decision as to the observance of the Convention’s requirements rests with the Court (see Kreuz v. Poland, no. 28249/95, §§ 52-53, ECHR 2001-VI).
The central issue in the present case is that a fine, amounting to 10% of the value of the bid made at the public auction, was imposed on the applicant company, which was already encountering financial difficulties. The Court has previously held that the imposition of a fine in order to prevent a build-up of cases before domestic courts and to ensure the administration of justice is not, as such, incompatible with the right of access to a court (see Toyaksi and Others v. Turkey (dec.), nos. 43569/08, 5801/09, 19732/09, and 20119/09, 20 October 2010, and Karakaşoğlu v. Turkey (dec.), no. 39105/09, 10 April 2012). However, the amount of the fine imposed, assessed in the particular circumstances of a given case, is also a material factor in determining whether or not a person enjoyed such right of access (see Kreuz, cited above, § 60, and Stankov v. Bulgaria, no. 68490/01, § 52, 12 July 2007).
Unlike other cases concerning excessive court fees, where individuals concerned, being unable to pay, did not have “access” to a court or to a particular stage of the proceedings (see Kaba v. Turkey, no. 1236/05, §§ 19-25, 1 March 2011, and Mehmet and Suna
Yiğit v. Turkey, no. 52658/99, §§ 33-39, 17 July 2007), in the instant case the merits of the applicant company’s case was indeed examined at three levels of jurisdiction. The applicant company thus had “access” to all stages of the proceedings. However, the Court reiterates that the imposition of a considerable financial burden after the conclusion of the proceedings may well act as a restriction on the right to a court (see Stankov, cited above, § 54). The Court therefore considers that the imposition of a fine of almost EUR 140,000 constituted such a restriction.
The Court further notes that a restriction affecting the right to a court will not be compatible with Article 6 § 1 of the Convention unless it pursues a legitimate aim and there is a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved (see Stankov, cited above, § 55).
The Court must therefore examine whether this was achieved in the present case. It notes in this connection that the purpose of the fine regulated by section of 134 Law no. 2004 is to avoid unnecessary claims intended to delay payment. The Court therefore considers that the rule in question pursues the legitimate aim of ensuring the proper administration of justice and protecting the rights of others. It must now examine whether the restriction, in the circumstances of the present case, was proportionate to the legitimate aim pursued.
The Court notes in the first place that the public auction that the applicant company sought to challenge was initially annulled by the Court of Cassation on 3 February 2003. The Appeal Court, pointing out that a valid offer should have covered both 40% of the market value of the property and the costs and expenses incurred in respect of the sale, found it established that the bid in the present case was not sufficient. The Court notes that it was only on 11 March 2003 that the defendant made a declaration to the Enforcement Office that it refrained from requesting the sale expenses from the applicant company. The Court therefore observes that although remedied subsequently, after the applicant company had initiated its case before the Kartal Enforcement Court in 2001, there was indeed a shortcoming in the auction. Therefore the applicant company cannot be criticised for having initiated unnecessary frivolous proceedings.
Secondly, the Court also observes that the domestic law does not set an upper limit on the sum that could be imposed as a fine under section 134 of Law no. 2004. According to this provision, the fine should be equal to 10% of the amount offered at the auction. Furthermore, the imposition of the fine is mandatory and not left to the discretion of the domestic courts (contrast Karakaşoğlu, cited above). In the present case, the financial burden imposed on the applicant company was particularly significant, namely EUR 140,000, and there was no room for judicial discretion.
The foregoing considerations lead the Court to the conclusion that although imposing a fine to avoid unnecessary delays in the payment of a debt pursues the aim of the proper administration of justice, having regard in particular to the high amount of the fine, it holds that the restriction imposed on the applicant company cannot be considered as proportionate to that legitimate aim.
There has therefore been a violation of Article 6 § 1 of the Convention in the present case.
II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
Invoking Article 6 of the Convention, the applicant company alleged that its right to a fair hearing had been breached in that the national courts had erred in the interpretation of the domestic law. It further maintained under Article 1 of Protocol No. 1 to the Convention that as the land in question had been sold at a very low price during the second auction, its right to the peaceful enjoyment of its possessions had been breached.
In the light of all the material in its possession, the Court finds that these submissions by the applicant company do not disclose any appearance of a violation of the rights and freedoms set out in the Convention or its protocols. It follows that these complaints must be declared inadmissible as manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
A. Damage
The applicant company claimed 5,000,000 Turkish liras (TRY
[1]) (approximately EUR 1,990,000) in respect of pecuniary damage and TRY 2,000,000 (approximately EUR 790,000) in respect of non-pecuniary damage.
The Government contested those claims.
The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. Moreover, the Court considers that the finding of a violation constitutes in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicant company. The Court further recalls that the most appropriate form of redress in respect of Article 6 is to ensure that the applicant as far as possible is put in the position he would have been had the requirements of Article 6 not been disregarded (see Plotnikovy v. Russia, no. 43883/02, § 33, 24 February 2005). The Court finds that this principle applies in the present case as well, having regard to the violation found above (see paragraphs 32-34). It therefore considers that the fine should not have to be paid, or if it has been paid, it should be reimbursed by the respondent Government.
B. Costs and expenses
The applicant company also claimed EUR 33,000 for the costs and expenses incurred before the domestic courts and the Court. In respect of its claim, the applicant company submitted a legal fee agreement amounting to TRY 10,000 (approximately EUR 4,000).
The Government contested the claim.
According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 3,000, covering costs under all heads.
C. Default interest
The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the complaint concerning the applicant company’s right of access to a court under Article 6 of the Convention admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds that the finding of a violation constitutes sufficient just satisfaction for any non-pecuniary damage suffered by the applicant company;
4. Holds that, in the event of the fine imposed on the applicant company having been paid, the respondent State is to reimburse it to the applicant company within the above-mentioned three months;
5. Holds
(a) that the respondent State is to pay the applicant company, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 3,000 (three thousand euros), plus any tax that may be chargeable to the applicant company, in respect of costs and expenses, to be converted into the currency of the respondent State at the rate applicable at the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
6. Dismisses the remainder of the applicant company’s claim for just satisfaction.
Done in English, and notified in writing on 22 October 2013, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Stanley Naismith Guido Raimondi
Registrar President
