FIFTH SECTION

CASE OF RITZ v. AUSTRIA

(Application no. 53911/11)

JUDGMENT

STRASBOURG

7 September 2017

This judgment is final but it may be subject to editorial revision.

In the case of Ritz v. Austria,
The European Court of Human Rights (Fifth Section), sitting as a Committee composed of:
	Erik Møse, President,
	Yonko Grozev,
	Gabriele Kucsko-Stadlmayer, judges,
and Anne-Marie Dougin, Acting Deputy Section Registrar,
Having deliberated in private on 11 July 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 53911/11) against the Republic of Austria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Austrian national, Mr Gerhard Ritz (“the applicant”) in his own name and in the name of his company, Ritz Baugesellschaft m.b.H., on 12 August 2011. The case was registered under the applicant’s name.
2.  The Austrian Government (“the Government”) were represented by their Agent, Mr H. Tichy, Head of the International Department at the Federal Ministry for Europe, Integration and International Affairs.
3.  On 9 December 2014 the complaint concerning the length of the civil proceedings was communicated to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court.
THE FACTS
Article I.	THE CIRCUMSTANCES OF THE CASE
4.  The applicant was born in 1953 and lives in Graz. He was the managing director and 80% shareholder of Ritz Baugesellschaft m.b.H.
5.  On 12 October 1998 the Graz Civil Regional Court (Landesgericht für Zivilrechtssachen) opened insolvency proceedings (Konkursverfahren) in respect of Ritz Baugesellschaft m.b.H. (hereinafter: “the company”). These proceedings were discontinued on 14 June 2013 for lack of funds to cover the cost (Beschluss auf Aufhebung des Konkurses mangels Kostendeckung).
6.  On 15 April 2002 the applicant initiated official liability proceedings in the name of the company (case no. 20 Cg 79/02y) with the Klagenfurt Regional Court (hereinafter “the Regional Court”) against the Republic of Austria, represented by the Financial Procurator’s Office (Finanzprokuratur). On 5 June 2002 he filed a further claim in his own name (case no. 29 Cg 110/02y). In both claims the applicant sued the Republic of Austria for pecuniary compensation for allegedly unlawful acts and shortcomings of the Regional Court in the course of the insolvency proceedings, which had resulted in pecuniary losses. In addition to that, the applicant and the company requested a declaratory judgment (Feststellungsurteil) concerning the future liability of the Republic of Austria for any further damages arising from the insolvency proceedings.
7.  On 13 November 2002 the Regional Court rejected the applicant’s claim filed in the name of the company, holding that the applicant had no locus standi because he could not dispose of the company’s assets as long as the insolvency proceedings were still pending.
8.  On 28 January 2003 the Graz Court of Appeal (Oberlandesgericht) granted the applicant’s appeal and referred the case back to the Regional Court. On 25 March 2003 the Supreme Court rejected the extraordinary appeal lodged by the Financial Procurator’s Office.
9.  On 17 September 2003 the Regional Court held a new hearing regarding the company’s claim, in which the parties agreed to suspend the proceedings, pending the outcome of other proceedings, apparently including the claim lodged in the applicant’s name.
10.  On 20 January 2004 the applicant asked for the proceedings lodged in the company’s name to be resumed and submitted a list of witnesses to be questioned by the Regional Court. On 7 April 2004 the Regional Court held a further hearing during which a building expert and a bookkeeping expert as sub-expert were appointed, the sub-expert to be consulted for any further advice. After that, the hearing was adjourned. The proceedings filed in the applicant’s name remained suspended, awaiting the outcome of the resumed proceedings.
11.  On 2 March and 19 July 2005 the applicant filed requests to accelerate the proceedings (Fristsetzungsantrag) under Section 91 of the Court Act (Gerichtsorganisationsgesetz). In the latter request the applicant asked the Court of Appeal to set a time-limit for the delivery of the expert reports by the end of July 2005 and for the Regional Court to hold a hearing for the purpose of questioning further witnesses and discussing the expert reports by 12 October 2005.
12.  On 11 August 2005 the Court of Appeal dismissed the applicant’s request under Section 91, finding that the Regional Court had not been dilatory; it also stated that the requested time-limits were unrealistic and that the applicant’s request itself had caused further delays.
13.  On 15 March and 19 May 2006 the experts submitted their reports.
14.  On 29 June 2006 the Regional Court held another hearing to discuss the expert reports; eventually the court decided to submit the file to the public prosecutor to examine whether criminal investigations should be instituted against unknown offenders ex-officio and the proceedings stayed until such proceedings were terminated.
15.  On 21 February 2007 the applicant requested that the proceedings be resumed after the Graz Public Prosecutor’s Office (Staatsanwaltschaft Graz) had discontinued the criminal investigations.
16.  On 28 June 2007 the Regional Court held another hearing and on 12 July 2007 gave its judgment: it partly dismissed and partly granted the claim.
17.  On 14 April 2008 the Court of Appeal quashed parts of the judgment upon both parties’ appeals and, to this extent, remitted the case back to the Regional Court. On 16 December 2008 the Supreme Court rejected the applicant’s appeal.
18.  On 31 May 2010 the Regional Court partly dismissed and partly rejected the applicant’s extended claim as inadmissible after holding hearings on 7 July and on 18 November 2009.
19.  On 15 February 2011 the Court of Appeal dismissed the applicant’s appeal and on 28 April 2011 the Supreme Court rejected the applicant’s extraordinary appeal on points of law.
THE LAW
Article II.	I.  ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
20.  The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement, laid down in Article 6 § 1 of the Convention, which reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by a ... tribunal...”
21.  The Government contested that argument.
22.  The period to be taken into consideration began on 15 April 2002 when the applicant initiated official liability proceedings by lodging a claim in the company’s name with the Regional Court (see paragraph 6 above) and ended on 28 April 2011, when the Supreme Court rejected the applicant’s extraordinary appeal (see paragraph 19 above). It thus lasted nine years for three levels of jurisdiction.
Section 2.01	A.  Admissibility
23.  The Government submitted that the applicant explicitly complained about the length of proceedings regarding the domestic official liability proceedings lodged in the company’s name. They referred to the Court’s constant case-law, according to which shareholders and/or directors of a legal entity are only in exceptional cases entitled to file a complaint. As the applicant, as its managing director, had not himself been a party to the domestic proceedings lodged in the name of the company, the application submitted by the (first) applicant was inadmissible.
24.  The applicant argued that even though he was challenging the length of proceedings lodged in the name of the company, not only “his” company, but also he, as an individual, was affected by the damage caused by the delays in the official liability proceedings; therefore the present application with this Court had been lodged in his own name, as well as in the name of his company. For the same reasons he had also initiated official liability proceedings before the domestic courts in both names.
25.  The Court reiterates that the term “victim” used in Article 34 of the Convention denotes the person directly affected by the act or omission which is at issue. It further reiterates that a person cannot complain of a violation of his or her rights in proceedings to which he or she was not a party. Thus, the sole shareholder of a company can in certain circumstances claim to be a “victim” within the meaning of Article 34 of the Convention where the impugned measures were taken in respect of his or her company; when this is not the case the disregarding of a company’s legal personality can be justified only in exceptional circumstances, in particular where it was clearly established that it was impossible for the company to apply to the Convention institutions through the organs set up under its articles of incorporation or – in the event of liquidation – through its liquidators (see Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, § 92, ECHR 2012 with further references).
26.  In the instant case the applicant was not the sole shareholder. However, he was the managing director and 80% shareholder of the company. At the time the applicant instituted the official liability proceedings, the company was under liquidation as the insolvency proceedings had already been opened (see paragraph 5 above) and a liquidator had been appointed to represent – in principle – the company. Nevertheless, the company had not ceased to exist as a legal person and the decision-making bodies of a company in liquidation continue to exist and may act on its behalf in certain limited circumstances; for instance, when there is a conflict of interest between the company and the liquidators. The Court observes that the complaint made relates to the length of proceedings regarding the official liability proceedings initiated by the applicant’s company concerning alleged shortcomings in the insolvency proceedings. In the present case, the essence of the complaint was the length of official liability proceedings lodged in order to oppose actions taken during the insolvency proceedings for which the liquidator, as the legal representative, might have been responsible. Thus, there were clearly conflicting interests between the liquidator and the managing director (see Credit and Industrial Bank v. the Czech Republic, no. 29010/95, § 50–52, ECHR 2003‑XI (extracts).
27.  The Court accordingly finds that, having regard to the particular nature of the complaint made, there were exceptional circumstances which entitled Mr Ritz, as the managing director and majority shareholder, to lodge a valid application on behalf of Ritz Baugesellschaft m.b.H. with the Court. It has to be added that the applicant had lodged an identical application in the name of the company as well as on his own behalf and eventually the case was registered and processed solely in the applicant’s name. Therefore, the Court is not persuaded by the Government’s argument and considers that locus standi is given in the present case. The Government’s objection must therefore be dismissed.
28.  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.
Section 2.02	B.  Merits
29.  The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
30.  Having regard to these criteria, the Court notes that the official liability proceedings were of some complexity as three levels of jurisdiction dealt with the question concerning the applicant’s locus standi and the consideration of the merits made it necessary to obtain two expert reports; again, three levels of jurisdiction were concerned. However, these factors alone cannot explain an overall duration of nine years.
31.  The Court considers that major delays in the proceedings occurred before the domestic courts regarding the obtaining of expert reports: even accepting that the determination of the preliminary issue whether the applicant had locus standi lasted approximately one year (see paragraphs 6 and 8 above) the Court cannot overlook that the experts were appointed only two years after the claim was lodged (see paragraphs 6 and 10 above) and that it took more than two further years until these expert reports were eventually received (see paragraphs 10 and 13 above). There were no discernible delays caused by the applicant, who filed two requests for the acceleration of the proceedings (see paragraph 11 above) and requested on two occasions the resumption of the proceedings (see paragraphs 10 and 15 above).
32.  Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of explaining the delays. Having regard to its case-law on the subject (see for example Otto v. Austria, no. 12702/08, 22 October 2009, and Strobel v. Austria, no. 25929/05, 4 June 2009), the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.
There has accordingly been a breach of Article 6 § 1.
Article III.	II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
33.  Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
Section 3.01	A.  Damage
34.  The applicant claimed 4,173,552.54 euros (EUR) and EUR 12,215,840.84 in respect of pecuniary damage caused to him and his company respectively; he further claimed non-pecuniary damages and asked the Court to calculate the amount.
35.  The Government contested the claim as not being justified.
36.  The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. However, having regard to its case-law in comparable cases and to the specific circumstances of the instant case, it awards the applicant EUR 6,000 in respect of non-pecuniary damage.
Section 3.02	B.  Costs and expenses
37.  The applicant claimed EUR 24,728.40 for the costs and expenses incurred before the domestic courts in both sets of official liability proceedings. He conceded that he did not have to pay them in so far as he had been granted legal aid in both sets of official liability proceedings. However, it was not ruled out that he might have to pay these costs in the future. He did not claim costs incurred before the Court.
38.  The Government contested the claim.
39.  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 rejects the claim for costs and expenses in the domestic proceedings, as the costs claimed have not yet been incurred. As the applicant has not claimed the reimbursement of the costs incurred in the proceedings before it, the Court is not required to make any award in that respect.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 6 § 1 of the Convention;

3.  Holds
(a)  that the respondent State is to pay the applicant, within three months EUR 6,000 (six thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(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;

4.  Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 7 September 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Anne-Marie Dougin	Erik Møse
	Acting Deputy Registrar	President