EHRM, 06-04-2006, nr. 46917/99

Under Polish law everyone, except public authorities and institutions, is obliged to pay a court fee at the time of lodging a statement of claim with the competent civil court. As the case proceeds, a party is obliged to pay additional court fees at the time of lodging any further appeals.

Under Article 98 § 1 of the Code of the Civil Procedure the costs of litigation such as necessary for the effective conduct of a case are borne by the unsuccessful party to the proceedings. The costs of litigation comprise the court fees, referred to above, legal fees paid to professional legal representatives and various other expenditure incurred in connection with the proceedings, such as transport costs and salary lost because of the participation in the hearings.

An exception from this general principle is provided for by Article 101 of the Code. Pursuant to this provision, the court shall not order the losing defendant to pay the costs of litigation, if he or she did not give cause for the institution of the proceedings and if they acknowledged the claim at a first hearing.

The scope of operation of the general principle concerning the financial responsibility of a party for the outcome of the proceedings, referred to above, is also mitigated by Article 102 of the Code. This provision enshrines the principle of equity in respect of costs of litigation and stipulates that the court may order the losing party to pay only a part of the litigation costs, or may exempt it altogether from the obligation to pay these costs, when particular circumstances of the case justify such a decision.

Under Article 7 of the Code of Civil Procedure, the public prosecutor may participate in civil proceedings whenever it is necessary to protect the rule of law or in order to protect the citizens' rights, or in the public interest. Pursuant to Article 55 of the Code, the prosecuting authorities are obliged to indicate the person or institution on behalf of which they have instituted the proceedings. Pursuant to Article 111 of the Code, prosecuting authorities are exempt from the general obligation to pay the court fees.

The court shall ex officio serve the statement of claim on this person or institution, which shall be authorised to step into the proceedings as a plaintiff.

Article 106 of the Code reads:

According to the case-law of the Supreme Court, Article 106 of the Code of Civil Procedure is applicable only if the prosecutor joined a party in the course of the proceedings and not if he instituted them him- or herself (decision of 17 June 1966, I Cz 54/66).

The Supreme Court further held:

In its judgment of 12 June 2002 the Constitutional Court of Poland, examining the compatibility with the Constitution of certain provisions of civil procedure insofar as applicable in competition proceedings, observed:

In its judgment of 6 September 2001 (P/3/01) the Constitutional Court observed that the principle of equality before the law which manifested itself also in the right of equal access to the court and in the right to a fair hearing, was also applicable to issues concerning litigation costs. Hence, the principle that the party winning the case should be reimbursed the costs while the party losing it should bear the economic burden of the proceedings must be regarded as corresponding to the principles of equality and equity.

From 1946 to the present day Polish law has provided that persons repatriated from the territories beyond the Bug River, which belonged to Poland before the Second World War are entitled to have the value of the property abandoned as a result of the Second World War deducted either from the fee for the so-called ‘perpetual use’ or from the price of immovable property purchased from the State Treasury.

These provisions were repeated in several successive statutes. At the material time, the Land Administration and Expropriation Act of 29 April 1985 (the ‘1985 Land Administration Act’) governed the legal situations of the persons having such compensatory entitlement.

The obligation to compensate repatriated persons was laid down in Article 81 of this Act, which, insofar as relevant, provided that persons who, in connection with the war that began in 1939, abandoned real property in territories which at present do not belong to the Polish State and who, by virtue of international treaties concluded by Poland, were to obtain equivalent compensation for the property abandoned abroad, shall have the value of the real property that has been abandoned deducted from the fee for the right of perpetual use of land or from the price of a building plot and the State-owned buildings or premises situated thereon.

At the time relevant for the present case, the procedure for the implementation of Article 81 of the Land Administration and Expropriation Act was laid down in the Cabinet's Ordinance of 16 September 1985 on the principles applicable in connection with offsetting the value of real property abandoned abroad against the price of a title to real property or against the fees for perpetual use.

Rules concerning the determination of the value of the abandoned property were set out in the Cabinet's Ordinance of 16 September 1985 (as amended) on the offsetting of the value of real property abandoned abroad against the fees for perpetual use or against the price of a building plot and buildings situated thereon (Rozporzadzenie Rady Ministrów w sprawie zaliczania wartocci mienia nieruchomego pozostawionego za granica na poczet oplat za użytkowanie wieczyste lub na pokrycie ceny sprzedaży dzialki budowlanej i polożonych na niej budynków) (‘the 1985 Ordinance’).

Paragraph 3 of the 1985 Ordinance provided, in so far as relevant, as follows:

Paragraph 5 provided that a first-instance body of the local State administration that was competent to deal with town and country planning should issue the decisions on offsetting the value of property abandoned abroad. Paragraph 6 laid down certain general rules relating to the valuation of such property.

The Government first argued that the applicants had enjoyed a fair hearing guaranteed by Article 6 of the Convention.

They submitted that the prosecuting authorities had instituted the civil proceedings against the applicants under Article 7 of the Code of Civil Procedure. When doing so, they had been acting for the purpose of the protection of the rule of law and in the public interest. The action against the applicants had not related to any pecuniary interests of the prosecuting authorities themselves. Furthermore, the State Treasury in whose interest the prosecutor had instituted the proceedings did not join the case as a plaintiff. Therefore, considering that the prosecutor had acted on the basis of provisions conferring on him the special role of the guardian of the public interest, the courts were right in deciding that the applicants should bear the costs they had incurred in the course of the proceedings.

The Government further submitted that the provisions of Article 106 of the Code of Civil Procedure did not discriminate against private parties as they did not provide for reimbursement of legal costs either to or from the State Treasury in civil cases in which the prosecuting authorities participated. Thus, they were not put in an unfairly advantageous position.

The applicants argued that the prosecuting authorities had instituted civil proceedings on behalf of the State Treasury, represented by statio fisci, the Boleslawiec District Office. The compensation claim brought by the prosecutor had been dismissed on the merits by both first- and second instance courts. Despite that, the second-instance court had ordered the applicants to pay the legal costs they had borne in full.

The applicants averred that normally under the Polish law of civil procedure the unsuccessful party had to bear legal costs of the winning party, pursuant to Article 98 of the Code of Civil Procedure.

They further accepted that under certain circumstances the exceptions from this principle of financial responsibility for bringing an unsuccessful civil action might exist. These exceptions allow the courts to take into account, when giving a decision on the costs, the parties' conduct, the character of the proceedings or considerations of social policy, and to shape their relevant decisions accordingly.

Article 106 of the Code of Civil Procedure, providing for the privileged position of the prosecuting authorities in respect of the litigation costs, is also an exception from this principle. However, that provision, insofar as it does not permit the courts to order reimbursement of costs of litigation to a party against whom the prosecutor brought an unsuccessful civil action, is blatantly unfair. The decision of the appellate court given in their case was also erroneous, especially in the light of the fact that both the first- and second-instance courts ruled on the merits against the prosecuting authorities.

In their case, neither the prosecuting authorities nor the institution of the local government on whose behalf the prosecutor had acted in the case had borne any financial consequences of the unsuccessful civil action. As a result, the applicants were obliged to bear the litigation costs amounting to 23,987.26 PLN in full. Had it not been the prosecutor acting as a plaintiff in the proceedings on behalf of the State, but any other party, they would have been granted the costs in accordance with the general rule stating that the unsuccessful party to civil litigation pays the costs of the successful party.

The applicants argued that the operation of this provision discriminated against them as individuals, being defendants in a civil case brought by the prosecuting authorities. It was only common sense to accept that the prosecuting authorities had at their disposal ample financial means exceeding those available to any individual. Nevertheless, nothing prevented the prosecuting authorities from erring in law when bringing a case to a civil court. It was the obligation of an independent and impartial court to examine whether their civil action was well-founded. In the applicant's case, in the light of the conclusions of both first- and second-instance courts, it was clearly not the case.

They submitted that they had incurred heavy expenses in the proceedings because the professional legal representation was indispensable in view of the high value of the claim and, in particular, the complexity of the legal issues involved in the case.

They finally submit that unfair favouritism of the interests of the State is discriminatory and violates the principle of equality between the parties to the proceedings. In their view, the notion of fairness could not be limited to the fair judicial decision on the merits of a civil dispute, but it must also encompass the fairness in adjudicating the litigation costs.

The Court first reiterates that it found on several occasions that the court fee levied on the party to civil proceedings constituted a restriction that impaired the very essence of the applicants' right of access to a court guaranteed by Article 6 § 1 of the Convention (Kreuz v. Poland, no. 28249/95, § 60, ECHR 2001‑VI; Jedamski and Jedamska v. Poland, no. 73547/01, § 60; Podbielski and PPU Polpure v. Poland, no. 39199/98, § 64). The Court considered in these cases, having regard to the principles established by its case-law in respect of the right of access to a court, that the amount of the court fees assessed in the light of the circumstances of a given case, including the applicants' ability to pay them and the phase of the proceedings at which that restriction has been imposed on them are factors which are material in the determination of whether or not a person enjoyed his right of access to a court.

The Court is well aware that in the circumstances of the present case neither the court fee nor the applicants' access to a court is concerned. However, the Court is of the view that there may also be situations in which the issues linked to the determination of litigation costs can be of relevance for the assessment whether the proceedings in a civil case seen as a whole have complied with the requirements of Article 6 § 1 of the Convention (mutatis mutandis, Robins v. the United Kingdom, judgment of 23 September 1997, Reports of Judgments and Decisions 1997‑V, p. 1809, § 29).

The Court also notes the relevance of the case-law of the Constitutional Court of Poland, referred to above (§ 36–37) for the issues examined in the present case. In particular, the latter emphasized that the right of equal access to the court and the right to a fair hearing were also applicable to the issues concerning litigation costs.

In this connection, the Court first notes that under Article 98 § 2 of the Polish Code of Civil Procedure the party losing a civil case is normally obliged to reimburse the litigation costs to the successful party provided that these costs were ‘necessary for the effective conduct of a case’.

The Court observes that the situation of the prosecutor in respect to the litigation costs in Polish civil procedure constitutes an exception from this principle. Under Article 106 of the Code of Civil Procedure, this principle is not applicable when the prosecutor participates in civil proceedings in his or her capacity of guardian of legal order.

The Court further notes the case-law of the Polish Supreme Court according to which this provision is applicable only if the prosecutor joins a party in the course of the proceedings and not if he institutes them him- or herself (see § 34 above). It further notes that the Supreme Court also held that the term ‘State Treasury’ used in Article 106 of the Code of Civil Procedure should by no means lead to a conclusion that an award of costs for or against the State Treasury was excluded in situations in which the prosecuting authorities act in a civil case representing financial interests of the State Treasury (see § 35 above).

It is true that the Court's power to review compliance with domestic law is limited (mutatis mutandis, Fredin v. Sweden (no. 1), judgment of 18 February 1991, Series A no. 192, pp. 16–17, § 50). Nevertheless, the Court observes, having regard to the case-law of the Supreme Court, that in the present case the exception referred to in § 63 above was applied by the second-instance court. That court gave its decision in respect of the costs despite the fact that Article 102 of the Code of Civil Procedure expressly stipulates that the court may order an unsuccessful party to civil proceedings to pay only a part of the litigation costs, or may exempt it altogether from the obligation to pay them, when particular circumstances of the case justify such a decision.

The Court further notes that this case-law of the Supreme Court makes it possible for the courts to apply relevant provisions of the Code of Civil Procedure in such a manner which would mitigate the privileged position of the prosecuting authorities, thus better taking into account the particularities of each individual case and the legitimate interests of an individual.

The Court observes that no such mitigation on the grounds of equity was available for the applicants under the decision of the appellate court. That court overturned the decision of the first instance in respect of costs only because the prosecuting authorities were their opponents in the civil case and despite the fact that the courts, in both the first- and second-instance judgments, invariably found against the public prosecutor as to the merits.

The Court further notes that the prosecuting authorities enjoy ab initio a privileged position with respect to the costs of civil proceedings. In this connection, the Court also notes the applicants' argument that the prosecuting authorities have in any event at their disposal legal expertise and ample financial means exceeding those available to any individual.

It is true that such a privilege may be justified for the protection of the legal order. However, it should not be applied so as to put a party to civil proceedings to undue disadvantage vis-à-vis the prosecuting authorities.

Further, in the Court's view, the general factual and legal background to the case should not be overlooked in the assessment whether the applicants in the present case had a fair hearing within the meaning of Article 6 of the Convention. The Court recalls in this respect its judgment in Broniowski v. Poland case, in which it found that there had been a violation of Article 1 of Protocol 1 to the Convention, originating in a systemic problem connected with the malfunctioning of domestic legislation and practice caused by the failure to set up an effective mechanism to implement the ‘right to credit’ of Bug River claimants Broniowski v. Poland[GC], no. 31443/96, §§ 180–187, ECHR 2004‑…).

In the present case, the Court notes that the applicants managed to have their ‘right to credit’ for the property in Trembowla satisfied by purchasing the property from the State Treasury in 1992 by way of tender. Subsequently, the legal certainty of the ownership they had thus acquired was threatened by the prosecutor's civil action. Had the action of the prosecuting authorities been successful, the applicants would have had to reimburse the full price they had received when in 1994 they sold to a third party the property purchased in exchange for their ‘right to credit’ (see § 18 above).

The Court further notes that the expert opinions were commissioned by the first-instance court in order to establish the value of the property purchased by the applicants and of the abandoned property. The Court observes that the law did not determine the method of estimating the price of the abandoned property, as observed by the court in its judgment of 18 December 1997 (see §§ 14–15 above). Hence, it was left to the court to determine the values concerned, choosing a method which it judged best suited to the circumstances of the case and for which expertise of experts in valuation of real estate was necessary.

Having regard to all these factors taken together (§§ 70–72), the Court is of the view that the case before the civil courts was complex.

The Court is further of the opinion that in such circumstances and also having regard to the substantial amount of money involved in the case, the applicants' decision to have a professional legal representation cannot be said to be unwarranted.

The Court further considers that it was not shown by the Government that the legal fees incurred in the case were excessive. In particular, no evidence was adduced to demonstrate that the legal fees which the applicants had paid for legal representation before two judicial instances were inconsistent with legal fees practised at the relevant time in cases of a similar character. In these circumstances, the Court considers that the costs of professional legal assistance in the civil case were not incurred recklessly or without good justification.

Having regard to the foregoing considerations and to the circumstances of the case as a whole the Court concludes that there has been a violation of Article 6 § 1 of the Convention.

The applicants first claimed PLN 61,501.05 in respect of pecuniary damage. They submitted that this amount comprised the actual litigation costs which they had borne before the domestic courts in the amount of PLN 23,987.26 with statutory interest in the amount of PLN 37,513.79 due under applicable provisions of Polish law for the period starting on the date on which this amount had been paid until 13 April 2005, the date on which they submitted their Article 41 claims to the Court. They subsequently reduced their claim to the amount of PLN 50,000.

They also claimed PLN 15,000 in respect of non-pecuniary damage they had incurred. They referred to the anguish and frustration they had suffered as a result of the judicial decisions concerning the litigation costs in their case.

The Government submitted that the applicants' claim was too high and requested the Court to make an award, if any, with due regard to the circumstances of the case taken as a whole.

The Court observes that the damage which the applicant suffered as a result of the breach of Article 6 § 1 of the Convention was, in the circumstances of the case, essentially of a pecuniary nature in that they had to bear the litigation costs in full. There is therefore a direct causal link between the violation found and the pecuniary damage which they claim. It accordingly awards the applicants as claimed PLN 50,000 in respect of pecuniary damage, which corresponds to the costs the applicants had to bear, with interest, plus any tax that may be chargeable on that amount.

The Court also considers that the applicants have suffered non-pecuniary damage — such as distress resulting from the judicial decisions complained of. Considering the circumstances of the case and making its assessment on an equitable basis, the Court awards the applicants EUR 2,500 under this head, plus any tax that may be chargeable on that amount.

The applicant also claimed PLN 5,000 for the costs and expenses incurred in the proceedings before the Court in which they tried to obtain redress for the breach of their rights resulting from the decisions of the domestic courts.

The Government argued that any award under this head should be limited to those costs and expenses that have been actually and necessarily incurred and are reasonable as to quantum.

According to the Court's case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession, to the documents submitted by the applicants and to the above criteria, the Court considers it reasonable to allow their claim in full to cover the costs for the proceedings before the Court, plus any tax that may be chargeable on that amount.

The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.