Suda v. the Czech Republic, European Court of Human Rights, App. 1643/06, 28 October 2010
Rule of law – the right to a fair trial
Krajský Soud
Vrchní Soud
Ústavní Soud
National Courts: Regional Court (Krajský Soud) in Brno;
The high court (Vrchní Soud) of Olomouc;
The Constitutional Court (Ústavní Soud).
28 October 2010 (Final on 28/01/2011)
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See the General Measures in addition to the individual compensation under the Report of the Government of the Czech Republic
on the execution of judgment in case no. 1643/06 – Suda v. the Czech Republic
“II. GENERAL MEASURES
As already acknowledged by the Court in § 15 of the judgment, Section 220k (1) was deleted from the Commercial Code as of 1 July 2008 by new Act no. 125/2008 (Companies and Cooperatives Transformations Act) which does not contain any similar provision providing for arbitrators‘ jurisdiction established by a contract between third parties in comparable situations. It follows that at present, occurrence of violation of the Convention similar to the present case is no longer possible. Therefore, no further systemic measures to prevent analogous violations in the future are required.”
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On the right of access to court that extends to arbitration: Lithgow and Others v. the United Kingdom, July 8, 1986, § 201, Series A no.102; on the conditions to waive the right to court in favour of arbitration (the waiver should be free, lawful, and equivocal): R. v. Switzerland, no. 10881/84, decision of the Commission of 4 March 1987, Decisions and Reports (DR) no 51; Osmo Suovaniemi and others v. Finland (dec.), No 31737/96, 23 February 1999; Transado - Transportes Fluviais do Sado, SA v. Portugal (dec.), no.35943 / 02, December 16, 2003; more on the conditions of a waiver: Deweer v. Belgium, February 27, 1980, § 49, Series A no. 35; on necessary guarantees to be observed in mandatory arbitration: Bramelid and Malmström v. Sweden, nos. 8588/79 and 8589/79, Commission decision of 12 October 1989, DR no. 29; on references to the national rules on company law: Kohlhofer and Minarik v. Czech Republic, nos. 2921/03, 28464/04 and 5344 / 05, 15 October 2009; and in particular the relationship between stakeholders and its impact on market share: Kind v. Germany (dec.), No 44324/98, 30 March 2000.
The applicant alleged that he was deprived necessary guarantees under national courts when referred to the arbitration tribunal to re-examine the value of his shares. In particular, referring to Article 6 § 1 of the Convention, he claimed that his proceedings would not be public, that there was no procedure for reviewing the merits of the potential decision of the arbitral tribunal and that the applicant would need to bear the costs of the proceedings.
A right to a fair trial.
This case sets forth the conditions to be met in order to waive a right to go to a court in favour of arbitration.
One of the issues concerned the fairness/bias of an arbitral tribunal to potentially re-examine the redemption value of shares of the applicant in view of the previously agreed upon selection procedure for such a tribunal. (Arbitrators were to be chosen from the list of arbitrators registered by the company and in accordance with the procedure developed by the company hence with no involvement of the applicant).
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“The applicant, Pavel Suda, is a Czech national who was born in 1968 and lives in Pardubice (Czech Republic). He was a minority shareholder in a public company that was closed by a decision of 2003. A request by the applicant for the redemption value of his shares to be re-examined was dismissed by the ordinary court on the basis of an arbitration clause. Relying on Article 6 § 1 (right to a fair hearing), he complains about his inability – on account of an arbitration clause in a contract signed with third parties – to have his case examined by an ordinary court providing the necessary guarantees, of the non-public nature of any arbitration proceedings and of the procedural costs he has incurred.”
The applicant initiated the following proceedings in the Czech Republic, all aiming at having the procedure for re-examining the redemption value of his shared held invalid: (1) before the Regional Court (Krajský Soud) in Brno (decision of 27 April 2004), (2) before the high court (Vrchní Soud) of Olomouc (decision of 18 October 2004), and finally before the (3) the Constitutional Court (Ústavní Soud) (decision of 23 June 2005). [section on LES CIRCONSTANCES DE L'ESPÈCE]
“The ECtHR held that the arrangement for dispute resolution was not in itself sufficiently unambiguous to constitute a waiver of the right to a tribunal, and that, if the parties were compelled to go to arbitration, the tribunal had to comply with Article 6. The Court found a violation of Article 6 (1) because the arbitration procedure did not fulfil two fundamental requirements: (i) the arbitration clause gave decision-making power to arbitrators on the list of a limited liability company, which was not an arbitration tribunal established by law; and (ii) the arbitration procedure did not allow for a public hearing and the applicant had not in any way waived this right.”
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The right to a fair trial and arbitration
This case sets forth the conditions to be met in order to waive a right to go to a court in favour of arbitration.
Similarly in:
Tabbane v. Switzerland, ECtHR, 1 March 2016, App. 41069/12
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Barbara Warwas, The Hague University of Applied Sciences