In a recent judgment in the case against Serbia (Application no. 318/15), the European Court of Human Rights found that the failure of authorities to take necessary measures in order to enforce and to enforce the final judgment rendered in favor of the applicant has amounted to a violation of Article 6 § 1 of the of the European Convention on Human Rights, which protects the right to a fair trial, and constitutes an interference with her right to the peaceful enjoyment of possessions, as provided in the first sentence of the first paragraph of Article 1 of Protocol No. 1.

The case originated in an application against Serbia lodged with the Court by a Serbian national, who was represented by Miloš V. Milošević, Živković Samardžić Dispute Resolution Partner. Miloš was assisted by Jovan Pjevač, Živković Samardžić Dispute Resolution Associate.

The circumstances of the case, as established by the European Court of Human Rights, were as follows:

In 2001, the applicant was awarded certain amount to be paid to her by Holding – Prva Iskra AD Barič, a socially-owned company, on account of compensation for expropriated real estate and the costs of the civil proceedings.

Socially-owned companies were a relict of the former Yugoslav brand of communism. They were independent legal entities run by their own employees and in case of insolvency they were subjected to regular insolvency proceedings. Their capital, however, in accordance with the legislation adopted after the collapse of communism, was to be privatized and the funds thus obtained paid into the state’s budget.

The enforcement proceedings initiated by the applicant in 2003, has been stayed after the Serbian Privatization Agency ordered the restructuring of Holding – Prva Iskra AD Barič. The insolvency proceedings in respect of the same company, after the restructuring failed, were opened in 2016. The applicant duly reported her claims based on the 2001 court judgment to the insolvency administration. However, the judgment remained unenforced to the present day.

In October of 2011, the applicant lodged an appeal with the Constitutional Court. Relying on the Constitutional Court Act 2007, she sought, in terms of redress, inter alia, compensation for the pecuniary and non-pecuniary damage suffered due to the impugned non-enforcement.

Late in December of 2011, the Amendments to the Constitutional Court Act 2011 were adopted. Article 85 § 1 of the Constitutional Court Act 2007 was amended to require that a constitutional appeal must contain a specific indication of the amount and basis for any pecuniary and/or non-pecuniary damages sought by the appellant, instead of just stating the kind of redress deemed necessary. Additionally, paragraph 3 was added to Article 85 of the Constitutional Court Act 2007, stating that a compensation claim may only be made “simultaneously with the lodging of a constitutional appeal”.

In 2012, once she noted the adoption of the amendments to the Constitutional Court Act, the applicant specified her compensation claims accordingly. Specifically, she requested the respective amounts awarded to her by the final judgment in question, whilst as regards the non‑pecuniary damage sustained she claimed 1,000,000 RSD (approximately 9,500 euros).

The Constitutional Court, in 2014, found that the applicant had indeed suffered a violation of her right to a fair trial within a reasonable time, as well as a violation of her property rights and awarded her EUR 1,000 in respect of the non-pecuniary damage in question. However, her compensation claim regarding the pecuniary damages was rejected. The Constitutional Court found that the pecuniary damage claim had been lodged out of time with a mere reference to Article 85 § 3 of the Constitutional Court Act, as amended in 2011, requiring such claims to be brought simultaneously with the lodging of a constitutional appeal, even though the applicant lodged her appeal more than two months before the adoption of the 2011 Amendments to the Constitutional Court Act.

According to the judgement, Serbia is to pay the applicant, from its own funds, the sums awarded in the court judgment rendered in her favor in 2001, the established costs of the enforcement proceedings, as well as two thousand euros in respect of non-pecuniary damage, costs and expenses.

“There are two important takeaways from this judgement,” said Partner Miloš V. Milošević. “Firstly, when it comes to the sums awarded by the final judgments, the State does bear responsibility for the debts of a socially-owned company, at least with regards to the final judgments that remained unenforced due to the restructuring ordered by the Serbian Privatization Agency and insolvency proceedings opened by the national courts. Secondly, not even the Constitutional Court may require the impossible. And it was impossible to require from the appellants to retroactively comply with the provisions of the amendments which had entered into force after they have already lodged their constitutional appeals.”

For more details or any questions, please contact Miloš V. Milošević at milos.milosevic@zslaw.rs, Jovan Pjevač at jovan.pjevac@zslaw.rs, or any of your regular contacts at Živković Samardžić.