BTS Holding, a.s. v. Slovakia (European Court of Human Rights)

Information Note on the Court’s case-law 263
June 2022

BTS Holding, a.s. v. Slovakia – 55617/17

Judgment 30.6.2022 [Section I]

Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Peaceful enjoyment of possessions

Unjustified refusal to enforce final and binding international arbitration award against National Property Fund after rescission of purchase agreement for State property being privatised: violation

Facts – The applicant company entered an agreement with the National Property Fund of Slovakia (“NPF”), the country’s privatisation agency, for purchasing a majority share in Bratislava airport which was being privatised. Following the rescindment of the agreement by the NPF the applicant company requested arbitration before the International Chamber of Commerce in Paris (“ICC”) of the International Court of Arbitration (“ICA”) concerning the amounts to be paid back to it. The dispute was resolved in an award in favour of the applicant company. Under the ICC’s terms of reference by submitting the dispute to it the parties undertook to abide by the award without delay, as provided for by the ICC Arbitration Rules and certified by the ICA Secretary General. Neither party objected to the ICC’s jurisdiction in the course of the arbitration proceedings. The applicant company petitioned for enforcement of the award in Slovakia and the first instance court authorised a judicial enforcement officer to enforce the award. Following an objection to enforcement by the NPF, the domestic courts refused to enforce the award on public policy and formal procedural grounds.

Law – Article 1 of Protocol No. 1:

(a) Applicability – The arbitration award had been sufficiently established to amount to a “possession” within the meaning of this provision. It was undisputed that it had become final and binding: while it could have been challenged by the procedures provided for this purpose in the jurisdiction of the seat of the arbitration, no such procedures had been made use of. Furthermore, foreign arbitration awards were in principle enforceable in Slovakia, by operation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the respective provisions of the Slovakian Arbitration Proceedings Act. No separate decision had to be taken for the recognition of the award; by operation of law, its legal recognition had been implicit in the appointment of a judicial enforcement officer to enforce it. Beyond the question of such implicit recognition, the proceedings pursued by the applicant company at the domestic level had been purely enforcement proceedings. As it was likewise clear, the legal framework of those proceedings for the examination of the NPF’s objection to the enforcement did not allow for any substantive review of the award itself, such examination being limited to any obstacles to the enforcement intervening after the award had been made.

(b) Merits – The non-enforcement of the award by the domestic courts had amounted to an interference with the applicant company’s possessions which had to be examined under the general rule embodied in the first sentence of Article 1 of Protocol No. 1 as it did not constitute a deprivation of possessions or a measure of control of the use of property within the meaning of its second and third sentences respectively. The Court then expressed grave doubts as to the lawfulness of the interference. In particular, after a detailed examination of each of the grounds relied on by the domestic courts, it appeared that those grounds had not been given and/or fell outside the legal framework for denying enforcement of a foreign arbitration award allowed by the provisions of the domestic law and the New York Convention. Nevertheless, and even assuming that denying enforcement of the award on these grounds had served a general interest, it had not been shown that it was proportionate to that aim. The Government had not advanced any arguments on this aspect of the case. Moreover, while focusing on elements which purportedly precluded the enforcement by reason of public policy or procedural formalities, the domestic courts had taken no account of the requirements of the protection of the applicant company’s fundamental rights and the need for a fair balance to be struck between them and the general interest of the community rights.

Conclusion: violation (unanimously)
Article 41: reserved in relation to pecuniary damage.
(See also Stran Greek Refineries and Stratis Andreadis v. Greece, 13427/87, 9 December 1994, Legal Summary)

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