Constitutional Court

KI122/17, Request for constitutional review of Decision Ae. No. 185/2017 of the Court of Appeals of 11 August 2017, and Decision IV. EK. C. No. 273/2016 of the Basic Court in Prishtina of 14 June 2017

KI122/17, Applicant: Česká Exportní Banka A.S.

Judgment of 18 April 2018

Keywords: res judicata, right to fair and impartial trial, legal certainty, injunctive relief, applicability of Article 31 of the Constitution and Article 6 of the ECHR in preliminary proceedings.

The Applicant was a foreign company, Česká Exportní Banka A.S., based in the Czech Republic, which had concluded a work contract with a local company, Compact Group L.L.C., based in the Republic of Kosovo. The contracting parties agreed that their disputes would be resolved through arbitration, before the Arbitration Court of the Czech Chamber of Commerce. The latter, upon the Applicant’s request, issued an Arbitration Award by which it obliged Compact Group L.L.C. to pay the Applicant an amount of 1,364,527.00 € plus default interest. The Arbitration Award was upheld by the regular courts and was declared as enforceable decision in the Republic of Kosovo. Furthermore, the Enforcement Order issued by the Private Enforcement Agent, which required the execution of the Arbitration Award, was also upheld.

One day after the Arbitration Award was upheld as a final, binding and enforceable decision in the Republic of Kosovo, the Compact Group L.L.C. rendered the Decision for the voluntary dissolution of their company. Through this decision, the Compact Group L.L.C. declared that it did not have any unpaid obligation towards third parties. The Applicant requested the Basic Court in Pristina – Department for Commercial Matters, the annulment of the Decision on voluntary dissolution as unlawful. In addition to the requests in his main claim, the Applicant requested the Basic Court to impose an injunctive relief aimed at safeguarding the assets and means necessary for the execution of the Arbitration Award.

Regarding the Applicant’s request for injunctive relief, there were four sets of first instance and appeal decisions, respectively four Basic Court decisions and four Court of Appeals decisions. Before the Constitutional Court, the fourth set of decisions is being challenged. The Applicant alleges that the fourth set of decisions violated its right to a fair trial because they overturned previous decisions which the Applicant considered to be final and binding, and, as such, res judicata.

The Applicant, in addition to the request to declare the challenged decisions invalid, it also requested that the decisions that had become final and binding be declared res judicata decisions. The Applicant’s main argument was that the Court of Appeals had reopened by self-initiative and beyond the requests of the litigating parties, the issues which had already been confirmed by its own earlier decision.

The Constitutional Court declared the Referral admissible and found a violation of Article 31 of the Constitution in conjunction with Article 6 of the ECHR, because it considered that the Court of Appeals did not respect the principle of legal certainty and did not respect a final decision. The Court also found that the Court of Appeals ignored in entirety all the Applicant’s allegations in respect of res judicata issues and did not respond to the Applicant’s arguments in this regard. As a result of these violations, the Court found that the Applicant has been deprived of the benefit of a final and binding court decision.

Regarding the proceedings as a whole, the Court also expressed its concern that the Applicant is compelled to undertake these additional proceedings against the voluntary dissolution of the respondent company in order to realize the execution of a final and binding judicial decision regarding its Arbitration Award.

Another important point of this Judgment is that, for the first time, the Court has interpreted the applicability of Article 31 of the Constitution (and Article 6 of the ECHR) in the preliminary proceedings. Based on the ECtHR case law (Micallef v. Malta, Application No. 17056/06, Judgment, [GC], 15 October 2009), the Court stipulated a two-step test based on which the applicability of these guarantees should be considered on case-by-case basis.

Finally, the Court declared the Referral admissible; it held that there has been a violation of Article 31 of the Constitution in conjunction with Article 6 of the ECHR; it found that the fourth group of (challenged) decisions are null and void; it found that the Decision of the Court of Appeals [Ae. No. 185/2017 of 16 December 2017] is final and binding, and as such res judicata regarding three specific points, which must be executed.