National court’s refusal to seek preliminary ruling from the EU Court of justice were not arbitrary nor unreasonable, because the applicant in its first and basic set of proceedings had invoked violation, only of the domestic law of its state and not that of the EU. No violation of fair trial.
Repcevirag Szövetkezet v. Hungary 30.04.2019 (no. 70750/14)
National courts refusal to refer questions to the Court of Justice of the European Union for a preliminary ruling. The applicant company operating in Hungary, was convicted irrevocably for a tax offense. In response to the claims of the tax authorities, the company cited a violation of domestic law rather than EU law. After its conviction, the company, began proceedings before the Budapest Regional Court for damages from the Supreme Court decision, and also asked the Court to seek a preliminary CJEU ruling for its case, claimimg violation of EU law. The claim was rejected irrevocably and the national courts refused to refer a question for a request to the CJEU, on the grounds that the applicant company had not raised any issues of EU law in its first set of proceedings. The ECHR held that there was no violation of fair trial ( Article 6 par. 1), because the domestic courts’ refusal to make a reference for a preliminary ruling by the CJEU, had been neither arbitrary nor unreasonable, when the applicant company in the first set of proceedings regarding the substance of the case, had not raised any issues of EU law.
The applicant company, Repcevirág Szövetkezet, is registered under Hungarian law as a cooperative
based in Aranyosgadány.
In 2008 the tax office fined the company for unjustifiably deducting the Value-Added Tax it had paid
on agricultural machines which it lent to cooperative members.
The applicant company unsuccessfully challenged the decision in court. The Supreme Court in
November 2009 confirmed the first-instance court decision, referring to the case-law of the Court of
Justice of the European Union (CJEU) on consideration for services in Aardappelenbewaarplats.
In 2010 the applicant company began proceedings in Budapest Regional Court for damages from the
Supreme Court, relying on the CJEU’s judgment in Gerhard Köbler v Republik Österreich.
The company alleged that the Supreme Court had violated EU law by failing of its own motion to
apply the correct provisions to the first set of proceedings, which it alleged to be Article 17 of the
Sixth Council Directive of 1978 rather than Article 8 of the Second Council Directive of 1967.
It asked Budapest Regional Court to seek a preliminary CJEU ruling on whether the Supreme Court’s
decision had been in line with EU law and under what circumstances the Supreme Court could be
held liable for a wrongful judgment. In May 2011 the Regional Court rejected the claim against the
Supreme Court and did not request a preliminary ruling. That decision was upheld in August 2012 by
the Budapest Court of Appeal, which also refused to refer a question to the CJEU.
The applicant company asked the Kúria (the Supreme Court from 2012) to review the appeal
judgment and also requested that it refer four questions to the CJEU. The Kúria rejected the referral
request and upheld the final judgment.
It found in particular that it was not possible to bring damages proceedings against the Supreme
Court on the grounds of an incorrect application of EU law because such issues should have been raised in the first set of proceedings, but the applicant company had failed to do so. It was therefore not possible to rely on a question of EU law in the damages case.
The applicant company lodged a constitutional complaint, along with another request for a referral
to the CJEU. The Constitutional Court rejected the complaint in May 2014 as inadmissible, without
referring a question
THE DECISION OF THE COURT
The Court noted that the Kúria had given reasons for its refusal to refer questions to the CJEU and
had therefore met one of the criteria in the CJEU’s key judgment on preliminary references, Srl Cilfit
and Lanificio di Gavardo SpA v. Ministry of Health (Cilfit). The Court’s role was to assess whether
those reasons had been arbitrary or manifestly unreasonable.
The Court noted that the Kúria had considered the first of the four questions suggested by the
applicant company for referral to be irrelevant and that the second and fourth questions were
outside the scope of the damages claim against the Supreme Court as they had concerned the
interpretation of EU law.
The third proposed question had been whether a State could be held liable for infringing EU law if a
complainant had not relied on any piece of EU legislation in initial proceedings.
The Kúria had dealt with that issue in an implicit way by pointing out that the applicant company had
relied on domestic legislation, the Civil Code, in the first set of proceedings, which had been against
the tax office, rather than EU law. As a consequence, the Supreme Court had been prevented from
taking up issues of EU law in its judgment in those proceedings. The Kúria had thus found that there
could be no subsequent State liability for an infringement of EU law.
The Court stated that the Kúria could have stated more explicitly why it had refused to make a
preliminary reference, but implicit reasoning could also be considered sufficient. It was not the
Court’s function to deal with errors of fact or law allegedly committed by a domestic court, unless
they had infringed the rights and freedoms protected by the Convention. It therefore did not have to
assess whether the Kúria’s approach had been compliant with EU law.
It also noted the Kúria’s view that the applicant company’s action against the Supreme Court had
been a way of making up for its omission in the first set of proceedings, where it had not relied on
any piece of EU legislation or sought a preliminary reference to the CJEU.
In turn, the Constitutional Court had provided reasoning why it lacked jurisdiction over the applicant
company’s complaint and the Court could not challenge the Constitutional Court’s view that
requests for a preliminary reference to the CJEU should be made in the ordinary courts. Article 6 § 1
did not require a supreme court to give more detailed reasoning when it was applying a specific legal
provision to dismiss an appeal on points of law as having no prospects of success.
The Court held that the domestic courts’ refusals to make a reference for a preliminary ruling by the
CJEU had been neither arbitrary nor manifestly unreasonable and that there had been no violation
of Article 6 § 1(echrcaselaw.com editing).