CEDH · CASELAW;DECISIONS;ADMISSIBILITYCOM;ENG — 16 mars 2021

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padding:1.02pt 5.03pt; vertical-align:top } .s195E3AC4 { width:28.26%; border:0.75pt solid #949494; padding:1.02pt 5.03pt; vertical-align:top }     SECOND SECTION DECISION Application no. 80531/12 Anton AHAC and Others against Slovenia   The European Court of Human Rights (Second Section), sitting on 16   March 2021 as a Committee composed of:   Valeriu Griţco, President,   Branko Lubarda,   Pauliine Koskelo, judges, and Hasan Bakırcı, Deputy Section Registrar, Having regard to the above application lodged on 17 December 2012, Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants, Having deliberated, decides as follows: THE FACTS 1.     A list of the applicants and applicant companies (hereinafter jointly referred to as “the applicants”) is set out in the appendix. The applicants were represented initially by Odvetniška družba Ježek & Snoj, a law firm practising in Ljubljana, and later by Mr G. Snoj, a lawyer practising in Ljubljana. 2.     The Slovenian Government (“the Government”) were represented by their Agents, Ms T. Mihelič Žitko and Ms V. Klemenc, State Attorneys. The circumstances of the case 3.     The facts of the case, as submitted by the parties, may be summarised as follows. Relevant background (a)    Mutual funds in Slovenian context 4.     Mutual funds comprise assets consisting of investments in transferable securities which are financed with the money of natural or legal persons who buy a fund share and thus become the holder of a proportionate part of the fund (hereinafter “the holder of fund shares”). The assets of a mutual fund are divided into equal units. A mutual fund share is made up of one or more mutual fund units, the value of which is to be paid from those assets at the request of the holder. 5.     At the relevant time the Investment Funds and Management Companies Act (hereinafter “the IFMCA”, see paragraph 55 below) regulated mutual funds as open-end investment funds, meaning that there were no limitations as regards investments by means of the sale of fund shares or the buy-back of such shares, or the sale of securities. A fund share which was a registered non-transferable security (section 25 of the IFMCA) could only be sold to the asset management company (hereinafter “AMC”) that managed the fund. The paying out of fund shares, which the holder of fund shares had a right to ask for at any time, was to be effected by the AMC within five working days of receiving a request for the redemption of the value of the fund share (hereinafter a “redemption request”). The holder of fund shares had to have his or her investment paid back in accordance with the actual price of the unit, which was calculated daily and published in newspapers. The amount paid back depended on the value of the securities in the mutual fund. The IFMCA also set out strict rules concerning the investment policies of mutual funds and limited the size of loan which an AMC was allowed to take out on behalf of a mutual fund. (b)    Dadas funds 6 .     In the period leading up to March 1996 the applicants bought fund shares and thereby became the owners of mutual fund units in (at least) one of the four mutual funds – namely Diver, Herman Celjski, Neli II and Rastko I (hereinafter “the Dadas funds”) – managed by the same AMC, Proficia Dadas. The Dadas funds were at the time the largest on the relevant market (of eighteen mutual funds), with approximately 3,500 holders of fund units (hereinafter “fund investors”). The total assets of the Dadas funds amounted to more than six billion Slovenian tolars (SIT), which corresponded to approximately 37 million euros (EUR). 7 .     The last net asset value per unit (hereinafter “NAVPU”) of the Dadas funds, published on 26 March 1996 (see paragraph 16 below), amounted to: SIT 286.26 for Diver; SIT 1,486.41 for Herman Celjski; SIT 281.94 for Neli   II; and SIT 391.92 for Rastko I. It was between 8.5 and 15.1% higher compared with 15 January 1996. (c)    Slovenian Stock Exchange Index 8 .     The Slovenian Stock Exchange Index SBI started at 1,390 points in 1996, which was followed by a rapid fall to 1,300 points and continued growth until mid-March, when it reached its peak value for the year at 1,600   points. This growth coincided with the period of increased inflows into the Dadas funds, and increased demand by these funds for shares in Dadas, Primofin, Finmedia and SKB. In the period from mid-January to mid-March, prices of these shares, which accounted for 40% of the investments of the Dadas funds, increased significantly. In particular, the share prices of issuers (legal entities which issued securities) that were affiliated with the Dadas system (Finmedia and Primofin) and the price of Dadas shares increased by around 70%, while the SKB share price increased by 11%. In the above-mentioned period, the value of the SBI Index increased by 14%. According to the findings of the Securities Market Agency (hereinafter “the Agency”) published in its 1996 report on the situation in the securities market, the increase in the share prices of Dadas, Finmedia and Primofin was significantly influenced by transactions between legal entities that were associated with the DADAS Poslovni sistem group and the Dadas funds; once the Dadas funds’ demand for those shares dried up, other investors were not willing to buy them at those prices, and the prices consequently dropped, resulting in a decline in the SBI Index, which reached its lowest value of 892 points on 10 September 1996. However, by the end of the year its value stabilised at 1,200 points. The Agency’s measures and Proficia Dadas’s response 9 .     On 7 and 19 March 1996 the Agency carried out inspections of Proficia Dadas, found numerous violations of the IFMCA, and subsequently implemented a number of measures against it. (a)    Order of 14 March 1996 10 .     On 14 March 1996 the Agency ordered Proficia Dadas to improve the investment structure of the Dadas funds and call in the loans which the company PRIOM – which was owned by Mr D.S., the director of Proficia Dadas – had taken from those funds. It found that the loans, which amounted to SIT 1.3 billion and represented 22% of the total Dadas funds’ assets, had not been properly secured. 11.     In its letter of 15 March 1996, the Agency called upon PRIOM to provide access to business documents concerning the short-term loan agreements that it (as a borrower) had concluded with the Dadas funds (as lenders). The Agency claimed that the management of Proficia Dadas had not been able to provide evidence and data on PRIOM’s ability to repay the loan and the quality of the guarantees provided. On 19 March 1996 PRIOM informed the Agency that it was not going to allow it to inspect the relevant documents. (b)    Press release of 15 March 1996 12 .     On 15 March 1996 the Agency published a press release entitled “Be cautious when investing in funds”, in which it explained the risks associated with investments in mutual funds. It also referred to the sharp increase in investments in mutual funds managed by the company Proficia Dadas which had occurred in February 1996, and noted that while the profits certainly appeared to be extraordinary, people should follow the maxim “if something seems too good to be true, then it probably is”. (c)    Compliance decree 13 .     On 20 March 1996 the Agency issued a decree ordering Proficia Dadas to remedy the irregularities found with regard to the Dadas funds and to, inter alia : (i) ensure that the assets of each Dadas fund only comprised investments in securities and cash assets in the form of bank deposits; (ii)   recover amounts owed to it within the usual time ‑ limits; (iii) ensure that the asset structure of each fund had at least 75% of securities listed on the stock exchange; (iv) ensure that the investments by mutual funds were changed in such a way that they complied with section 95(1), section 97 and section 99 of the IFMCA (see paragraph 55 below); and (v) remedy the irregularities arising from the keeping of books of account. (d)    Limiting Decree and subsequent events 14 .     On 20 March 1996, on the basis of section 112 of the IFMCA (see paragraph 55 below), the Agency issued a decree limiting the total assets value of all mutual funds managed by one AMC to SIT 3.5 billion (hereinafter “the Limiting Decree”). It prohibited the AMCs that managed mutual funds whose total asset value exceeded that amount from accepting new payments of fund shares until the total asset value of those mutual funds went below that limit. The decree was published in the Official Gazette of 29 March 1996 and entered into force on 30 March 1996. 15 .     On 22 March 1996 the Agency notified all AMCs of the Limiting Decree. The notice, together with enclosed clarifications on the application of individual provisions of the IFMCA, was served on Proficia Dadas on 25   March 1996. On 29 March 1996 the Agency also held a press conference, explaining the reasons for and consequences of the decree. It emphasised that the determination of the maximum value of assets held by mutual funds which could be managed by one AMC did not represent a prohibition on doing business, as its purpose was to invest and grow the money of savers, and to enable all managers to continue to manage assets that were already in the funds without hindrance. It also explained that the restriction regarding the acceptance of new payments stemmed from the legislative provision providing that each mutual fund should buy securities listed on the stock exchange amounting to at least 75% of the money received from investors, and that, according to the Agency, the increased inflows into the mutual funds were causing a shortage of long ‑ term securities on the stock market. In the Agency’s opinion, considerably higher inflows would trigger the inflation of share prices and, as a result, cause disturbances on the securities market, which was also evident from the monitoring of the operations of the funds, including the Dadas funds, and their investments. 16 .     In the meantime, on 27 March 1996 Proficia Dadas had informed the Agency that it had, on the same day, transferred the assets and liabilities of the Dadas funds into the “temporary custody” of PRIOM, and thus temporarily suspended its management of those mutual funds. On the same day the Agency prohibited Proficia Dadas from publishing any further NAVPU. The last NAVPU of the Dadas funds was thus published on 26   March 1996 (see paragraph 7 above). 17 .     On 28 March 1996 Proficia Dadas published a press release in the daily newspaper Delo , criticising the Limiting Decree and explaining that the transfer of funds to PRIOM was temporary and aimed at protecting the assets of investors, and that trading in fund units was temporarily suspended. Proficia Dadas also criticised the Agency for continuously carrying out inspections of the operations of mutual funds under its management, and for showing an obvious intention to destabilise its operations or the market and cause unease among investors. 18 .     Subsequently, Proficia Dadas published another notice entitled “Proficia Dadas replies” in Delo , in which it contested the statements made by the Agency at its press conference (see paragraph 15 above) and criticised the Limiting Decree for debasing the value of investors’ assets and possibly leading to the withdrawal of investors, followed by the sale of securities and a drastic fall in their prices (and the value of fund units). It went on to explain that the Dadas funds would become insolvent, which would lead to their liquidation, reducing investors’ assets to 20-25% of the last published unit value, owing to their unavoidable sale on a destabilised market. 19 .     On 1 April 1996 Proficia Dadas published a “Notice to investors” stating that in order to protect the assets of investors, custody of investors’ assets had been temporarily transferred to PRIOM. It further stated that if more than 30% of investors disagreed with the transfer, the assets would be returned to Proficia Dadas, liquidation proceedings would be initiated, and the value of the assets would decrease drastically. 20 .     On 5 April 1996 the Agency replied via Delo , explaining that the Limiting Decree had not limited the operations and management of the assets already raised and had not concerned the rights of existing investors, but had restricted new investments. It further explained that the Limiting Decree had also been adopted because an extremely large number of new investments in February and March had not been invested in securities but had been given as a loan to PRIOM. The aim of the Limiting Decree had been to ensure that Proficia Dadas diligently managed assets and dispersed risks. Accordingly, the transfer of assets to PRIOM as announced in Proficia Dadas’s press release of 28 March 1996 could not have been aimed at protecting these assets from the Agency, since only the manager of those assets had announced the intention to liquidate and thereby put pressure on investors to raise deposits. The Agency also stated that if a portfolio was made up of appropriate investments with real value, there was no danger of the AMC not being able to cash in the portfolio over a longer period, and no danger of a substantial drop in value. The Agency further noted that PRIOM had not repaid the loans which it had received. 21 .     On 9 April 1996 Proficia Dadas addressed to the Agency a “Proposal for resolving the current situation in mutual funds”, proposing, essentially, that the assets be transferred into the custody of one of the commercial banks and managed by a company which complied with the applicable legal provisions, with a partial moratorium on pay-outs from the fund assets for three months, and with further rules concerning pay-outs after that period. 22 .     On 10 April 1996 the Agency considered Proficia Dadas’s proposal. It found it acceptable in principle if the owners of at least 70% of the units making up the Dadas funds agreed with it, and if the managing company in question was not directly or indirectly associated with persons in the Dadas system and also fulfilled the relevant legal conditions. The Agency also stated that the funds could operate with the level of assets which had already been achieved, without a limitation period, or could reduce the amount of assets to any level. It stressed that the concept of rapid reduction with an immediate sell-off of assets could not, as a rule, be in the interest of investors. On the same day it informed Proficia Dadas of its views and called on it to submit them to its investors. 23 .     On 29 April 1996 Proficia Dadas published in Delo a “Notice to investors”, in which it stated that with respect to all the Dadas funds, owners holding more than 70% of the fund units had agreed that the management of assets should be transferred to PRIOM. It also stated that the following options were now available to fund investors: (i) they would be allowed to transfer their assets to another AMC licensed by the Agency, in which case Proficia Dadas and the committee of investors should each have one representative in the body dealing with the investments; or (ii) they would conclude agreements on fund share redemption and the method of repayment with Proficia Dadas as the debtor and DADAS Poslovni sistem as the transferee, with DADAS Poslovni sistem assuming the obligations to settle the claims arising from redemption requests submitted by the holders of fund shares as creditors. A claim would be recalculated in the following manner: the last published purchase price of fund units multiplied by the number of fund units recorded on the fund share. With the second option, claims (together with certain interest) should be settled within four years, with a one-year grace period on payment of the principal amount, and the transferee would guarantee to fulfil its payment obligations up to the value of all of its assets. Moreover, Mr D.S., as the president of the body dealing with investments, would develop an investment plan, and trading with the claims would soon be possible on a regulated market, which meant that each creditor could decide to sell its claim at the market price. 24 .     On 17 May 1996 the Agency sent to Proficia Dadas a memo of a meeting held with Mr D.S. on 13 May 1996. The Agency noted that the settlements resulting from Proficia Dadas’s offer as published in Delo on 29   April 1996 were legally acceptable but did not bind those who did not accept the offer by signing the agreement. The Agency also clarified the legal position of the company DADAS Poslovni sistem and described the procedure for implementing the offer of Proficia Dadas of 29 April 1996 (partial “liquidation” with the simultaneous transfer of management to another AMC). 25 .     In the meantime, the majority of investors in the Dadas Funds, including all the applicants, had started concluding agreements on fund share redemption and the method of repayment (see paragraph 23 above, hereinafter “repayment agreements”). At the same time, DADAS Poslovni sistem acquired assets from Proficia Dadas amounting to the value of the claims arising from the redemption of fund shares. 26 .     Subsequently, the brokerage company DADAS BPH, which had been operating under the umbrella of DADAS Poslovni sistem, lost its licence for brokerage services (see paragraph 36 below) and, according to the applicants, it had to focus on other non-financial activities and eventually collapsed, leading to a loss of the applicants’ savings. At the beginning of 1997 the investors who had concluded repayment agreements (see paragraph 25 above) started entering into agreements with the company Fundus to swap 50% of their claims for ordinary shares in DADAS Poslovni sistem, which were listed on the Ljubljana Stock Exchange. 27 .     Investors who had not concluded agreements on fund share redemption and the method of repayment or had not submitted fund shares for redemption had their remaining mutual fund assets managed by another AMC, Kmečka družba, which on 21 June 1996 obtained the Agency’s authorisation to take over management of the Dadas funds from Proficia Dadas. The Agency also granted Kmečka družba authorisation to merge the Dadas funds into one fund and simultaneously form two new funds: Rastko and KD Bond. On 3 July 1996 the Agency permitted the temporary suspension of pay-outs until 1 September 1996 at the latest, which was aimed at establishing the assets structure of the funds in accordance with the law. Prior to the merging of the Dadas funds, the NAVPU was recalculated on 23 August 1996 and amounted to: SIT 92.84 for Diver; SIT 720.49 for Herman Celjsk; SIT 121.12 for Neli П; and SIT 161.05 for Rastko I. On 23   August 1996 the total value of the units of all four funds amounted to SIT   1,095.50, representing on average 44.8% of the value of the mutual funds on 26 March 1996 (see paragraph 7 above). On 23 August 1996 the values of the newly formed mutual funds amounted to SIT 1,000 for KD   Bond and SIT 1,000 for Rastko, and on 5 September 2001 the values amounted to SIT   2,008.97 for KD Bond and SIT 2,461.44 SIT for Rastko. The NAVPU of the Dadas funds reached the value of 26 March 1996 again on 5   September 2001. (e)    Review of the Limiting Decree by the Constitutional Court 28.     On 3 April 1996 Proficia Dadas initiated proceedings for a review of the legality and constitutionality of the Limiting Decree (see paragraph 14 above). 29 .     On 16 May 1996 the Constitutional Court decided that the Agency had acted within its powers when issuing the Limiting Decree but had failed to temporarily restrict its validity. It ordered the Agency to remedy that failure within thirty days of the court’s decision being published (Official Gazette of 20 June 1996). It noted, inter alia , as follows: “27. The Agency may issue an order only in the event of specific circumstances provided for by law. The existence of such circumstances is determined with regard to a particular situation existing on the securities market. The Agency substantiated the existence of such specific circumstances through extensive statements in its reply to the [application for a review of the legality and constitutionality of the Limiting Decree]. 28. The decision adopted by the Agency essentially means a restriction of the operations of investment funds. Since, under subsection three of section 112 of the IFMCA, the Agency is authorised to issue a decision temporarily suspending the operations of investment funds, in full or in part, in the event of serious disturbances in foreign exchange or securities transactions or other similar serious disturbances, it [is also authorised] to adopt a more lenient measure by which it only restricts the operations of investment funds. This was precisely what the Agency did by means of the disputed [decree]. As has already been mentioned, this measure falls within the scope of statutory power. 29. Under subsection three of section 112 of the IFMCA, the Agency may ... temporarily suspend (in full or in part) the operations of investment funds; however, it is not authorised to adopt measures which would permanently restrict the operations of investment funds ...” 30.     On 20 June 1996 the Agency informed the Constitutional Court that it had amended the Limiting Decree by setting a time ‑ limit for its validity – it would be valid until 31 October 1996. The amendment, which had been adopted on 12 June 1996, was published in the Official Gazette of 14 June 1996. (f)      Statement of the President of the Agency’s Expert Council before the Committee on Finance and Monetary Policy of the National Assembly 31 .     At its 137th and 138th sessions on 22 and 25 October 1996, the Committee on Finance and Monetary Policy of the National Assembly considered the report of the Agency for 1995, and during the discussion it also touched upon the issues concerning the Dadas funds. At the session on 22 October 1996 the then President of the Agency’s Expert Council, Mr   Mramor, stated, inter alia , as follows: “We do understand the problems that 3,505 people who invested their money in the Dadas funds are currently facing. It is not an easy decision when you find yourself in a situation where you have to make a decision in such a way that these people do not lose out; however, they will not lose out because of our decision, since the only question was how long such manipulation of people would last before it [failed]. All systems of acquiring money in an unlawful way [fail] sooner or later. This is a ‘cash for cash’ system, and all these systems are the same. When we received the indication, the question was how to react quickly, and we had also already discussed this with the investors in the Dadas funds, and the talks with them had been good and extensive. We have met many times. [We have] also met with the director and have talked to him many times, [and] the Council, so I understand their problems ... The Agency [responded] relatively quickly. Within fifteen days there were such inflows of money ... until we received all these solid arguments so that we could adopt the measure, which was subsequently also upheld by the Constitutional Court, namely [a measure] for a relatively limited period of time. Everybody admitted that we had acted extremely rapidly. But the investors must understand this. We did not take their money. Their money was taken by those who manipulated and presented to them a value which was fictitiously higher ... than the real one.” (g)    Withdrawal of the operating licence 32.     On 28 March 1996 the Agency initiated a procedure to withdraw Proficia Dadas’s authorisation to perform services relating to managing investment funds, on the suspicion that the company had transferred the assets of its mutual funds to PRIOM in violation of section 118 of the IFMCA (see paragraph 55 below). In its order of 3 April 1996, the Agency further accused Proficia Dadas of breaching the law by trading non ‑ marketable securities between the Dadas funds through the company PRIOM, which had been acting as a fictitious seller and buyer. 33 .     On 9 May 1996 the Agency withdrew Proficia Dadas’s authorisation to manage investment funds. It established: that the assets of the Dadas funds had been transferred to PRIOM without the required consent of the holders of fund shares and the Agency’s authorisation; and that PRIOM had not had the Agency’s authorisation to manage mutual funds, and had failed to satisfy the conditions for obtaining such authorisation, since it had been deeply in debt and its share capital had been at least eighty ‑ three times smaller than the required level. The Agency also dismissed Proficia Dadas’s argument that the transfer had been necessary to protect the assets of investors, noting that the assets of existing investors and their management had not been affected by the Limiting Decree. By unlawfully transferring the assets to a company operating outside the regime provided for by the IFMCA, Proficia Dadas had clearly intended to avoid any supervision by the Agency. In this connection, the Agency explained that the prohibition on payments had not upset the balance between the diligent management of assets and the sources of funding for such assets, and that new monetary payments had meant the compulsory purchase of new securities, which had been another way to increase the assets of funds. If new payments had not led to an increase in the assets of a fund, this meant that investors’ money had not been managed economically. It was the duty of an AMC to ensure continuous liquidity (redeemability) by means of appropriate investments in securities. 34.     On the same day the Agency issued another decision, also withdrawing Proficia Dadas’s special authorisation to manage an authorised investment company. It found, inter alia , that Mr D.S. was the only partner and director of PRIOM. He and his wife, through another company which they owned called FUNDUS d.o.o., were the owners of 91% of the shares in Proficia Dadas and were making business decisions for both companies. The transactions relating to securities which had not been traded on a regulated market had been concluded between the Dadas funds in such a way that PRIOM had always acted as a fictitious purchaser or seller, selling the securities of one fund to another within the space of a few days at most, in violation of section 109 of the IFMCA (see paragraph 55 below). 35 .     Proficia Dadas challenged both decisions before the Supreme Court. On 12 June 1996 the court dismissed the appeals, finding that the Agency had properly established the facts and applied the law. 36 .     Subsequently, on 16 July 1996 the Agency withdrew from the brokerage company DADAS BPH its authorisation to carry out transactions relating to securities. It found that the company had participated in the manipulation of prices by, inter alia , assisting in fictitious transactions involving the resale of securities between the Dadas funds. The decision was upheld by the Supreme Court and the Constitutional Court. (h)    Parliamentary inquiry 37.     One of the applicants, Mr P. Glavič, who was a member of the National Council until 1997, requested a parliamentary inquiry into the events on the capital market in March 1996 and the activities of the Agency in the period 1995-1997. In 1998 a National Assembly Commission of Inquiry was set up for the purpose of investigating the matter, and experts were appointed. In September 2000 it issued a final report, which concluded: that the Agency’s press releases had been justified, adequate and timely; that the Limiting Decree (see paragraph 14 above) had been aimed at protecting existing investors and had not limited the existing assets of the funds which could have been used for the purchase of privatisation shares; and that no illegalities had been established as regards the Agency’s work during the period under investigation. That report was not adopted by the National Assembly Commission of Inquiry, which was unable to finish its work before the end of the relevant mandate. It was criticised in another report prepared by Mr P. Glavič and Mr Novšak (both applicants in the present case), who acted as experts on behalf of the National Council. Civil proceedings against the Agency and the State (a)    First-instance proceedings 38 .     On 18 May and 3 June 1999 respectively more than a thousand fund investors – making up two separate groups of claimants – lodged with the Ljubljana District Court two identical actions for compensation against the State (the first defendant) and the Agency (the second defendant). The claimants alleged, inter alia , that (a)   the Agency’s press release of 15 March 1996 had been inaccurate and misleading, and had led to investors requesting the redemption of their fund shares and a crash of the stock exchange market; (b)   the Limiting Decree had been unlawful, because there had been no extreme situation; it had prohibited payments into funds without prohibiting pay-outs as well, and had not been limited in time; (c)   the Agency had acted without due diligence, because it had revoked the business licence of Proficia Dadas without transferring management of the funds to another managing company and thereby protecting investors from their own naivety; (d)   the Agency had acted unlawfully, because it had allowed management of the Dadas funds to be transferred to DADAS Poslovni sistem and had revoked the licence of the brokerage company DADAS BPH; and (e)   the Agency had conducted several inspections in 1995 but had failed to report any problems or react to the existing irregularities in the portfolio of the Dadas funds and initiate liquidation proceedings in respect of those funds in January 1995. 39 .     On 15 March 2001 the court decided that it had no jurisdiction ratione materiae to consider the civil claims of claimants whose claims did not exceed SIT 2,000,000, and that it would refer their civil claims to the Ljubljana Local Court for consideration. Claimants in both actions appealed against that decision to separate the claims, arguing that they were joint claimants within the meaning of section 191 of the Civil Procedure Act (see paragraph 56 below), and that the subject matter of the dispute involved claims whose substance was the same and which relied on the same factual and legal grounds. By way of a decision of 13 June 2002 the Ljubljana Higher Court upheld the appeal in both actions, on the grounds that the claimants were joint litigants whose claims relied on the same factual and legal grounds, within the meaning of section 191(1) of the Civil Procedure Act (see paragraph 56 below). On 16 December 2004 the two cases were joined under case no. V Pg 16/2003. 40 .     The parties lodged a number of written pleadings during the proceedings. The applicants relied on documentary evidence and, in relation to the question of the existence of a causal link between the alleged unlawful action on the part of the Agency and the destruction of the Dadas funds, suggested that an expert in economics be appointed. On 10 March 2005 the Ljubljana District Court held a hearing, rejecting non ‑ documentary evidence that was not in the case file as unnecessary, and proceeded to give judgment. 41 .     The Ljubljana District Court dismissed the lawsuit, finding that there had been no wrongful conduct or unacceptable omission on the part of the defendants, and that therefore they could not be liable for the alleged damage. The court held, in particular, as follows. (a)   The Agency’s press release of 15 March 1996 (see paragraph 12 above) – warning investors to be more careful when investing in mutual funds, in accordance with section 6 of the IFMCA (see paragraph 55 below) – had been published only after the Agency had obtained the relevant data on price manipulations. (b)   The press releases issued by Proficia Dadas had incited fear in investors and had caused them to request the redemption of their fund shares. (c)   All the Agency’s measures had been lawful and had been upheld on appeal, except for the unlawful omission of a time ‑ limit with respect to the Limiting Decree, which had been remedied following the Constitutional Court’s decision. (d)   The allegations that investors would have acted differently had the Limitation Decree been constrained by a time-limit from the start had not been substantiated. Having regard to the public statements of Proficia Dadas and the unrealistic and unlawfully created NAVPU of the Dadas funds, setting a time-limit on the Limiting Decree at an earlier stage would not have stopped investors from requesting the redemption of their fund shares. (e)   The claimants’ allegations that the Agency’s measures had been unlawful and delayed were inconsistent. (f)     The Agency had acted lawfully with respect to DADAS BPH, as Proficia Dadas could have concluded stock exchange transactions via any other brokerage company. (g)   The Agency’s measures had been taken in response to the unlawful business operations of Proficia Dadas and companies connected to it, such as PRIOM, DADAS BPH and DADAS Poslovni sistem. The apparent high but unrealistic rate of return of the Dadas funds, which had resulted from the planned regulation of prices, had caused considerably higher inflows into those funds. From July 1995 to February 1996 the average monthly inflows into the Dadas funds had been very high (other funds had had net outflows) owing to Proficia Dadas’s manipulations in security-related trading with companies connected by capital and personal ties. This had led to a “spiral phenomenon”: considerably higher inflows of assets into mutual funds in the period from 1 January 1996 to 18 March 1996, when no new shares had been listed on the stock exchange, had increased the demand for securities, resulting in the artificial inflation of prices on the stock exchange so that they were constantly at a higher level. (h)   The Agency could not have transferred the assets of the Dadas funds in order for them to be managed by another AMC, because those assets had already been unlawfully transferred to PRIOM. (i)     The Agency had taken measures once it had detected irregularities in Proficia Dadas’s activities and had been able to establish that the company had acted unlawfully. At the time there had been no basis for initiating liquidation proceedings under section 145(2) of the IFMCA (see paragraph 55 below). (b)    Second-instance proceedings 42 .     The claimants appealed but did not complain about the fact that their claims had been dealt with in the context of so-called “commercial dispute” proceedings. 43 .     On 19 December 2007 the Ljubljana Higher Court dismissed the appeal, and its decision was served on the applicants’ lawyer on 8 January 2008. It acknowledged that prior to the proceedings at issue the applicants had had no possibility of contesting the factual situation as established by the Agency in the Limiting Decree, namely the existence of serious disturbances in securities transactions or other similar serious disturbances under section 112(3) of the IFMCA (see paragraph 55 below). The applicants therefore had to be given the opportunity to establish, in civil proceedings, any unlawful conduct on the part of the Agency. 44 .     The court reiterated that the growth in the NAVPU of the Dadas funds had been unrealistic, and the assets obviously overrated. It established that, with regard to the sequence of events, which had not been disputed, no damage had (yet) been caused to the applicants by the Limiting Decree, which had not led to the liquidation of funds or prevented the prudent distribution of risk. The Agency had only prohibited further payments into mutual funds, while Proficia Dadas could still operate and manage the existing assets of the Dadas funds. The claimants had not argued, let alone proved, that following the issuing of the Limiting Decree, investors had put pressure on the Dadas funds by requesting the redemption of their fund shares. 45 .     Moreover, the court found that the Agency had had no choice but to take measures when on 27 March 1996 Proficia Dadas had transferred management of the mutual funds to PRIOM, a company which the Agency had not approved to manage mutual funds (see paragraph 16 above). It concluded that the withdrawal of Proficia Dadas’s operating licence on 9   May 1996 (see paragraph 33 above) had been justified and lawful. The Agency had not been able to take further measures to protect the interests of investors by liquidating the Dadas funds or transferring management of the funds to another managing company until after 12 June 1996, when the Supreme Court had upheld the withdrawal of the licence; however, the claimants had already signed the agreements on fund share redemption and the method of repayment in May 1996. The alleged damage had therefore resulted from the claimants’ poor financial decision to have their claims arising from the submission of the fund shares for redemption paid by the transferee, DADAS Poslovni sistem. In this connection, the court dismissed the allegation that the Agency should have warned investors about the danger that DADAS Poslovni sistem might not pay out on their claims, noting that the Agency had had no insight into its business operations. Fund investors could have adopted a moratorium on the paying out of fund shares if they had truly expected that pressure caused by such paying out could cause a depreciation in the NAVPU after the adoption of the Limiting Decree. 46 .     The Ljubljana Higher Court upheld the lower court’s conclusion that there was no causal link between the initially unlimited temporal validity of the Limiting Decree and the alleged damage to fund investors. It was undisputed that the investors who had decided not to submit their fund shares for redemption and have DADAS Poslovni sistem assume the debt of Proficia Dadas, and had instead transferred their remaining assets in the Dadas funds to Kmečka družba (see paragraph 27 above), had not suffered any damage. As regards the alleged violation of the principle of proportionality, the court noted that the Constitutional Court had examined it when reviewing the Limiting Decree and the Supreme Court’s decision of 16 October 1996. Lastly, it noted that it was not bound by the conclusions of the National Council put forward by the applicants. The allegations of unlawful actions and omissions on the part of the State were also found to be ill ‑ founded. (c)    Proceedings before the Supreme Court 47.     The applicants lodged an appeal on points of law, arguing that the first ‑ instance court, at the relevant hearing, had reviewed the documentary evidence only pro forma , and had not allowed any of their requests for evidence. 48 .     On 28 August 2008 the Ljubljana District Court rejected the appeal on points of law of seventy-seven claimants, including ten of the applicants (see table 1 in the appendix), who had failed to submit a power of attorney. 49 .     On 5 July 2011 the Supreme Court rejected the appeal on points of law of claimants, including 475 of the applicants (see table 2 in the appendix), whose claims did not reach the statutory threshold for commercial disputes. It held that a dispute between a company and the State or the Agency was a commercial dispute according to the subjective criterion under section 481(1) of the Civil Procedure Act (see paragraph 56 below). In accordance with section 484 of the Act, the rules of procedure in commercial disputes also applied to natural persons who were, as determined by the Ljubljana Higher Court (see paragraph 39 above), joint litigants with a company in such a dispute whose claims relied on the same factual and legal grounds. An appeal on points of law in commercial disputes was admissible only if the value of the matter in dispute exceeded SIT 5,000,000, a condition which had not been fulfilled in the case of the above claimants. 50 .     The Supreme Court dismissed on the merits the appeal on points of law of the remaining claimants, including 107 of the applicants (see table 3 in the appendix). It rejected the claimants’ argument that the lower courts had not allowed any of their requests for evidence. It found that the claimants had failed to specify what this evidence was. A court was not required to allow requests for evidence if, in its view, such evidence was irrelevant for its decision, but had to provide appropriate grounds for refusing to allow such requests, which the first-instance court had done in the case at issue. As regards the lower courts’ reliance on decisions issued in other proceedings in which the claimants had not participated, the claimants had not demonstrated that they had unsuccessfully attempted to participate in the proceedings before the Agency or the Supreme Court, despite having been able to do so by law. Moreover, in their appeal, the claimants had not contested the facts established by the court of first instance on the basis of those decisions. Nor had they specified what statements they had been unable to make or what positions and evidence they had been unable to present. 51 .     The Supreme Court reiterated that the Limiting Decree had been lawful and that the Agency had had the power to adopt it in order to protect investors and the securities market. The alleged damage had been caused by Proficia Dadas’s unlawful conduct and the economic decisions of the claimants, and not the initial lack of a time-limit as regards the validity of the Limiting Decree. (d)    Proceedings before the