CEDH · CASELAW;JUDGMENTS;GRANDCHAMBER;ENG — 1 juin 2023

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page-break-inside:avoid; page-break-after:avoid; line-height:113%; font-size:10pt } .s320E5A8E { width:5.95pt; font:7pt 'Times New Roman'; display:inline-block } .sD11CFAB7 { margin-top:14pt; margin-left:15.01pt; margin-bottom:3pt; text-align:justify; padding-left:1.99pt; font-family:Arial } .sFBC99493 { font-style:italic } .s2D9C6089 { margin-top:12pt; margin-bottom:12pt; text-indent:14.2pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid } .s69DCC830 { margin-top:36pt; margin-bottom:0pt } .s48FC6C54 { width:23.87pt; display:inline-block } .s446E0F47 { width:141.09pt; display:inline-block } .sA8208715 { width:9.2pt; display:inline-block } .s7BF29C1E { width:139.76pt; display:inline-block } .sF6A12959 { width:33%; height:1px; text-align:left } .s85226119 { margin-top:0pt; margin-bottom:0pt; text-align:justify; font-size:10pt } .s653E6C45 { font-family:Arial; font-size:6.67pt; vertical-align:super; color:#0069d6 }   GRAND CHAMBER CASE OF FU QUAN, s.r.o. v. THE CZECH REPUBLIC (Application no. 24827/14)         JUDGMENT Art 6 § 1 (civil) • Access to court • Domestic courts’ failure to examine merits of claim, subsuming case facts under relevant law provision by means of principle of jura novit curia , in absence of appropriate arguments from claimant • No excessive formalism Art 1 P1 • Control of use of property • Company’s omission to duly raise before domestic courts complaints of authorities’ failure to take good care of its seized property and undue delay in lifting seizure • Art 1 P1 inapplicable to company’s compensation claim – based on unwarranted prosecution and detention of its managing director and associate – for lack of sufficient basis in domestic law   STRASBOURG 1 June 2023   This judgment is final but it may be subject to editorial revision. In the case of Fu Quan, s.r.o. v. the Czech Republic, The European Court of Human Rights, sitting as a Grand Chamber composed of:   Síofra O’Leary,   Georges Ravarani,   Marko Bošnjak,   Gabriele Kucsko-Stadlmayer,   Pere Pastor Vilanova,   Arnfinn Bårdsen,   Branko Lubarda,   Mārtiņš Mits,   Jovan Ilievski,   Péter Paczolay,   Lado Chanturia,   María Elósegui,   Darian Pavli,   Ioannis Ktistakis,   Frédéric Krenc,   Mykola Gnatovskyy, judges ,   Pavel Simon, ad hoc judge , and Søren Prebensen, Deputy Grand Chamber Registrar , Having deliberated in private on 3 May 2023, Delivers the following judgment, which was adopted on that date: PROCEDURE 1.     The case originated in an application (no. 24827/14) against the Czech Republic lodged with the Court under Article   34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Fu Quan, s.r.o. (“the applicant company”), a commercial company incorporated under Czech law, on 25 March 2014. 2.     The applicant company was represented before the Chamber by Mr   J.   Stránský, and before the Grand Chamber by Mr D. Hlaváč, both lawyers practising in Prague with the law firm Stránský & Partneři. 3.     The Czech Government (“the Government”) were represented before the Chamber by their Agent at the time, Mr V.A. Schorm, and before the Grand Chamber by his successor in that position, Mr P. Konůpka, both of the Ministry of Justice. 4.     The applicant company alleged, in particular, that it had been denied access to a court on account of a formalistic and restrictive interpretation of the national law by the domestic courts. The applicant company also alleged that it had sustained damage on account of the seizure of its property in the criminal proceedings against its managing director and its other member, who were eventually acquitted, and of their detention pending trial. It relied on Article 6 § 1 and Article 13 of the Convention and on Article 1 of Protocol No. 1 thereto. 5.     The application was allocated to the First Section of the Court (Rule   52 § 1 of the Rules of Court). On 15   December 2015 the Government were given notice of the application. The parties exchanged observations on the admissibility and merits of the application. 6.     On 17 March 2022 a Chamber of that Section, composed of Krzysztof Wojtyczek, President, Armen Harutyunyan, Pauliine Koskelo, Tim Eicke, Linos-Alexandre Sicilianos, Ksenija Turković, Aleš Pejchal, judges, and Renata Degener, Section Registrar, delivered its judgment. The Chamber, by a majority, declared the application admissible and held, by five votes to two, that there had been a violation of Article 1 of Protocol No. 1 to the Convention and that it was not necessary to examine the complaint under Article 6 § 1 and Article 13 of the Convention. Judges Koskelo and Eicke expressed a joint dissenting opinion. 7.     On 17 June 2022 the Government requested the referral of the case to the Grand Chamber in accordance with Article 43 of the Convention. On 5   September 2022 the panel of the Grand Chamber granted the request. 8.     The composition of the Grand Chamber was determined in accordance with the provisions of Article 26 §§ 4 and 5 of the Convention and Rule 24. 9.     As Kateřina Šimáčková, the judge elected in respect of the Czech Republic, withdrew from sitting in the case (Rule 28 § 3), the President of the Grand Chamber decided to appoint Pavel Simon to sit as an ad hoc judge both in this case and in Grosam v. the Czech Republic , no. 19750/13 (Article 26 §   4 of the Convention and Rule 71 § 1 and Rule 29 § 1), which were to be examined simultaneously (Rule 71 § 1 and Rule 42 § 2). 10.     On 14 October 2022 the President, after consulting the parties, decided not to hold a hearing (Rule 71 § 2 and Rule 59 § 3 in fine ). 11.     The applicant company and the Government each filed written observations on admissibility and the merits. The parties did not reply to each other’s observations. 12.     In addition, third-party comments were received from the Slovenian and Polish Governments, which had been given leave by the President to intervene in the written procedure (Article 36 § 2 of the Convention and Rule   71 § 1 and Rule 44 § 3). The parties did not reply to those comments (Rule   71 § 1 and Rule 44 § 6). THE FACTS 13.     The applicant company, Fu Quan, s.r.o., is a limited liability company incorporated under Czech law with its registered office in Prague. the Criminal proceedings 14.     On 25 April 2005 the applicant company’s only two members ( společník ), one of whom was also the company’s managing director ( jednatel ), were accused of tax evasion. They were arrested on 26   April 2005 and two days later the Prague 2 District Court ( obvodní soud ) remanded them in custody. 15 .     On 27 April 2005 the Prague municipal prosecutor’s office ( městské státní zastupitelství ) ordered, under Article 347 § 1 of the Code of Criminal Procedure (see paragraph 57 below), the seizure of property belonging to the applicant company, including merchandise (clothing) and a vehicle leased under a leasing contract. It prohibited the accused company members from disposing of the seized property unless such action aimed to prevent an imminent risk of damage. The merchandise was seized between 2 May and 27 June 2005. It was entrusted to the Office for Government Representation in Property Matters ( Úřad pro zastupování státu ve věcech majetkových – hereinafter “the OGRPM”) in boxes on pallets. 16 .     According to an expert report of 15 August 2005, commissioned by the police, the value of the seized merchandise was 62,424,027 Czech korunas (CZK) (2,116,218 euros (EUR) at that time). The report stated that some of the clothes showed signs of damage due to long-term storage and that they were faded and out of fashion. The expert who prepared the report later added, for the purposes of the criminal proceedings against the applicant company’s members, that when preparing her report, she had physically examined all the merchandise and that “a large part of the goods were of very poor quality, damaged, the boxes had been eaten through by mice, many of the clothes were faded and wrinkled”. 17 .     The applicant company’s two members, one acting in his capacity as managing director, filed complaints against the seizure of the property, but on 9 June 2005 the Prague Municipal Court ( městský soud ) dismissed them as unfounded. The Municipal Court stated that one of the members did not have any family or social ties or immovable property in the Czech Republic and maintained regular contact with his family in China, and that the second member also had strong ties with China and did not even have a valid residence permit in the Czech Republic. It went on to conclude that, in view of their connections with China, of which country they were nationals, and having regard to their criminal conduct in question, there was a suspicion that they would try to prevent execution of a possible future sentence of confiscation of property by transferring the applicant company’s property to China. 18.     On 14 November 2005 the police returned to the accused company members several electronic devices, bank cards and other personal items, stating that they were not necessary for the purposes of the criminal investigation and proceedings and that there was no likelihood of their forfeiture or confiscation. On 21 November 2005 the leased car (see paragraph 15 above) was returned to the leasing company. 19.     On 12 April 2006 the municipal prosecutor’s office indicted the two company members. 20.     On 16 March 2007, during the trial, the two accused company members were released from custody. 21.     By judgments of 2 November 2006 and 16 July 2007 respectively, the Prague Municipal Court found the applicant company’s members guilty of tax evasion. However, those judgments were quashed on appeal by the Prague High Court ( vrchní soud ) on 16 March 2007 and 25 January 2008 respectively, and the case was remitted to the first-instance court. 22.     By a judgment of 2 May 2008, the Prague Municipal Court found the accused guilty for the third time. 23 .     By a judgment of 27 February 2009, which became final on the same day, the Prague High Court acquitted the accused. It held as follows: “[I]t has not been proved that the events for which the accused are being prosecuted actually happened. That means that even though the events described most probably happened, it has not been established that they happened in a manner that would justify that a specific act be attributed to the accused, either separately or together, and therefore it may not be found that they committed such an act either separately or as accomplices. Hence, it is not possible to conclude that either of the accused committed an act that could be regarded as the crime specified in the indictment, that is to say, the crime of tax evasion in relation to the seized merchandise and the money transferred.” The return of the seized property 24.     On 9 June 2009 the Municipal Court asked the municipal prosecutor’s office to propose a decision regarding the seized property. The seized funds 25.     By a decision of the Municipal Court of 9 September 2009, the funds seized during the criminal proceedings were deposited in an escrow account. Following a complaint by one of the applicant company’s members, on 30   March 2010 the High Court quashed that decision and remitted the case. 26.     In the fresh proceedings, by a decision of 17 May 2010, the Municipal Court returned the seized funds to the applicant company. The seized merchandise 27.     Meanwhile, in a letter of 13 August 2009, the OGRPM asked the Municipal Court when a decision terminating the seizure of the applicant company’s merchandise would be made. 28.     On 9 September 2009 the Municipal Court asked the applicant company’s managing director, who had previously stated that in the company’s warehouse there had also been merchandise belonging to other companies, to identify his company’s property within fourteen days of receipt of the letter. However, the letter was not served because the addressee could not be found at the address indicated in the letter, the reason being that the applicant company had changed the address of its registered office at around that time. 29.     On 22 September 2009 the applicant company’s managing director stated that all the seized merchandise belonged to the applicant company. 30.     The case file was subsequently sent to the Ministry of Justice for examination of the company’s compensation claims (see paragraphs 36-49 below), and was returned to the Municipal Court on 1 July 2010. 31 .     By a decision of 22 July 2010, the Municipal Court decided to return the seized merchandise to the applicant company, pursuant to Article 80 of the Code of Criminal Procedure (see paragraph 57 below). That decision became final on 17 August 2010. 32.     On 6 September 2010 the seized merchandise was inspected in the warehouse of the OGRPM. The applicant company’s managing director and the representative of the OGRPM agreed that the merchandise would be handed back over several days, to be specified in advance by the managing director to the OGRPM. Each day a record of the handover of the merchandise would be drawn up and signed by both parties and would state the number of pallets handed over. The managing director then labelled the pallets with seals and a stamp. 33 .     Between 14 and 23 September 2010, over a total of six days, the seized merchandise was handed over to the applicant company’s managing director. As agreed, the handovers were recorded in reports and photographs were taken which, according to the Government, clearly showed that the merchandise had been stored in the normal way, in cardboard boxes wrapped in plastic sheeting or in plastic bags. 34.     Following a request, the Director General of the OGRPM sent a letter to the Government Agent on 19 February 2016 which stated, inter alia : “[The applicant] company ... began communicating with the Office in respect of the seized [merchandise] following the decision of the Prague Municipal Court ... of 22   July 2010 ... When taking the [merchandise] back, the [applicant] company ... did not claim that it was damaged; on the contrary, it confirmed that the property was in good condition and that the merchandise was undamaged ... At the same time, the Office considers it appropriate to note that some articles were identified as counterfeit.” THE Compensation proceedings Compensation sought by the applicant company’s managing director 35 .     On 13 December 2010 the applicant company’s managing director sought compensation from the Ministry of Justice under the State Liability Act (see paragraph 59 below) for damage in the form of loss of earnings, which was granted on 26   May 2011. He was awarded CZK 116,960 (EUR   4,754 at that time) in compensation for the 690 days he had spent in custody (that is, an amount of CZK 170 per day pursuant to the State Liability Act). Compensation sought by the applicant company 36 .     Meanwhile, on 27 January 2011 the applicant company sought CZK   63,294,609 (EUR 2,613,599) from the Ministry of Justice as compensation for the damage caused by the detention of its managing director, who had eventually been acquitted. It relied on the State Liability Act (see paragraphs 59-64 below) because it considered that the damage had been caused in the exercise of public authority. The only provision the applicant company referred to was section 14 of that Act (see paragraph 60 below). 37 .     The applicant company’s principal claim, amounting to CZK   61,887,364 (EUR 2,555,490 at the time), concerned the loss of value of its merchandise caused by the five ‑ year storage. That sum corresponded to the difference between the original value of the seized merchandise (CZK   62,424,027), as established by the expert (see paragraph 16 above), and the amount the applicant company had obtained by selling a part of the merchandise (CZK 536,663). In respect of that part of its compensation claim, the applicant company argued, among other things, as follows: “By a decision of ... the Prague Municipal Court ... of 22 July 2010, it was decided that the merchandise would be returned. ... After taking it back, we discovered that the returned merchandise was in a deplorable condition. The seizure of the merchandise lasted five years! These were clothes, that is to say, goods whose condition deteriorates considerably with prolonged storage. Furthermore, after five years, any clothing becomes practically unsaleable due to changing fashion trends (leaving aside the truly catastrophic actual condition ( katastrofální faktický stav ) of the merchandise). Our company was able to sell off a part of the merchandise, but (because of its condition) only for a fraction of its original value.” 38 .     The remaining claims of the applicant company concerned compensation for equipment that had remained at its offices after its managing director had been detained, but which had been stolen because the police had not secured it. The applicant company further argued that the arrest of its managing director and the seizure of its financial assets had left it unable to pay its telephone bills, which had led to enforcement proceedings being instituted against it, resulting, eventually, in the payment of default interest and of the costs of the enforcement proceedings to the telecommunications company as the enforcement creditor. It had also been unable to make its payments under the leasing contract, which had resulted in the imposition of a contractual penalty and to the company being unable to acquire ownership of the leased vehicle. 39.     On 26 May 2011 the Ministry issued an opinion refusing the applicant company’s claims. The relevant parts of that opinion read as follows: OPINION “[W]ith regard to the awarding of compensation for an unlawful decision pursuant to [the State Liability Act]. ... Based on its content, the Ministry of Justice considers [the applicant company’s] submission to be a claim under [the State Liability Act] for damage caused in the exercise of public authority by a decision or irregular official conduct ... Assessment of the case Under [the State Liability Act], the conditions for establishing the State’s liability for damage are: (1)     the existence of a ground for liability (an unlawful decision or irregular official conduct); (2)     the occurrence of damage; (3)     the existence of a causal link between the ground for liability and the occurrence of damage. All of these conditions must be fulfilled together in order for the State to be held liable for the damage and for compensation to be awarded. In its assessment of the claim, the Ministry considered all the conditions for the establishment of liability. A ground for liability was found to exist, as an unlawful decision had been rendered in the proceedings. However, the other conditions for establishing the State’s liability were not found to be present. ... The Ministry ... is not responsible for the passing of time as such. The alleged depreciation of the merchandise is not in any way substantiated. Nowhere is it stated that the merchandise in question could not have been sold by the claimant at a higher price after it was returned by the law-enforcement authorities or that the claimant would have sold all the merchandise at the alleged price if the managing director had not been prosecuted. Accordingly, this claim appears to be purely speculative and unsubstantiated.” 40.     The Ministry also dismissed the applicant company’s remaining claims (see paragraph 38 above). 41 .     On 2 June 2011 the applicant company brought a civil action against the State before the Prague 2 District Court, seeking compensation for the damage sustained on account of the detention of its managing director and other member, who had eventually been acquitted. It again relied on the State Liability Act (see paragraphs 59-64 below) but this time the provisions it referred to were sections 15(2), 33 and 35 of that Act (see paragraphs 61 and   63-64 below). The relevant parts of the applicant company’s civil action read as follows: I. Facts establishing entitlement to compensation for damage “[T]he Ministry of Justice completely ignored the [applicant company’s] claim for compensation for the damage sustained in connection with the custody of its managing director and other member, which completely paralysed the operations of the company. Not only were the plaintiff’s members deprived of their liberty, but almost all the plaintiff’s stored merchandise was seized, along with substantial sums of money found at the company’s registered office and during searches of the homes of the persons concerned. All the plaintiff’s accounting records and documents required for its operation were seized, and it was entirely deprived of funds. Through no fault of its own, the plaintiff therefore de facto ceased operation as a result of the State’s actions, and thus found itself in a difficult financial situation. ...” II. Compliance with the limitation period for bringing a claim “[O]n 27 February 2009 the Prague High Court delivered a judgment ... in which it ... acquitted the managing director. This acquittal is final ... The two-year limitation period for claiming compensation provided for in section 33 of [the State Liability Act] therefore began to run on 28 February 2009 and would have expired on 28 February 2011. On 27 January 2011, however, the relevant claim was filed with ... the Ministry of Justice ... so that in accordance with section 35 of [the State Liability Act] the limitation period did not run between 27 January 2011 and 26 May 2011 (the date of the Ministry of Justice decision). The limitation period for the plaintiff to bring a claim for compensation before the court has therefore been complied with ...” III. Pecuniary damage “... 2.     Compensation for the damage to the seized merchandise On 22 July 2010, pursuant to the decision of ... the Prague Municipal Court ... it was ordered that this merchandise be returned ... After taking it back, however, the plaintiff discovered that the returned merchandise was in a deplorable condition. The seizure of the merchandise lasted five years! These were clothes, that is to say, goods whose condition deteriorates considerably with prolonged storage. Furthermore, after five years, any clothing becomes practically unsaleable owing to changing fashion trends (leaving aside the truly catastrophic actual condition ( katastrofální faktický stav ) of the merchandise). The plaintiff nonetheless managed to sell off a part of the merchandise, but (because of its condition) only for a fraction of its original value ... The plaintiff considers that, as a result of the five-year storage of the merchandise, it sustained damage amounting to the difference between the original price of the merchandise [established by] the aforementioned expert opinion (CZK 62,424,027) and the proceeds it received from the sale of a part of the merchandise (CZK 536,663). The plaintiff thus sustained damage in an amount of CZK 61,887,364 (i.e., CZK   62,424,027 minus CZK 536,663). ... The plaintiff does not argue that the Ministry is responsible for ‘the passage of time’. [It] is seeking compensation for the objective deterioration ... of the seized merchandise which occurred in connection with the exercise of public authority. In the plaintiff’s view, it is irrelevant whether the merchandise could have been sold for a higher price, and it is impossible to prove that all of [it] would have been sold at the given time. [The applicant company] does not accept the conclusion that its claim is speculative. As stated above, the merchandise was returned to the plaintiff after five   years of storage in a totally deplorable condition. This ... was caused by the decision of the law-enforcement [that is, criminal justice] authority; therefore, the causal link with the damage is established ...” 3.     Compensation for damage for the theft of office equipment and the disposal of personal belongings “When its managing director was remanded in custody, items of property belonging to the plaintiff which were located on its office premises ... were left ... without any form of security or protection. While the managing director was held in custody the following items were disposed of ...” IV. Assertion of claim for compensation for damage Ad (1)     Expenses incurred as a result of non-payment for telecommunications services “[T]he plaintiff claims compensation for the damage specified above, consisting in the expenses incurred as a result of non-payment for telecommunications services, in an amount of CZK 23,245.” Ad (2)     Damage to seized merchandise “In view of all the information provided above, the plaintiff considers it proven that damage was caused to it in the exercise of public authority. Under section 15(2) of [the State Liability Act] the plaintiff hereby claims compensation for the damage consisting in the absolute depreciation of the seized merchandise, equal to the difference between its value as determined by the expert opinion and the total sum obtained from the sale of a part of the merchandise, i.e., an amount of CZK 61,887,364.” Ad (3)     Damage due to the loss of office equipment and personal belongings “[T]he plaintiff hereby claims compensation for damage consisting in the loss of company office equipment and personal belongings with a total value of CZK 684,000.” Ad (4)     Damage resulting from an unfulfilled vehicle leasing contract “[T]he plaintiff hereby claims compensation for damage resulting from non-fulfilment of a financial leasing contract for a ... car, as a result of which the plaintiff sustained pecuniary damage in an amount of CZK 700,000, corresponding to the value of the vehicle at that time.” 42.     On 13 December 2011 the applicant company withdrew its claim for CZK 2,782,682.63 (EUR 108,935 at that time) corresponding to the amount obtained by selling another part of the merchandise. The proceedings relating to that part of the claim were discontinued by a decision ( usnesení ) of 28   December 2011. 43 .     By a judgment of 28 December 2011, the District Court dismissed the applicant company’s action as unfounded on the grounds that, under the State Liability Act, only the parties to the proceedings from which an unlawful decision originated could seek compensation for damage sustained on account of that decision. The relevant parts of that judgment read as follows: “As grounds for its action the plaintiff stated that its managing director ... and its other member ... had been prosecuted ... for the criminal offence of evasion of taxes ... Pursuant to the decision of the Prague 2 District Court of 28 April 2005 ... the managing director and the other member were remanded in custody ... The plaintiff’s managing director and his co-accused were subsequently released from custody by a decision of the Prague High Court of 16 March 2007 ... He spent 690 days in custody. ... [T]he court finds ... that the action is unfounded. The conditions for the State to incur legal liability for damage caused in the exercise of public authority by a decision or irregular official conduct are the existence of an unlawful decision or irregular official conduct, of damage [sustained by] the injured party and of a causal link between the irregular official conduct or unlawful decision and that damage. Most importantly, in the present case, the court finds no locus standi on the part of the plaintiff, which, as a legal person, was not a party to the above-mentioned criminal proceedings in which its managing director and other member were prosecuted. Therefore, the plaintiff could not have sustained any damage in connection with the criminal prosecution of its managing director and other member. This view was already expressed by the Supreme Court in its judgment of 15 December 2005 No. 25 Cdo 1956/2004 ... in which it held that a company was not entitled ... to compensation for the damage caused by an unlawful decision issued in connection with the criminal prosecution of its managing director. Although that decision relates to Act no. 58/1969, its applicability to the [State Liability Act] remains unaffected, as the conditions for establishing locus standi on the part of the plaintiff have not changed. ... Therefore, there is no causal link between the damage claimed by the plaintiff as a legal person and the criminal prosecution of its managing director and other member.” 44 .     The applicant company appealed. In its appeal it argued as follows: II. “[The District Court] ... abstained from any review ... as regards the causal link between the unlawful decision and the pecuniary damage sustained by the plaintiff ... In the reasoning of the impugned judgment the ground ... given for dismissing the action is ... that the plaintiff did not have locus standi . This argument primarily relied on section 7(1) of the [State Liability Act], according to which only the parties to the proceedings in which an unlawful decision was issued are entitled to compensation for damage. In the case at hand, however, the parties to the proceedings were [both] members of the plaintiff, and one of them was also its sole managing director. The plaintiff considers that such a conclusion – albeit supported by the decision of the Supreme Court of 15 December 2005 referred to ... – is incorrect and/or unlawful, primarily on account of the excessively formalistic interpretation of the [State Liability Act] made by the court concerned. In the situation at issue the plaintiff was, figuratively speaking, also being held in ... detention, as all of its human constituents (as a legal person) were in custody at the time (i.e., both of its members, including the managing director). It was thus inconceivable that the plaintiff could have been active in any way, commercially or otherwise. In the plaintiff’s view, this resulted in a violation of its constitutionally guaranteed rights and freedoms ... enshrined in Article 11 of the Charter of Fundamental Rights and Freedoms (‘the Charter’), which protects the right of both natural and legal persons to own property, and Article 36 of the Charter, which guarantees the right to a fair trial and the judicial protection of rights. ... The plaintiff similarly draws attention to the international-law dimension of the protection of property and possessions, as guaranteed, for example, by Article 1 of Protocol No. 1 to the Convention ..., by which the Czech Republic is bound ... In a different context, the right to compensation for unlawful detention is also referred to in Article 9 § 5 of the International Covenant on Civil and Political Rights ..., which provides that ‘[ a ] nyone who has been the victim of unlawful arrest or detention shall have an enforceable right to compensation ’. III. This excessively formalistic and even restrictive interpretation of the relevant provisions of the [State Liability Act] (by the court) in effect made it impossible for the plaintiff to seek judicial protection of its rights, as the impugned judgment barred it de facto from proceedings concerning compensation for damage caused in the exercise of public authority, and it was thereby prevented from obtaining redress for the ‘injustice’ indirectly caused to its members. In the plaintiff’s opinion, the way in which the court interpreted the substantive legal rules is in conflict with the ideas and principles of the functioning of the rule of law ... Taken to the point of absurdity, it is easy to imagine a situation where a great number of commercial companies (or legal entities in general) are destroyed by the State on the technical grounds that they lack locus standi in compensation proceedings. When a criminal prosecution is brought against the governing body of a commercial company, the company itself is never a party to the criminal proceedings ..., but this by no means rules out the possibility that the company will sustain damage as a result of those criminal proceedings. In the present case, the unfairness of such an interpretation is compounded by the fact that the plaintiff company was deprived of all its effective human capital by a sudden and unannounced police action which prevented it from paying even its most routine expenses. This action, taken without regard for its consequences, made it impossible to cover payments to telephone operators and leasing payments for cars ... The company’s funds were seized, and no measures were permitted, let alone taken, to prevent the damage which inevitably occurred soon afterwards as a direct consequence. That damage was caused to the plaintiff, and consequently to its members, as a result of direct action taken by public authorities. Further official investigation found this action to have been ... unlawful. ... It was the State which caused damage to the plaintiff by its actions. The company, which in terms of human resources consists solely of its members (who were affected, inter alia , by the State’s actions), seeks compensation for that damage. The impugned decision legally classifies the claim as falling under [the State Liability Act], and then formalistically infers that the plaintiff company, which sustained the damage, is not entitled to bring an action and that the State does not, and never has to, bear actual liability for the consequences of such excesses. As a result of its unacceptable formalism, this [outcome] merely represents a crude method of disclaiming any liability whatsoever in the exercise of public authority. In this context, the plaintiff also draws attention to a possible conflict with the principle of legality enshrined in Article 2 § 2 of the Charter.” 45 .     By a judgment of 15 May 2012, the Municipal Court dismissed the applicant company’s appeal and upheld the first-instance judgment. The Municipal Court judgment, in its relevant parts, read as follows: “According to the facts as presented in the action, the plaintiff is seeking compensation for the damage caused to it by the ‘placement in custody of its managing director and other member. ... The plaintiff maintains that [because of] its managing director’s and other member’s placement in custody its operations were completely paralysed and it was deprived of its effective human capital. The plaintiff further argues in its action that it brought the claim within the limitation period, referring in this context to section 33 of the [State Liability Act] and to the judgment of 27 February 2009 by which its managing director was acquitted. In its action the plaintiff made a total of four separate compensation claims, specifying that the alleged damage consisted of: 1.   expenses incurred as a result of the non ‑ payment of telecommunications services because of its managing director being held in custody, in an amount of CZK 23,245; 2.   the reduced value of the merchandise seized in the criminal proceedings as a result of its five-year storage, in an amount of CZK   61,887,364 (CZK 59,104,681.37 after the partial withdrawal); 3.   the theft of office equipment and the taking of personal belongings as a result of the managing director’s custody, in an amount of CZK 684,000; and 4. compensation for the unfulfilled vehicle leasing contract owing to the managing director being in custody ... According to the facts as presented in the action it is necessary to legally characterise the plaintiff’s claim (as the plaintiff itself does, referring to section 33 of the State Liability Act) as a claim for compensation for damage caused by a decision on custody, and more specifically an unlawful decision. Section 9(1) of the State Liability Act provides that the person ... entitled to compensation for damage caused by a decision on custody is the person who was held in custody. The provision in question specifies that a person ... entitled [to compensation] is a person who was held in detention ..., which [may only be the case with] a natural person. This provision does not permit any other interpretation as to the person entitled. Certainly, a commercial company whose managing director and other member were remanded in ... detention (even where there are no other members) cannot be considered a person having sustained damage caused by ... detention ... It can be concluded that if the detention ... of a particular individual is cited as the reason (the cause of the damage), then it is necessary to consider the claim under section 9 of the State Liability Act as belonging solely and exclusively to that particular individual. Although the plaintiff did not argue ... that the damage resulted from the unlawful criminal proceedings ... brought against its managing director and other member, the plaintiff’s claim can also be examined on ... that ground ... In judicial practice, [it] has already been established that the discontinuation of a criminal prosecution, or an acquittal (as was the case here), has the same consequences as the quashing of an unlawful decision under section   8(1) of the State Liability Act. The person having locus standi to [bring] such a claim is ‘the party to the proceedings’ in which the unlawful decision was issued. In the present case, there is no doubt that the bringing of the charges (unlawful decision) and the acquittal (decision quashing the unlawful decision) concerned natural persons, namely the plaintiff’s managing director and other member, and that ... these individuals were parties to the criminal proceedings. The plaintiff, as a legal person, cannot be regarded as a party to the criminal proceedings since it has not been prosecuted. It cannot be considered such a party even taking into account the fact that the individual prosecuted is the sole managing director or member of the commercial company. It is the rule, not the exception, that a prosecuted individual lives within a certain organised community and has many relationships with other entities, whether of a family, work, business or social nature, etc. An individual can therefore serve as a member, officer or statutory representative of various legal entities, and the influence of that individual within that legal entity may be absolutely exceptional, unique or irreplaceable. There is no doubt that in such a case the criminal prosecution of a natural person has a fundamental influence or impact on the functioning of a legal person. However, this cannot alter the fact that the injured person under the State Liability Act, as a result of an unlawful decision to bring charges, is the person who was prosecuted, in this case, the plaintiff’s managing director or its other member. A similar issue has already been considered by the Supreme Court in its decision No.   25 Cdo 1956/2004, to which the first-instance court correctly referred in the reasoning of its judgment ... As regards the plaintiff’s claim for compensation for the damage caused by the ‘five ‑ year storage’ of the merchandise that was seized during the criminal proceedings, it must be noted that, quite apart from the plaintiff’s lack of locus standi ... there is also no causal link between the unlawful decision on custody or [the decision] to bring charges against the plaintiff’s managing director and other member, and the damage allegedly sustained as a consequence of the ‘five-year storage of the merchandise’. The plaintiff made no claims in relation to the cause of this damage other than a general allegation regarding its managing director’s or other member’s ... detention and/or prosecution. The fact that the merchandise was seized ... and later returned to the plaintiff’s managing director does not automatically mean that the State is liable ... for the loss of value of the merchandise caused by the passage of time. The mere fact that the proceedings resulted in an acquittal cannot lead to the conclusion that all the procedural acts carried out in the course of those proceedings (such as the seizure of the merchandise and its return to the managing director) constituted an unlawful decision or irregular official conduct (something that the plaintiff has not even argued). Based on the reasoning above, the appellate court finds the conclusion of the first ‑ instance court that the plaintiff lacks locus standi to be correct. This lack of locus standi is also linked to the correct legal conclusion of the first-instance court that there is no causal link between the alleged damage sustained by the plaintiff and the criminal prosecution of its managing director (other member).” 46 .     The applicant company then lodged an appeal on points of law ( dovolání ) with the Supreme Court in which it repeated the same arguments it had raised in its appeal to the second-instance court (see paragraph 44 above). 47.     By a decision of 15 November 2012, the Supreme Court declared the applicant company’s appeal on points of law inadmissible. It held, inter alia , as follows: “When the criminal prosecution of a person does not end in ... a [conviction], any claims for compensation for damage caused in connection with the prosecution are to be assessed under the relevant provision on compensation for unlawful decisions ... Section 7 of the State Liability Act ... provides that only a party to the proceedings in which an unlawful decision was issued is entitled to compensation for damage ... It is established in case-law that a commercial company is not entitled to compensation for damage caused by an unlawful decision, where [the damage] is sustained as a result of the criminal prosecution of its managing director ... The conclusion of the appellate court that the plaintiff company lacks locus standi , either in a dispute against the State concerning compensation for damage caused by the detention of its managing director and other member or in a dispute concerning compensation for damage caused by their prosecution, is therefore consistent with the settled case-law of the Supreme Court, from which there is no reason to deviate in the present case. In so far as the appellant considers that the appellate court erred in making an excessively formalistic interpretation of the State Liability Act, it must be noted that the Charter of Fundamental Rights and Freedoms (‘the Charter’) does not provide for a direct claim for compensation for damage caused by an unlawful decision or irregular official conduct. The Charter states that the conditions and detailed provisions in respect of the State’s liability for damage so caused shall be set out by law (Article 36 §§ 3 and   4 of the Charter of Fundamental Rights and Freedoms), which ... is ... the [State Liability Act]. In this context, the Constitutional Court has previously held that Article   36 § 3 of the Charter recognises an entitlement to compensation for damage caused by an unlawful decision of a court, another State body or the public administrative authorities, or as the result of irregular official conduct, only if the general conditions laid down by law are fulfilled, including the condition of the injured party’s locus standi within the meaning of section 7(1) of the State Liability Act, and consequently also section 9(1) of [that Act] (cf., for example, the Constitutional Court’s decision of 29 July 2008 No. I. ÚS 216/07). An interpretation of the legal rules on State liability for damage due to an unlawful decision that upholds the statutory requirement of locus standi ... of the injured party is therefore consistent with the constitutional law of the Czech Republic.” 48 .     On 16 January 2013 the applicant company lodged a constitutional complaint ( ústavní stížnost ), alleging a violation of its right to fair proceedings and its right to the peaceful enjoyment of its possessions. It again reiterated its arguments raised in its appeal and appeal on points of law (see paragraphs 44 and 46 above). 49 .     By a decision of 26 September 2013 (I