Judgment Vujovic and Lipa D.O.O. v. Montenegro (no. 2) - Court of Appeal’s persistent failure to comply with decisions of the Constitutional Court resulted in breach of the Convent

issued by the Registrar of the Court   ECHR 278 (2025)   27.11.2025   Montenegrin Court of Appeal’s persistent failure to comply with decisions of   the Constitutional Court resulted in breach of the Convention   In today’s Chamber judgment1 in the case of Vujović and Lipa D.O.O. v. Montenegro (no.2)   (application no. 43050/22), the European Court of Human Rights held, unanimously, that there had   been a violation of Article 6 (right to a fair hearing within a reasonable time) of the European   Convention on Human Rights, and a violation of Article 1 of Protocol No. 1 (protection of property).   The case concerned repeated remittals by the Constitutional Court to the Court of Appeal in the   context of insolvency proceedings.   The Court found no reason to depart from the Constitutional Court’s conclusions that the decisions   of the Court of Appeal had been insufficiently reasoned and arbitrary. Furthermore, the total length   of the proceedings had been mainly caused by the cumulative effect of the Court of Appeal failing to   comply with the Constitutional Court’s decisions on four occasions, contrary to legislative   requirements, and had been entirely attributable to the domestic authorities. It had not been until   the fifth re-examination of the case that the Court of Appeal had finally complied with the   Constitutional Court’s decisions and most of the applicant company’s property had by then been   sold.   Principal facts   The applicants are Milorad Vujović a Montenegrin national who was born in 1956 and lives in   Cetinje, and a limited liability company, Lipa D.O.O, which was founded in 2002 and is based in   Montenegro. Mr Vujović is the founder, sole owner and executive director of the applicant company.   In December 2013 the Podgorica Commercial Court opened insolvency proceedings in respect of the   applicant company at the request of a secured creditor. The applicant company appealed against   that decision arguing that the secured creditor did not have legal standing to make that request.   In 2014 the Podgorica Court of Appeal rejected the applicant company’s appeal and, as a result, the   insolvency proceedings against the applicant company continued. The Constitutional Court   subsequently rejected a constitutional appeal. The applicants lodged an application with the   European Court, complaining that the Court of Appeal had refused to examine their appeal on the   merits. In 2018 the European Court delivered a judgment finding a violation of Article 6, owing to a   lack of access to a court, and the applicant sought the re-opening of the domestic proceedings.   On 29 November 2018 the Court of Appeal re-opened the proceedings and upheld the Commercial   Court’s December 2013 decision. The applicants lodged a constitutional appeal concerning the Court   of Appeal’s interpretation of the relevant provisions of the Insolvency Act in force at the time,   arguing, in particular, that a secured creditor could not request the opening of insolvency   proceedings. They also referred to the unreasonable length of the proceedings.   On four occasions, on 3 November 2020, 25 May 2021, 22 February and 11 July 2022, the   Constitutional Court quashed decisions of the Court of Appeal upholding the Commercial Court’s   1. Under Articles 43 and 44 of the Convention, this Chamber judgment is not final. During the three-month period following its delivery,   any party may request that the case be referred to the Grand Chamber of the Court. If such a request is made, a panel of five judges   considers whether the case deserves further examination. In that event, the Grand Chamber will hear the case and deliver a final   judgment. If the referral request is refused, the Chamber judgment will become final on that day.   Once a judgment becomes final, it is transmitted to the Committee of Ministers of the Council of Europe for supervision of its execution.   Further information about the execution process can be found here: www.coe.int/t/dghl/monitoring/execution.   2013 judgment and remitted the case for fresh examination. The Constitutional Court held that a   secured creditor did not have the same status as an insolvency creditor and could not, therefore,   request the opening of insolvency proceedings. The Constitutional Court found that the Court of   Appeal had ruled in an arbitrary manner, thus violating the applicants’ right to a fair trial.   On 24 November 2022 the Court of Appeal ruled in favour of the applicants, quashed the   Commercial Court’s decision and ordered a re-examination of the case. On 29 November 2022 the   Commercial Court rejected the request to open insolvency proceedings in respect of the applicant   company. An appeal by the secured creditor’s legal successor was unsuccessful.   Complaints, procedure and composition of the Court   Relying on Article 6 (right to a fair hearing within a reasonable time), the applicants complained that   the insolvency proceedings had been unfair and unreasonably long, in particular the repeated   decisions of the Court of Appeal had been insufficiently reasoned and arbitrary, as well as contrary   to the findings of the Constitutional Court. Relying on Article 1 of Protocol No. 1 (protection of   property) to the Convention, the applicants complained that the domestic courts’ decisions had   amounted to an unlawful interference with their right to the peaceful enjoyment of their property.   The application was lodged with the European Court of Human Rights on 13 August 2022.   Judgment was given by a Chamber of seven judges, composed as follows:   Erik Wennerström (Sweden), President,   Ivana Jelić (Montenegro),   Raffaele Sabato (Italy),   Frédéric Krenc (Belgium),   Davor Derenčinović (Croatia),   Artūrs Kučs (Latvia),   Anna Adamska-Gallant (Poland),   and also Ilse Freiwirth, Section Registrar.   Decision of the Court   Article 6   As to the fairness of the proceedings, the Court noted that while the Court of Appeal’s decisions had   not been entirely unreasonable, it was clear that the reasoning had been considered, on four   occasions, as arbitrary by the Constitutional Court and, as such, in violation of Article 6. The   Constitutional Court had also referred on several occasions to the relevant provision of the   Constitutional Court Act, providing that its decisions were binding and had to be complied with.   However, it was only after four remittals that the Court of Appeal had finally complied with the   Constitutional Court’s ruling. The Court saw no reason to depart from the Constitutional Court’s   conclusions.   As to the length of the proceedings, the Court noted that the proceedings had begun on   27 December 2013, when insolvency proceedings had been opened, and had ended on 19 January   2023, when the Court of Appeal had given the final decision in the case. Taking into account the time   the case had been pending before the European Court, the proceedings had lasted six years, two   months and 21 days, during which time the national courts had issued 15 decisions at three levels of   jurisdiction.   The case concerned insolvency proceedings in respect of the applicant company in which the main   question was whether the secured creditor had had legal standing to request the opening of those   2 proceedings. That was not a question of such complexity as to justify proceedings of that length. The   proceedings had not been characterised by any particularly long period of inactivity on the part of   any single court. Most of the sets of proceedings had lasted on average a few months at each level   of jurisdiction, which could not be considered excessive as such. However, the Court considered that   judgments quashing previous findings and remitting the case were usually a result of errors   committed by the lower courts and that the repetition of such judgments could point to a   shortcoming in the justice system. The total length of the proceedings had been mainly caused by   the cumulative effect of the Court of Appeal failing to comply with the Constitutional Court’s   decisions on four occasions, contrary to the requirements of domestic legislation in that regard and   had been entirely attributable to the domestic authorities.   There had therefore been a violation of Article 6 in respect of the fairness of the domestic   proceedings and in respect of the length of the domestic proceedings.   Article 1 of Protocol No. 1   The national courts had opened insolvency proceedings in respect of the applicant company at the   request of a secured creditor, which had resulted in the sale of most of the applicant company’s   properties. It had not been until the fifth re-examination of the case that the Court of Appeal had   finally complied with the Constitutional Court’s decisions and most of the applicant company’s   property had been sold in the meantime which demonstrated that, in the specific circumstances of   the case, the applicants had not had the opportunity to effectively challenge the interference with   their possessions.   The applicants had clearly not been provided with a reasonable opportunity of putting their claims   to the responsible authorities in order to effectively challenge the interference with their rights. The   inordinate length of the proceedings had also had a direct impact on the applicants’ right to peaceful   enjoyment of their possessions. The delay had imposed an excessive individual burden on the   applicants and had therefore upset the fair balance that had to be struck between the applicants’   right to peaceful enjoyment of their possessions and the general interest involved.   The State had failed to comply with its duty under Article 1 of Protocol No. 1 to set up a proper   forum allowing the applicants to assert their rights effectively. There had been a breach of that right.   Just satisfaction (Article 41)   The Court held that Montenegro was to pay the applicants 4,680 euros (EUR) in respect of non-   pecuniary damage and EUR 9,200 in respect of costs and expenses.   The judgment is available only in English.   This press release is a document produced by the Registry. It does not bind the Court. 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