McCallan

The Supreme Court of the Slovak republic, in the case of plaintiff Rozmin s.r.o. with registered office in Rožňava, Šafárik st. 21, ID: 36 174 033, represented by JUDr. Radomír Bžán, attorney with registered office in Bratislava, Lazaretská st. 3/A, versus defendant Regional mining office Spišská Nová Ves with office in Spišská Nová Ves, Markušovská rd. 1, represented by JUDr. Tibor Seman, PhD., attorney with registered office in Košice, Novomeského sq. 5, concerning the review of lawfulness of the defendant´s decision to assign mining area to the company Economy Agency RV, s.r.o. with registered office in Rožňava, Marikovszkého 5, following an appeal of the plaintiff against the ruling of the Regional Court in Košice file number: 5S/73/2005-67, dated February 7th 2007,

decided that:

The Supreme Court of the Slovak republic changes the contested ruling of the Regional Court in Košice file number: 5S/73/2005-67, dated February 7th 2007 so, that it quashes the defendant´s decision to assign the mining area to the company Economy Agency RV, s.r.o. with registered office in Rožňava, Marikovszkého 5, registered in the records of mining areas under number 74/e, record number 3, dated April 22nd 2005, and returns the matter to the defendant for further procedure.

None of the participants has the right of court fees reimbursement.

Reasoning

In the contested first-instance ruling, the Regional Court in Košice stopped the proceedings concerning the review of lawfulness of the defendant´s decision file no. 887/465/2005-VI, dated May 3rd 2005, announcing to the plaintiff that the mining area was assigned to the company Economy Agency RV, s.r.o. Concerning court fees, it ruled that none of the participants has the right to their reimbursement. In the reasoning of the ruling, the Court stated that the mining area Gemerská Poloma, located in the cadastral regions of Gemerská Poloma and Henclová was assigned for mining activities by a decision of the defendant dated July 25th 1996 to the contributory organization Geologická služba SR with registered office in Bratislava, record number 74/e. Following a previous consent of the defendant, file number 1520-465-V/97 dated June 24th 1997, all the rights and obligations concerning the mining area resulting from the corresponding provisions of the Act no. 44/1988 Coll. on the protection and exploitation of mineral resources (Mining Act) and other legal regulations, were transferred to the plaintiff. The Court further stated that during a control carried out by the defendant on December 8th 2004, the defendant discovered relevant facts proving that the plaintiff has not begun to deplete the talc mineral resources from the mining area within the period of three years from its transfer, or he interrupted the depletion of resources for a period longer than three years, following which he started a tender procedure to assign the mining area to another organization, which was published in the Official commercial journal and announced to the plaintiff in a letter dated January 3rd 2005. The Court further stated that the mining area was properly assigned in 1996 by a decision of the mining office (Art. 25 of the Mining Act) in a procedure pursuant to Art. 24 of the Mining Area, and there was no reason for its termination. The Court found that the assignment of the mining area pursuant to Art. 27 par. 12 second sentence of the Mining Act cannot be applied at this procedure, because it only concerns the change of organization entitled to carry out mining activities in the mining area, which will be chosen applying the procedure of Art. 24 par. 4 to 10 of the Mining Act, and this procedure starts automatically ex offo, because the organization currently in hold of the mining area has not observed the terms resulting from Art. 27 par. 12 second sentence of the Mining Act, resulting from which its right to deplete the talc deposit perished. The Regional Court also stated that on April 21st 2005 a tender procedure was held, in which the proposal of the company Economy Agency RV, s.r.o. won the first place, which was announced to the plaintiff in a letter file number 887/465/2005-VII dated May 3rd 2005 and to the winning company in a letter file number 887/465/2005-VI, which also announced that a corresponding change in the mining areas record no. 74/e will be carried out on April 22nd 2005. The Regional Court resulted from the provision of Art. 27 par. 12 second sentence of the Mining Act, that the organization originally holding the mining area cannot be a participant of the tender procedure or any following legal procedures to assign the mining area to the winning organization. It claimed that the Act also does not oblige the defendant to file any decision concerning its deprivation of the mining area. Resulting from this reasoning, and from the corresponding legal provisions, the Court concluded that the action was filed by an unauthorized person, who was not a participant of the administrative procedure and was not even supposed to be that, and therefore pursuant to Art. 250d par. 3 of the Civil procedure Act (CPA) stopped the civil law procedure. In the conclusion the Court stated that the plaintiff had the chance to claim the protection of his rights and rightful interests in a procedure pursuant to Section 5, Chapter 5 of the CPA. The decision on court fees was reasoned by Art. 146 par. 1 letter c) of the CPA in connection with Art. 246c of the CPA.

The first-instance ruling was contested within the given time period by an appeal of the plaintiff, claiming that the court of appeal changes the ruling of the first-instance court so that it quashes the defendant´s decision to assign mining area to another organization because of its unlawfulness. He claimed that the first-instance court came on the basis of the given evidence to incorrect factual ascertainments and its decision is based on incorrect legal consideration of the case. He pointed out that, in the announcement of the defendant dated January 3rd 2005, the specified reason to re-assign the mining area is the interruption of the plaintiff´s mining activities for a period longer than three years, i.e. from October 1st 2001 to November 18th 2004, however this is not a lawful reason recognized by the Mining Act. The plaintiff finds the information on his interruption of mining activities, claiming that it started on October 1st 2001 and ended on November 18th 2004, incorrect and leading, because he only announced the interruption of his mining activities on November 30th 2001, and it is therefore obvious that the mining activities were not interrupted for three years. He also contested the interpretation of the record of control carried out by the defendant at the mining area on December 8th 2004, which is clearly in contradiction with its own content, because the record does not mention any depletion of the talc deposit within the given time period of three years, on the contrary it claims that no breach of any laws was discovered. The plaintiff claims that if the reasoning of the first-instance court was correct, stating that the plaintiff´s right to deplete the deposit perished automatically after 3 years from his acquiring of the mining area (which was in 1997), the record of control would have to observe a serious breach of the Mining Act, which it actually did not even mention. The plaintiff also pointed out that the court did not specify the control´s alleged conclusions, whether the depletion of the deposit has not started or it was interrupted for a longer period than three years, and therefore its ruling is unintelligible. He also claimed that the court did not consider the given written evidence – a letter from the Central mining office dated March 16th 2005. He disagreed with the legal evaluation of the court that the right to carry out mining activities on the mining area perishes automatically ex lege after a period of three years, because it should only perish on the basis of validity of a decision to assign the mining area to another organization. The plaintiff also contests the opinion of the first-instance court that a tender procedure itself is enough for the assignment of the mining area to another organization as incorrect, because the Mining Act does not distinguish between a “first” and a “following” assignment of a mining area, and therefore it is unacceptable that the defendant as a body of state administration can freely decide whether he assigns the mining area in the form of a rightful decision or in the form of a single letter. The plaintiff finds that, because of unlawful procedure of the defendant, neglecting the administrative process, the defendant foiled any attempt to review his activities, which should be a reason to quash his decision pursuant to Art. 250j par. 2 letter d) of the CPA. The plaintiff also contested the legal interpretation of the court that the plaintiff (probably a mistake in writing, because the appeal said “defendant”) should not have been treated as a participant of the administrative procedure, pointing at the provision of Art. 41 of the Mining Act pursuant to which the administrative procedure rules, especially Art. 14 par. 1 of the Administrative procedure Act (APA), shall apply to the procedures pursuant do Art. 24 to Art. 28 of the Mining Act accordingly. The plaintiff insisted that his rights were the object of the defendant´s decision, because it was him who thus lost his rights concerning the mining area. By ignoring his rights to the mining area, the defendant infringed his constitutional right resulting from Art. 48 par. 2 of the Constitution of the Slovak republic, and the court undertook no proper action to protect the infringed right of the plaintiff. He finally pointed out that the actions of the defendant addressed to the plaintiff and to the winner of the tender procedure had the effect that the APA joins with a valid administrative decision, because they lead to a change of the authorized organization of the mining area, and therefore they were supposed to contain all the essentials of an administrative decision – the fact that they did not is the basic reason for their quashing.

In his written statement to the appeal, the defendant proposed to confirm the contested ruling as correct, not considering the arguments of the plaintiff´s appeal as reasonable.

The Supreme Court of the Slovak republic as the court of appeal (Art. 10 par. 2 of the CPA) reviewed the contested ruling in terms of the appeal (Art. 212 par. 1 of the CPA in connection with Art. 246c par. 1 first sentence of the CPA) without an appellate hearing (Art. 214 par. 2 letter c) in connection with Art. 246c par. 1 first sentence of the CPA) and drew a conclusion that the appeal is reasonable.

Pursuant to Art. 244 par. 1, 2, 3 of the CPA, in administrative justice the courts examine the lawfulness of decisions and procedures of administrative bodies on the basis of civil law actions or legal remedies.

In administrative justice, the courts examine the lawfulness of decisions and procedures of bodies of state administration, bodies of territorial self-governance as well as bodies of professional self-governance and other legal entities if the law confers upon them the power to decide on rights and duties of individuals and legal entities in the field of public administration (hereinafter the "decision and procedure of administrative authority").

Decisions of administrative authorities are decisions issued by them in the administrative procedure, as well as other decisions which constitute, change or abolish the rights and obligations of individuals or legal entities, or by which the rights, obligations and legal interests of individuals or legal entities can be directly influenced. The procedure of an administrative authority also includes its passivity.

Pursuant to Art. 247 par. 1, 2 of the CPA, the provisions of this Chapter two shall apply in cases when an individual or a legal entity claims that his rights have been aggrieved by a decision or a procedure of an administrative authority and asks the court to examine the lawfulness of this decision or procedure. When reviewing the decision of an administrative authority held in the administrative procedure, the proceedings according to this Chapter shall be linked to a condition that actor has exhausted ordinary remedies and that the decision became final and conclusive.

Pursuant to Art. 250 par. 2 of the CPA the plaintiff is an individual or a legal entity claiming that, as a participant of the administrative procedure, his rights were aggrieved by the decision or procedure of the administrative authority. A civil law action may also be filed by an individual or legal entity that the administrative authority did not properly treat as a participant of the administrative procedure, even though it was supposed to do so.

The basic mistake of the first-instance court lies in the fact that it did not consider the question whether the plaintiff could be actively legitimated to file an action pursuant to Art. 250 par. 2 second sentence of the CPA.

The procedure of the administrative authority when assigning a mining area pursuant to Art. 27 par. 12 of the Mining Act is not specified by this Act in detail, however considering Art. 41 of the Mining Act, the general rules of administrative procedure shall be applied. Therefore the defendant was supposed to proceed in accordance with the provisions of the APA (Administrative Procedure Act).

One of the basic rules of the administrative procedure is its lawfulness (legality) expressed in Art. 3 par. 1 of the APA, pursuant to which the administrative authorities proceed in accordance with the laws and other legal regulations. They are obliged to protect the interests of the state and society, the rights and legal interests of individuals and legal entities and strictly demand the performance of their duties. This rule applies not only to the whole administrative procedure, but also to administrative decisions. The protection of the interests of the state and society, i.e. the public interest of all people, as well as the demand of performance of individuals´ duties must be done only by means specified by the law.

It is undisputed that in this case the procedure was started with an impulse from the administrative authority (Art. 18 par. 1 of the APA). From the substantive law (Art. 27 par. 12 second sentence of the Mining Act), a duty resulted for the defendant to either cancel the mining area or to assign it to another organization, by complying with the terms set exactly by law, and using a tender procedure pursuant to Art. 24 par. 4 to 10 of this Act. In this case, the defendant had to find out the reasons to start a procedure ex offo by his own means. With the start of an administrative procedure, the APA links rights and obligations both for the administrative authority and for its participants. If the administrative procedure started, the administrative authority is oblige to proceed and hold a decision, the participants and other concerned persons have procedural rights, and a period for holding a decision starts. An administrative procedure guided by the rule of officiality is considered started on the day when the competent authority makes the first act towards the participant (Art. 18 par. 2 of the APA). The first act is usually the delivery of the first paper to the participant, which should also contain a notification that an administrative procedure has started. Even though the APA does not specify any essentials of the first act of the procedure, applying the general rules it should contain at least the information, which administrative authority starts the procedure, in what matter and what is being proposed as the result. In this case, such first act is the letter of the defendant about the assignment of the mining area “Gemerská Poloma” to another organization, dated January 3rd 2005, addressed to the plaintiff, which did however not contain all the abovementioned essentials. Besides other facts, the letter informed that the defendant published a tender announcement in order to assign the mining area “Gemerská Poloma” to another organization. The procedure of the mining office during the tender is regulated in the provisions of Art. 24 par. 4 to 10 of the Mining Act. Following the tender, the mining office should continue in the assigning of the mining area in accordance with the APA.

Pursuant to Art. 14 par. 1 of the APA a participant of the procedure is anyone whose rights, interests protected by law and obligations are the objects of the procedure, or whose rights, interests protected by law and obligations may be influenced by the decision; a participant of the procedure is also anyone claiming that his rights, interests protected by law and obligations may be directly influenced by the decision, until an opposite is proven.

Resulting from the quoted provision, any person, the rights, interests protected by law and obligations of which are the objects of the procedure, must be considered as a participant of the procedure, including any person the rights of which were actually already decided upon by a decision. A participant of the procedure is also a person whose rights, interests protected by law and obligations may be directly influenced by the decision – this part of the definition includes the cases when the decision over the rights of one person can directly influence the legal position of another person. In this situation, the decision of the administrative authority may influence the legal status of this person, i.e. the substantive law position of such person following the validity of decision will be different than it was before the decision. Such persons must be allowed to participate at the procedure, so that they could exercise and defend their rights and lawful interests. As soon as the procedure was started, these persons obtain a subjective claim to be taken in the procedure.

Considering the question of the participation of the plaintiff in the administrative procedure had an important influence on the active legitimation of the plaintiff in this case.

On the day of the original contractual transfer of the mining area “Gemerská Poloma”, the plaintiff obtained a subjective right to mine talc in this mining area. Before the transfer, the plaintiff did not possess this right, because it was constituted by the contractual transfer, which entered into full effect on the day of its registration in the mining areas record. Whereas the defendant assigned the mining area to a different organization, he also cancelled the right of the plaintiff to carry out mining activities in the mining area. It is therefore beyond any doubt that he intervened with the legal status of the plaintiff.

When concerning the active legitimation of the plaintiff to file this action, the legal consideration of the first-instance court cannot be sustained.

First of all, it is necessary to point out the nature and purpose of the administrative justice, which is the protection of rights of individuals and legal entities involved in administrative procedure. It is a legal institution enabling any person who feels damaged to apply to the court as an independent body and thus incite a procedure in which the administrative authority no longer has its authoritative position, but is a common participant of the civil law procedure with the same rights at the person whose rights are involved. The aforementioned provisions of the CPA must be interpreted in accordance with their sense and purpose, so that the active legitimation is guaranteed to all cases in which an act of the administrative authority, related with a specific matter and specific participants, influences the legal position of the plaintiff.

The constitutional right to access to court belongs to rights guaranteed by international conventions and the Slovak constitutional law. The right to demand the judicial review of any decision of the administrative authority (unless specifically excluded by law), is therefore one of the public subjective laws explicitly guaranteed by the Constitution of the Slovak republic (Art. 46 par. 1). According to the constitutional law interpretation rules, in doubts whether the plaintiff shall have access to court or not, it is inevitable to incline to the point of view in favor of the plaintiff´s access to court. Resulting from this basic approach to understanding the procedural legitimation, the plaintiff in this case was actively legitimated to file his action. Because he was supposed to be a participant of the administrative procedure pursuant to Art. 14 par. 1 of the APA, he was entitled to file his action in accordance with Art. 250 par. 2 second sentence of the CPA, and therefore the first-instance court should not have stopped the procedure on the basis that the plaintiff was not a person entitled to file such action.

The court of appeal also considered the question whether the action is admissible with respect to not exhausting the ordinary remedies by the plaintiff. In a normal lawful administrative procedure, the administrative authority would hold a decision pursuant to Art. 46 and following of the APA with all the essentials including instructions about ordinary legal remedies. The defendant however decided to assign the mining area in the form of a single letter (announcement), depriving the plaintiff of any proper legal remedies, which is not acceptable. In a standard procedure, i.e. if the defendant had held a proper decision, the plaintiff would have been able to appeal against such decision (Art. 53 of the APA), and this appeal could have been justified by the superior administrative authority (Art. 58 of the APA), which could consequently be reviewed by the court.

These possibilities however could not have been applied because of the applied procedure of the defendant, who assigned the mining area to another organization in the form of a single letter.

From the available evidence in the file it is obvious that the administrative authority committed a whole lot of serious procedural failures, considerably decreasing the chances of the plaintiff to protect his rights. In a legal state which the Slovak republic is, there is a promise valid in such cases that the failures of a body of state administration should not be a burden for individuals or legal entities. The plaintiff has in no way activated, caused or contributed to these failures, these however caused that he was not able to defend his rights in a proper procedure. Had the court, considering all this, stopped the civil procedure because of a lack of active legitimation of the plaintiff, he would deprive the plaintiff of his access to court; such decision would be an unconstitutional negation of justice.

Furthermore it is necessary to point out that the purpose of the condition to exhaust all the ordinary remedies in the administrative procedure, resulting from Art. 247 par. 2 of the CPA, are the principles of procedural economy, subsidiarity of the judicial protection and non-intervention of justice into public administration. If it is possible to achieve reparation within the bodies of administration, this should be preferred to an ingerence of the judicial power. In this case it is however obvious that the plaintiff cannot achieve any reparation in the administrative procedure – in his letter dated May 9th 2005 he demanded his participation at the procedure, as well as a delivery of a proper decision canceling his rights to the mining area, however without any success, because the decision was issued in the form of a letter. The plaintiff therefore proved his effort to exhaust all the ordinary remedies in the administrative procedure. The fact that the defendant did not issue a proper decision, but a single letter in the form of an announcement instead, cannot aggravate the position of the plaintiff.

Assigning a mining area is a decision which influences the existing right of the plaintiff to mine talc deposits at the mining area, and therefore was supposed to be issued in the written form with all the formal essentials resulting from Art. 47 of the APA. The decision must be based on solid grounds so that the actual state of the matter was found accurately and completely (Art. 46 of the APA). According to the Supreme court, this specific matter cannot contravene with the generally accepted principles of administrative procedure, as the right of the participant to be heard, his right to express his opinion to the grounds of the decision, to propose evidence to be carried out, the right to be acquainted with the reasons of the administrative act. The plaintiff had no chance to execute these rights; therefore the procedure has a considerable defect.

Resulting from aforementioned reasons, the Supreme Court of the Slovak republic came to a conclusion that the appeal of the plaintiff is reasonable. The procedure of the defendant was not in accordance with the corresponding provisions of the APA and the Mining Act, and has lead to an assignment of the mining area without a proper decision, which is in contradiction with the law. The defendant did not enable the plaintiff to propose evidence and express his opinion in the procedure, even though it is a right of the participant of the administrative procedure to be acquainted with the results of the procedure (Art. 33 of the APA).

The decision of the court in this case concerns the review of the lawfulness of the decision and procedure of an administrative authority pursuant to Section V of the CPA, and is not a part of the administrative procedure. It is therefore not a role or purpose of the court to substitute the duties of the defendant and find out any evidence concerning the matter belonging to the administrative procedure. Because of this, there was no point in quashing the first-instance court decision, but the court of appeal came to a conclusion that the decision of the defendant, issued in the form of a letter, must be cancelled because of its unintelligibility and the matter must be returned to the defendant for further procedure (Art. 250ja par. 2 letter d) of the CPA). Because there were no reasons to confirm (Art. 219 of the CPA) or to quash the contested first-instance decision (§ 221 par. 1 of the CPA), it had to be changed as given in the decision merits.

Finally it is necessary to state that the first-instance court adopted a wrong opinion that the assigning of a mining area could be, from the point of view of the plaintiff, an unlawful intervention, which should be contested according to Section 5 Chapter 5 of the CPA. In this case, the procedure of the defendant was clearly not just actual intervention, when the administrative authority does not have to follow the APA or other procedural code and issue any decision.

According to Art. 250j par. 6 of the CPA, the administrative authority is obliged to follow the opinion of the court in further proceedings.

Concerning the court fees remuneration, the court of appeal decided in accordance with Art. 224 par. 1 in connection with Art. 250k par. 1 first sentence and Art. 246c par. 1 first sentence of the CPA. The remuneration was not awarded to any of the parties, because the plaintiff who was successful did not claim its amount, and the defendant was not successful.

Instruction about legal remedies: There are no legal remedies available against this ruling.