Recent practice in the Romanian dispute resolution landscape has shown a rise in (i) litigation involving wrongful decisions concerning unpaid tax, lack of liquidities, and consequent lack of debt settlement, and (ii) cases of fraudulent acts linked to insolvent companies, mostly committed prior to the commencement of the insolvency proceedings.
In addition, on the subject of recent significant legal developments, the structure of civil and commercial claims is changing, following the recent decision of the Constitutional Court of Romania granting the right to a second appeal following the removal of the minimum threshold for claims, allowing access to the higher court for claims under RON 1 million (roughly EUR 214,000).
The Constitutional Court held that the criterion used by the Romanian legislator for granting access to a second appeal – a threshold claim value of over RON 1 million – led to the classification of claims addressed to courts as either important (value wise) or less important. This is an artificial and unjustified classification, the Court held, since the difficulty of a legal issue cannot be assessed on the basis of the amount of money in dispute but on its nature. The State must ensure equal protection of the legitimate rights and interests of individuals, the Court explained, and it cannot be argued that only those whose pecuniary claims are of a certain amount may benefit from this protection.
At the same time, the previous system discriminated between citizens in tying the right to a second appeal to the value of the claim submitted to the court, and it did not ensure the legal equality of citizens in accessing this extraordinary means of attack. These are the main reasons why the Constitutional Court of Romania ruled that a component part of the right to a fair trial was being violated.
Nevertheless, the right to a second appeal for claims under RON 1 million is not yet set in stone for parties to ongoing litigation that was commenced before July 20, 2017, as for the time being this issue is disputed by the Constitutional Court of Romania and the Romanian High Court of Cassation and Justice, each of which have issued different views concerning the trials to which the Constitutional Court’s decision should be applied.
Constitutional Court decisions are effective from their publication in the Official Gazette and the debated decision was published on July 20, 2017. On the one hand, the Constitutional Court held, including through a subsequent decision, that the debated constitutional decision is effective also for trials commenced before July 20, 2017 and as long as the court of appeal rendered its decision after this date, the latter is susceptible to a second appeal.
By contrast, the Romanian High Court of Cassation and Justice held that the constitutional decision applies only to trials commenced after July 20, 2017. It is worth mentioning that this interpretation, rendered by the High Court through a preliminary ruling for the resolution of legal issues, is binding on all courts of law in Romania.
We expect this debate to be settled in the near future, and in the meantime, parties could exercise their right to a second appeal in order to preserve this possibility and also ask for the issue to be brought before the Constitutional Court.
The bad news for litigants is that this recent change in case structure will heavily impact the litigation time frame, as second appeal requests – especially those heard by the High Court of Cassation – will most certainly extend the trial period by over a year, due to the specific procedures for this court and its significant caseload. Those who have obtained a favorable decision in their appeal, though, are usually able to enforce it against the counterparty, even if the latter submitted a second appeal, although they would have to assume the risk that the decision is overturned. This can still prove to be a better strategic decision, as the debtor could go bankrupt in the meantime.
Thus, going forward, all new pecuniary claims, provided there is no exception related due to the specific nature of the claim, will enjoy three levels of jurisdiction, which should translate into higher guarantees for litigants regarding the protection of their right to a fair trial.
By Ioan Roman, Founding Partner, and Alexandra Ichim, Senior Associate, Maravela|Asociatii
This Article was originally published in Issue 5.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.