The author of the communication (letters dated 5 June 1986 and 13 February 1987) is Xves Morael, a French citizen born in France in 1944, at present residing in Paris. He claims to be a victim of violations by France of article 14 (1) and (2) and articles 26 and 17 (1) of the International Covenant on Civil and Political Rights. He is represented by counsel.
The author states thftt he is a businessman, and a former member Qf the board and, later, managing director of the joint stock cQmpany "SQciet~ anonyme des cartonneries mecaniques du Nord" (SCMN), which was a producer of paper and cardbQard, that had employe~ al~os~ 700 persons in 1974. As a cQnsequence Qf the Qil crisis in 1973 and because of increased cQmpetition in the sectQr, the company suffered serious financial lQsses and, by decision Qf 24 May 1974 of the Tribunal of Co~~erce of Dunkirk, it was placed under judicial supervision (rlgllment judiciairl). Qn 25 June 1975, the SDnle Tribunal ordered the sale of assets (liguidatiQn del bilns SQcioux), an order upheld by the Court of Appeal 01 Douai on 12 July 1975. On 11 July 1977, the Court of Cassation quashed the order, but on 3 July 1978 the Court Qf Appeal of Amiens, in its turn, ordered the sale to proceed. In the meantime, the company had resumed its activities.
The author further states that, as a shareholder (owning 3.16 per cent of the company's shares) and as b member o( the board of directors of the company since 1970, he repeatedly criticized the policies of the then Managing Director and R~tion must be stayed while a criminal action is being prosecuted (le criminel t..i.~n.t...lLdvil en .1..'-.i..t..A.t.) •
By judgement of 7 July 1981, the Tribunal of Commerce of Dunkirk found that the Ruthor h3d failed to prove due diligence and ordered him to pay 5 per cent of the company's debts, which acco:ding to the accounts presented to the Tribunal by the court-appointed administrator amounted in 1981 to FF 957,040, since the campi-my I s debts, including the ASSEDIC payments, were set at FF 19,140,814.
The author alleges that the former French bankruptcy law, which was applied to him, unjustly placed a presumption of fault on the defendant (article 99 of Act No. 67--563) and observes that the French Parliament amended it on 25 July 1985 (p[(ect.ive 1 Janui:uy 1986) eliminating that preswnption of fault. However, he did not benefit from the application of the revised law. l.h The author appealed the judgement of the Tribunal of Commerce of Dunkirk, claiming that a nwnber of procedural errors had been committed by the lower court hnrl requesting a finding that he had exercised all due diligence during his five mnnth~ ~s Managing Director, and thRt he was not liable for any part of the compcHlY's debts. In partiCUlar, he cited the misuse of influence by the Public "~he court must, in all circumstances, enaure the observance of, and itself observe, the principle of adversary proceedings. "In its decision, it may not admit grounds, explanations and documents relied upon or produced by the parties unless they have been available to the parties for contradictory debate. "It may not base its decision on grounds it has raised ex off~ without having invited the parties to present their observations." The author notes that at no time in the appeal proceedings were the partils given an opportunity to present their observations on the higher indebtedness figures or on his own share of liability. On 2 May 1985, the Court of Cassation r~jected the author's appeal.
With respect to article 14 (1) of the Covenant, the author calls into question the Frencb legal system, which, as it was applied to him, did not guarantee ~ fair hearing, in partiCUlar because there WAS no "equality of arms" in the procedure whereby companies are .placed under judicial supervision and because article 99 of Act No. 67-563 placed an unfair presumption of fault on company officers without requiring proof of their actual misconduct. In this connection, the author contends that the Court of Cassation wrongly interpretad the '~oncept of due
Another alleged violation of article 14 (1), the author claims, consisted in the court's consideration of a new ~nd higher amount for the company's liabilities without giving him an opportunity to challenge it. He further contends that the case was not heard within a reasonable time, considering that the Trf~ Inal of Commerce of Lille appointed its administrator in January 1980 and the tinal decree of the Court of Cassation was not handed down until May 1985. The autlAor claims that had the procedure been more expeditious, the level of the company's debts would have been lower, especially as employees had been paid FF 16,038,647 ever. after the company had ceased operations in January 1980.
With respect to article 14 (2), the author contends that article 99 of Act No. 67-563 had not only a civil but also a penal character, and he ref~rs in this oonnection to the fact that the Public Prosecutor (Ministere public) was heard dUllng the proceedings before the Tribunal of Commerce of Dunkirk. He further contends that the decision by the Court of Appeal ordering him to pay FF 3 million francs amounts to a penal sanction. He therefore claims that he should have enjoyed the presumption of innocence.
The author states that to th~ extent that he was a vi~tim of violations of article 14 by not having been given a fair hearing, he was also denied tho equal protection of the law, as provided by article 26 of the Covenant. This, h~ claims, also constitutes a viOlation of article 17 (1), in that there wes an attack on his honour and reputation, in particular that the proceedings against him tarnished his reputation as a company officer and that he is now prohibited by the bankruptcy law from e~ercisi~g many managerial functions.
Lastly. the author emphasizes the fact that he was a victim of violations of the Covenant subsequent to the entry into force of the Optional Protocol for France (17 May 1984).
By its decision of 1 July 1986, the Working Group of the Human Rights Committee, Acting under rule 91 of its provisional rules of procedure, transmitted the communication of Yves Morael to the State party, requesting anI information and observations relevant to the question of the admissibility of the communicat;on.
In a communication dated 1 December 1986 the State party concedes that the author has "exhausted al~ domestic remedies within the meaning ot: article 5, paragraph 2 (~), of thA Optional Protocol". With regard to the argumentation of the author cad the merits or hi~ claims. the State party contends that the author's communication should be rejected as "manifestly ill-founded". "Given the complexity of the case and the fact that Mr. Morael used all the remedies permitted by French law for such proceedings without displaying particular eagerness, the courts, which were called upon to reach a decision on three occasions in this case within a total period of less than four years, have acted with all due dispatch."
With regard to the author's assertion that he was not given a fair hearing owing to the presumption of fault established by article 99 of the then applicable Act of 13 JUly 1967, the State party quotes the text of the Act: "When judicial superv1s10n of the affairs of a body corporate or the sale of its property reveals that its assets are insufficient, the court may decide, on the petition of the court-appointed administrator, or even ex officio, that the company's debts shall be borne, in whole or in part and jointly or severally, by all or some of the managers of the company, whether de jure or de facto, visible or undisclosed, remunerated or not. To be absolved of their liability, such persons must show that they devoced all due energy and diligence to the management of the company's affairs." And the state party adds that "this procedure, commonly known as an action for coverage of liabilities, thus introduces in respect of a company's managers or some of them, a presumption of liability, there being a shortfall in assets resulting from the failure of their management".
"In the view of the French Government, this presumption of liability attached to a company's managers is not in conflict with the principle of a fair hearing, contrary to the contention of the author. Admittedly, the liability of the persons concerned may be invoked in this type of procedure without presentation of proof of fault on the part of the managers. But that is the case in any system of liability for risk or 'objective' liability. Furthermore, the existence of such a presumption instituted by the Act is not, in itself, in any way contrary to the rule of a fair hearing inasmuch as the proceedings take place in conditions that ensure the full enjoyment of his rights by the person concerned. What is more, in the case in question, this presumption is not irrefragable, for the managers in question can in fact absolve themselves of liability by proving by whatever means that they devoted all due energy and diligence to the management of the company's affairs. The tribunal, itself supervised by the Court of Appeal, is free to evaluate such proof in the light of all the elements which had an influence on the behaviour of the managers involved."
"It is for [the tribunal] to decide, on the petition of the receiver (syndic) or ex officio, to make all or some of the company's managers. jointly or severally. assume all or part of the company's liabilities. The tribunal is under no compulsion whatsoever to find against the persons involved. If it does so it is free to determine the amount of the obligation assessed to the managers at fault. on the sole condition that in its decision it does not exceed the amount of the shortfall in assets. It is also free to decide on the advisability of making the managers jointly liable. In short, an action for coverage of liabilities in no Wn¥ constitutes an automatic sanction, but must rather be regarded as a -214-
With regard to the author's claim that the Court of Appeal of Douai violated the principl~ of adversary proceedings by convicting him on the basis of elementa that became known after submission of the court-appointed administrator's findings, the State party notes that the author does not identify the elements in the file that were allegedly not the subject of adversary proceedings. Furthermore, the Court of Cassation, in its decree of 2 May 1985, explicitly dismissed this argument when it stated that "the Court of Appeal, in determining that, at the time it handed down its decision, the liabilities of SC~l exceeded its assets, relied upon the elements contained in the findings &ubmitteu by the court-appointed administrator, in which the figures are ideatical, to within a few fr~ncs, with those of tha ~tatement of outstanding claims as ascertained on 15 FebrlJary 1983, which was not the subject of any objection •.. the Court of Appeal thus ... did no~ ignore the principle of adversary proceedings ••• ".
With respect to the alleged violation of article 14 (2), the State party observes that "the presumption of fault enunciated in article 99 of the Act of 13 JUly 1967 is in no way contrary to article 14, paragraph 2, of the Covenant". In an action for coverage of liabilities, "the verdict, regardless of the amount involved, remains commensurate with the loss suffered by the creditors and never has the character of a financial penalty". Under no circumstances does an action for coverage of liabilities "have .3 penal character, and acts constituting serious errors of management do not as such constitute criminal offences. What is more, the Public Prosecutor is not empowered to act in such a matter. Unless the court takes up the question ex officiQ - which was not done in this case - only the receiver may bring a petition for coverage of liabilities. But, the presumption of innocence laid down in article 14, paragraph 2, applies exclusively to criminal offences".
With respect to the alleged violation of article 14 (1) in conjunction with articles 26 and 17 of the Covenant, the Statp party observes that the author has failed to substantiate his allegations.
With regard to the substantiation of his grievances, the author takes issue with most of the State party's arguments concerning the meri.ts. Above all, he draws the Committee's attention to the fact that "article 99 of the Act of 13 July 1967 was the subject of a parliamentary debate in 1984 which led to the adoption of the amended bankruptcy law of 25 January 1985". This new Act, which was not applied to him, restores ordinary law in respect of the burden of proof, by eliminating the presumption of fault on the part of company managers. That has two consequences in his case: first, the Court of Cassation, in its ruling of 2 May 1985, did not apply the more lenient system emerging from the new law of 25 January 1985. He was thus sentenced to bear part of the company's liabilities on the basis of a statute abandoned by the legislature less than four months earlier; secondly, the debates both in the National Assembly and the Senate indicate that article 99 of Act No. 67-563 was deemed to violate the principles of "fair hearing" and "presumption of innocence", and that eminent French professors of law and legal experts called upon to testify at proceedings under that article considered it to be distinctly penal in character.
The author quotes extensively from the debates in the French National Assembly and requests the Committee to take into account the criticisms voiced on that occasion before determining t:'le scope of the concepts of "fair hearing" and "presumption of innocence" guaranteed by the Covenant. The following are excerpts from the debates in the National Assembly: Mr. Robert Badinter, Minister of Justice at the time of the parliamentary examination of article 99 and currently President of the Constitutional Council, stated: "Existing law is still burdened by the highly repressive influence of old bankruptcy law. The present Act still regards [management] with suspicion. It threatens company managers with numerous criminal penalties ••. It exposes them to liability for covering a company's indebtedness by subjecting them to a presumption of fault contrary to the fundamental principle of presumption of innocence .. (National Assembly, meeting of 5 April 1984, ComEte rendu, p. 1180) The author then quotes article 180 of the new bankruptcy law of 25 January 1985: "When judicial reorganization or liquidation of a body corporate reveals that its assets are deficient, the court may - where a fault of management has contributed to such deficiency in assets - decide that the debts of the body corporate shall be borne, in whole or in part, jointly or severally, by all or some of the managers, whether de jure or de factQ and whether or not they are remunerated ..... The author adds that the law was voted without any deputy objecting to the adoption of that text. -216- The author then quotes from a law report by Professor Bouloc of the University of Parisl " Since a conviction ordering coverage of liabilities exposes the manager to personal bankruptcy, to prohibition of performance of managerial functions, to a procedure of jUdicial supervision or liquidation of personal property, and even to criminal proceedings (article 132 of the Act of 1967), it cannot be eaid that coverage of liabilities is purely and simply a civil institution witt.out any connection with the criminal law .•. "
The author also cites the debates of the 20th Congress of the National Association of JUdicial Auditors (Compagnie nationale des experts judiciaires en ~Qmptabilit~) in 1981, which dealt with the practical application of article 99 of the then applicable bankruptcy law and which arrived at the following conclusion, in.t.-e.r alia I " ..• article 99 can be seen to institute a penalty having no connection •.. with the desire to alleviate the loss suffered by the creditorsl you mismanaged the company placed under your direction, since you have filed for bankrupt·f. You will ~e punished, and the punishment will serve as an example". He thus concludes that the proceedings against him had a dual character, of which the criminal law aspects should be taken into consideration in relation to the terms and principles of the Covenant, which have a scope of their OW~l independent Qf national laws and other definitions.
Before considering the claims contained in a co~unication, th" Human ~ightR CQmmittee must, in accordance with rule 87 of its provisional rules of procedure, decide whether or not it is admissible under the Optional Proto~o1 to the Covenant.
The Commi~tee f~und that the parties agreed that all domestic remedies had been exhausted. It also ascertained that the same matter was not being e~amined under another procedure of international investigation or settlement. The communication therefore meets the requirements of article 5 (2) of the Optional Protocol.
With respect to the State party's conclusion that the communication shou~d be rejected as "manifestly ill-founded", the Committee noted that article 3 of the Optional Proto~ol provides that a communication shall be considered inadmissible if it h (a) anonYTllOUS, (b) constitutes an abuse of the right of .3ubmission, or (c) is incom. '8tible wi th the provisions nf the Covenant. The Committee found that t.he authQr had made a reasonable effott to substantiate his complaints and that he invoked specific provisions of the Covenant. Therefore, the Committee had to eKamine the issues raised, when deciding on the merits of the c&se.
Accordingly, on 10 July 1987, the Human Rights Committee decided that the communication was admissible and requested the State party, should it not intend to submit further explanations or statements under article 4 (2), paragraph 2, of the Optional Protocol, to so inform it, so as to enable it to arrive at an early decision on the merits.
The deadline for the State party's submission of explanations or statements under artiCle 4 (2) of the Optional Protocol expired on 6 February 1988. On 29 April 1988, the secretariat sent a reminder to the State party concerned. No further explanation nr statement has been received from the State party. The Committee therefore concludes, on the basis of paragraph 2 of its decision on admiealbility, that the State party does not lntend to submit any further explanations or statements.
The ~uman Rights Committee, having examined the merits of the communication in the light of all the information made available to it by the parties, as provided in article 5 (1) of the Optional Protocol, decid~s to base its views on the following facts, which are ~ncontested.
Lhe author of the communication is a businessman and former member of the board, and later Managing Director, of the joint-stock company "Societe anonyme des cartonneries mecaniques du Nord". In 1973, t~e company began to experience serious financial difficulties and a judicial administrator was appointed. After a sale of some company assets to satisfy creditors in 1978, the company resumed operations under a different management. Since it continuc~ to lose money, the general meeting of shareholders appointed the author as Managing Director on 1 July 1979. He served in that capacity until 7 December 1979, when another jUdicial administrator was appointed. During those five months he ordered several economy measures designed to save the company, such as closing the Paris office and reducing the salary of the Managing Director by 33 per centl he also attempted to reduce pe~sonnel, but this was unsuccessful owing to the partial refusal of the Inspectorate of Employment and to strikes. During civil proceedings held on the petition of the court-appointed administrator for an order for coverage of liabilities, the Tribunal of Commerce of Dunkirk heard the Public Prosecutor (who made reference to criminal proceedings then pending against the author, subsequently acquitted of all charges by decision of the Tribunal correctionnel of Dunkirk on 4 May 1982) and, on 7 Jul~ 1981, finding that the author had not proven that he had been diligent in the sense of article 99 of the Bankruptcy Act, ordered him to bear part of the company's indebtedness, as established by operations of the procedure, in the proportion of 5 per cent, together with other members of management, who were jointly ordered to pa1 35 per cent of the indebtedness. The author appealed, petitioning the Court of Appeal to find that he had exercised all due diligence during his five months as Managing Director. In its order of demonstra~ed that he had exercised due diligence, confirmed the lower court's judgement that the company's indebtednes. ~ould partly be borne by its managers, while amending it as concerns its fixing of the amount in percentages. Deciding to take as the appropriate point for evaluating the shortfall in the company's assets the date of 15 February 1983, when it had been definitively verified, without challenge, at abou~ FF 30 million, the Court set the sum to be charged the author at rr 3 million, independently of the other managers. The author then appealed to the Court of Cassation, arguing that the Court of Appeal had erred in finding that he had not proven due diligence and that it had based the determination of the shortfall on elements which had not been part of the proceedings. On 2 May 1985, the Court of Cassation rejected the ~uthor's appeal, finding that the Court of Apppal had established the facts correctly and had based its decision on the verification of the statement of liabilities, about which there had been no challenge, by the parties, and ti'at consequently it hdd not disregarded the principle of adversary proceedings. Subsaquently, article 180 of the new Bankruptcy Act, dated 25 January 1985 (and effective as from 1 January 1986), abolished the presumption ~f fa~1t, restoring the principle of proof of fault to determine the responsibilities of company managers in case of losses.
The first question before the Committee is whether the author is victim of a violation of article 14 (1) of the Covenant because, as he alleges, his case did not receive a fair hearing with:n the meaning of that paragraph. Tho Committee notes in this connection that the paragraph in question applies not only to criminal matters but also to litigation concerning rights and obligations of a civil nature. Although article 14 does not explain what is meant by a "fair hearing" in a suit at law (unlike paragraph 3 of the same article dealing with the determination of criminal charges), the conce~t of a fair hearing in the context of article 14 (1) of t~p Covenant should be interpreted as requiring a number of conditions, such as ~~Jality of arms, respect for the principle of adversary proceedings, preclusion of gx officio reformatio in pejuB,. and expeditious procedure. The facts of the case should accordingly be tested against those criteria.
At issue is the application of the third paragraph of the article of the Bankruptcy Law of 13 July 1967 that established a presumption of fault on the part of managers of companies placed under judicial supervision, by requiring them to prove that they had devoted all due energy and diligence to the management of the company's affairs, failing which they could be held li~ble for the company's losses. The author claims in this regard that the Court of Cassation had qiven too severe an interpretation of due diligence, one that amounted to denying him any possibility of demonstr~ting that he had exercised it. It is not for the Committee, however, to pass judgement on the validity of the evidence of diligence produced by the author or to question the court's discretionary power to decide whether such evidence was sufficient to absolve him of any liability. As regards respect for the principle of adversary proceedings, the Committee notes that to its " k_12ffici.s2 correction worsening an earlier verdict. 9.S As to the complaint that the action for coverage of liabilities brought against the author violated the principle of presumption of innocence laid down in article 14 (2) of the Covenant, the Committee points out that that provision is applicable only to persons charged with a criminal offence. Article 99 of the former bankruptcy law entailed a presumption of responsibility on the part of company managers in the absence of proof of their diligence. But that presumption did not relate to any charge of a criminal offence. On the contrary, it was a presumption relating to a system of liability for ri k resulting from a person's activities - one that is well known in private law, ~en in the form of absolute or objective liability ruling out all evidence to the cuntrary. In the situation under consideration, liability was established in favour of the creditor~ and the amounts charged to the managers corresponded to the damages they had suffered and were to be paid in order to cover the company's liabilities. The object of article 99 of the Bankruptcy Act was to compensate creditors but it also entailed other penalties which, however, were civil-law and not criminal-law penalties. The provision concerning the presumption of innocence in article 14 (2) cannot therefore be applied in the case under consideration. That conclusion cannot be affected by the allegation that the provision of article 99 of the Bankruptcy Act ~as subsequently modified by elimination of the presumption of fault, considered unjust from the point of view of the material settlement of liability, for this circumstance does not of itself imply that the earlier provision contravened the above-mentioned provisions of the Convention.
With respect to the complaints of violation of articles 26 and 17 (1) of the Covenant, the Committee considers that the author has not demonstrated that he was a victim of a violation of article 26, regarding equality before the law or that the procedure followed by the French courts improperly attacked his honour and reputation, protected by ~rticle 17.
The Human Ri9hts Committee, actin9 under article 5, para9raph 4, of the Optional Protocol to the International Covenant on Civil and Political Ri9h~8, is of the view that the faots which have been put before it do not disclose any violation of para9raphs 1 and 2 of article 14 of the Cov.nant. -221- s••t Copy Avalllble