Liechtenstein civil procedure law provides for the possibility to request a security deposit from foreign plaintiffs in order to secure the defendant's right for reimbursement of his legal fees in case he prevails. § 57 ZPO (civil procedure order) stated that the rules for security deposit are applicable for persons not domiciled in Liechtenstein.
In fact the request for security deposit always was a good tactical means for the defendant, especially if the value at stake was substantial. If the plaintiff was ordered to pay a security deposit and was not in a position to pay the latter within the usual delay of 4 weeks, the defendant was entitled to request the court to reject the plaintiff's complaint.
Any final decision of a Liechtenstein court or administrative authority can be appealed to the Liechtenstein Constitutional Court. An appeal can only be filed on the grounds of violation of constitutional rights deriving from the Liechtenstein constitution and/or deriving from the European Convention of Human Rights.
In the specific case which has been decided now by the Constitutional Court, the appellant invoked an infringement of European law, (Liechtenstein is party to the European Economic Area agreement) specifically the appellants claimed that § 57 ZPO constitutes a indirect discriminatory provision in light of the jurisprudence of the European Court of Justice and the EFTA Court of Justice and is therefore violating EEA law.
The Constitutional Court has held, that EEA law generally supersedes the Liechtenstein constitution so that in case Liechtenstein law violates EEA law, the Constitutional Court is competent.
The Constitutional Court has pointed out, that in the previous decisions 1997/31, 2002/37 and 2002/52 the opinion was issued, that the statutes of the civil procedure order providing for the possibilty to reqest a security deposit in question were in conformity with EEA law.
Some authors and and the Court of II. Instance have criticized the Constitutional Court's opinion and have issued the view that §§ 57 et sequ. ZPO are clearly infringing EEA law. The Court of II. Instance has based his attitude on an opinion issued by the EU-Commission in a case before the EFTA Court (Piazza vs. Schurte AG (E-10/04)). There the Commisson has qualified the mentioned sections of the ZPO as indirect discrimination violating EEA law. Based on these arguments the Constitutional Court decided to review his opinion.
Especially in light of the EU - Commission's legal opinion it is therefore hardly astonishing that the Court changed its opinion and came to the conclusion that §§ 57 et sequ. ZPO are not tenable as they discriminate foreign plaintiffs.
As a consquence the mentioned provisions were entirely repealed by the Constitutional Court. However, the legal community in Liechtenstein was surprised by the fact that the the Court repealed the all the provisions whilst only EU/EEA citizens/entities could claim an infringement of EU/EEA law. Simultaneously the Government was ordered to publish the repeal immediately in the Lichtenstein Law Gazette (which took place on 10 July 2008). It remains to be seen whether the Government will propose a new law regarding securtity deposits (at least as regards non EU/EEA plaintiffs).
Consequences
- For the time being, foreign plaintiffs cannot be obliged to pay a security deposit in connection with a lawsuit in Liechtenstein. This is favourable for persons/ entities intending to file a claim with the Liechtenstein Princely Court. Before, paying the deposit often constituted a major impediment (with a high value at stake, the deposit was substantial) to bringing a claim. This means that it has become easier to file a lawsuit in Liechtenstein.
- Foreign defendents and defendents domiciled in Liechtenstein will have difficulties to execute an award for costs (in case the claim is denied) by the Liechtenstein courts, because judgements issued by Liechtenstein courts are only enforceable in Austria and Switzerland. Liechtenstein is not party to a multilateral convention such as the Lugano Convention. If the jurisdiction where the cost award shall be enforced does not recognize Liechtenstein cost awards, it can occur that such an award is worthless.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
