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FIRST
SECTION
CASE OF YERSHOVA v. RUSSIA
(Application
no. 1387/04)
JUDGMENT
STRASBOURG
8 April 2010
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Yershova v. Russia,
The
European Court of Human Rights (First Section), sitting as a Chamber
composed of:
Christos Rozakis,
President,
Anatoly Kovler,
Elisabeth
Steiner,
Dean Spielmann,
Sverre Erik
Jebens,
Giorgio Malinverni,
George Nicolaou,
judges,
and Søren
Nielsen, Section
Registrar,
Having
deliberated in private on 18 March 2010,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 1387/04) against the Russian
Federation lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a Russian national, Mrs Mariya Grigoryevna
Yershova (“the applicant”), on 8 December 2003.
- The
Russian Government (“the Government”) were represented by
Ms V. Milinchuk, former Representative of the Russian Federation at
the European Court of Human Rights.
- On
12 July 2007 the President of the First Section decided to give
notice of the application to the Government. It was also decided to
examine the merits of the application at the same time as its
admissibility (Article 29 § 3).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant was born in 1954 and lives in Yakutsk.
- She
was an employee of the municipal company, Yakutskgorteploset (the
Yakutsk Town Heating Supply Municipal Company, “the company”).
A. Legal status of the Yakutskgorteploset municipal company
- The
company was founded by a decision of the Municipal Property
Management Committee of Yakutsk Town Council of 30 June 1992.
Sections 3 and 4 of the company's statute stipulated that the
company's main objective was to provide uninterrupted heating supply
to all the people of Yakutsk, with maintenance work and
transportation services, as well as commercial activity. The town of
Yakutsk retained ownership of the company's property, while the
company exercised the right of economic control in respect of it. Any
change to the company's statutory capital was a prerogative of the
founder committee. The company could not sell or in any other way
alienate or dispose of the property under its economic control
without the consent of the founder. The founder received 10% of the
company's net income. In accordance with section 7 of the statute,
the higher management body of the company was its founder. Only the
founder committee could liquidate or reorganise the company, appoint
a liquidation commission or approve a liquidation balance sheet in
respect of the company.
- The
company was under an obligation to use its assets in accordance with
the statutory objectives. Section 5 of the statute stipulated that
the company could independently undertake a wide range of economic
activities, make contracts and plan its commercial activity. It could
also decide on the salary scales for the company's employees and
determine the amount of funds to be allocated for salaries.
B. Judgments in the applicant's favour and the
company's liquidation
1. First judgment in the applicant's favour
- In
August 2000 the applicant was dismissed from the company.
- On
7 December 2000 the Yakutsk Town Court of the Sakha (Yakutiya)
Republic reinstated the applicant and ordered the company to pay her
16,632.32 Russian roubles (RUB) in arrears. The judgment was not
appealed against and became enforceable on 17 December 2000. The
applicant was immediately reinstated at the company.
- According
to the Government, the company paid the applicant RUB 16,632.32
between October 2000 [sic] and February 2001, thus voluntarily
completing the enforcement of the award. They have not submitted any
documents in this respect.
2. Liquidation order in respect of the company
- At
some point the Municipal Property Management Committee of Yakutsk
Town Council withdrew a major part of its assets from the company and
transferred it to a newly-created municipal unitary enterprise called
the Yakutsk Municipal Unitary Enterprise, MUP Teploenergiya «МУП
Теплоэнергия»)
(“MUP Teploenergiya”). It appears that the
newly-created enterprise had the same designated goal, that is, the
supply of heating, assumed the same functions and was registered at
the same address in Yakutsk as the company. The exact date of the
transfer is unclear.
- On
16 January 2001 the head of Yakutsk Town Council ordered the
liquidation of the company, because it had become unprofitable, and
appointed a liquidation commission.
- According
to a letter from the head of the Supreme Commercial Court of the
Russian Federation of 11 October 2007, the applicant had not
forwarded the writs of execution in respect of the judgment of 7
December 2000 to the company's insolvency manager.
3. Second judgment in the applicant's favour
- On
14 June 2001 the applicant was again dismissed. She brought a court
action challenging the dismissal.
- On
3 December 2001 the Yakutsk Town Court allowed the applicant's action
against the employer and awarded her compensation of RUB 50,357
payable by the liquidation commission of the company.
4. Enforcement proceedings in respect of two judgments
- On
1 March 2001 the bailiff sent the writ of execution in respect of the
first judgment to the head of the liquidation commission.
- In
January 2002 the applicant forwarded the writs of execution in
respect of the second judgment to the insolvency manager.
- She
was listed in the list of creditors. The global amount of her claims
was RUB 95,339.46, of which RUB 66,999.46 constituted the judgment
debt and RUB 28,350 unpaid severance benefits.
- By
letters of 28 January and 27 May 2002 the insolvency manager of the
company confirmed that the applicant's claims arising from the
judgments of both 7 December 2000 and 3 December 2001 were included
in the registry of the company creditors' claims.
5. Further developments in the insolvency proceedings
- On
16 May 2001 the Yakutsk Town Court, on a complaint by a private
individual, quashed the Municipal Property Management Committee's
decision on the transfer of the company's assets' to
MUP Teploenergiya and the decision by the head of Yakutsk Town
Council to liquidate the company stating that it was unlawful. It
appears that at some point this decision was upheld on appeal by the
Supreme Court of the Sakha (Yakutiya) Republic. The parties have not
submitted copies of the respective judicial decisions.
- On
9 November 2001 the Commercial Court of the Sakha (Yakutiya) Republic
declared the company insolvent and ordered the liquidation commission
to start payments in respect of the creditors' claims.
- On
29 November 2002 a local prosecutor's office opened criminal
proceedings against Yakutsk Town Council on suspicion of the
deliberate creation of the insolvency of the enterprise in relation
to the transfer of a major part of the company's assets to the
newly-created municipal company, MUP Teploenergiya.
- On
16 May 2002 the Presidium of the Supreme Court of Sakha (Yakutiya)
quashed the judgment of 16 May 2001 on a supervisory review and
confirmed the lawfulness of the Town Council's decision to transfer
the municipal company's property to MUP Teploenergiya. With reference
to section 104 of the Federal Insolvency Act (see paragraph 42
below), the court found that the transferred property in question had
been withdrawn from circulation, that it constituted an exempt asset
because of its vital importance for the region and the authorities
had lawfully transferred the property in question to a different
company.
- On
11 June 2002 the criminal proceedings were discontinued, owing to the
absence of a criminal act in the actions of the town administration.
- On
26 November 2002 the Commercial Court of the Sakha (Yakutiya)
Republic declared the enterprise insolvent and discharged it from all
obligations and debts, including those before the applicant.
- By
a letter of 16 January 2003 the prosecutor informed the applicant
about the intention of the prosecutor's office to challenge the
judgment of 16 May 2002 by the Presidium of the Supreme Court of
Sakha (Yakutiya) by way of the supervisory-review proceedings. The
parties have not submitted any information on the outcome of the
proceedings.
C. The applicant's action against the liquidation commission
- On
25 February 2003 the applicant brought new court proceedings,
claiming that the local authorities should be held vicariously liable
for the company's debts.
- On
24 March 2003 the Yakutsk Town Court dismissed the applicant's claim
as having no basis in domestic law.
- On
23 April 2003 the Supreme Court of the Sakha (Yakutiya) Republic
quashed the decision and remitted the case for re-examination to the
first-instance court. The Supreme Court noted, in particular, that
Yakutsk Town Council had handed a significant part of the company's
assets over to a newly created municipal enterprise. The court
considered that the company's inability to satisfy its creditors'
claims was closely linked to the transfer. The court considered that
the lower court had not examined these circumstances when deciding on
the local administration's liability for the company's debts.
- On
10 June 2003 the Yakutsk Town Court examined the case afresh. With
reference to the decision to discontinue the criminal proceedings in
respect of suspicion of deliberate creation of insolvency, the court
found that the removal and transfer of the company's assets had been
lawful and dismissed the applicant's claims.
- On
9 July 2003 the Supreme Court of the Sakha (Yakutiya) Republic upheld
that decision.
D. Proceedings before the Constitutional Court
- The
applicant applied to the Constitutional Court, claiming that the
provisions of the Federal Insolvency Act, which stipulated that,
where there was a lack of assets, the debtor was to be released from
claims that were unsatisfied in the insolvency proceedings, were
incompatible with the Constitution.
- On
8 June 2004 the Constitutional Court of the Russian Federation
rejected her complaint.
E. Current enforcement status of the judgments in the applicant's
favour
- According
to the Government, the debtor company enforced the judgment of 7
December 2000 between October 2000 and February 2001. According to
the applicant, the judgment of 7 December 2000, in the part
concerning the payment of RUB 16,632.32, and the award of 3 December
2001 remain unenforced to date.
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. Municipal unitary enterprises
- The
Civil Code of the Russian Federation defines State and municipal
unitary enterprises as special forms of legal entity that do not
exercise a right of ownership in respect of a property allocated to
them by its owner (Article 113 § 1). The State or municipal
authority retains ownership of the property but the enterprise may
exercise in respect of that property the right of economic control
(«право хозяйственного
ведения») or
operational management («право
оперативного
управления»)
(Article 113 § 2). The name of the unitary enterprise must
indicate the owner of its property (Article 113 § 3).
-
The unitary enterprise, based on the right of economic control, is
set up by a decision of the State or the local self-government body
authorised for this purpose (Article 114).
- The
constituent document of the enterprise, based on the right of
economic control, is called The Rules and is approved by the State
body or by the local self-government body. If, at the end of the
fiscal year, the cost of the net assets of the enterprise, based on
the right of economic control, proves to be less than the size of its
authorised fund, the founder of the enterprise is under obligation to
effect a reduction of the statutory capital in conformity with the
procedure established by law. If the cost of the net assets falls
below the amount fixed under domestic law, the enterprise may be
liquidated by a court decision (Article 114).
- The
owner has the right to establish the enterprise and to decide on the
goals of the enterprise and the scope of its designated activities.
The owner exercises control over the use of property in accordance
with the designated purpose, has the right to reorganise or liquidate
the unitary enterprise and receives a part of the enterprise's profit
(Article 295 § 1).
- The
manager of a unitary enterprise is appointed by, and reports to, the
property owner (Article 113 § 4).
-
The owner's consent must be obtained for any transaction that may
lead to the encumbrance or alienation of the real estate. The
enterprise independently disposes of the rest of the property under
its economic control, with the exception of the cases established by
law or by other legal acts (Article 295 § 2).
B. Insolvency of unitary enterprises with the right of
economic control
- Unitary
enterprises, with the right of economic control over a property, may
be declared insolvent in accordance with the insolvency procedure
applicable to private companies. The State or municipal owner of a
property is not liable for debts of unitary enterprises with the
right of economic control over that property unless the owner has
caused the enterprise to become insolvent or violated the procedure
for its liquidation (Article 114 § 7 and 56 of the Civil Code
and section 184 of the Federal Insolvency Act, Federal Law no. 6-FZ
of 8 January 1998, in force at the material time).The State or
municipal owner of the property may pay, but is not obliged to pay,
debts of a unitary enterprise in the framework of insolvency
proceedings (sections 1 and 89 of the Insolvency Act).
C. Specific provisions concerning transfer of communal
infrastructure facilities of vital importance
1. Federal Insolvency Act
- If the debtor's assets include assets which have been
withdrawn from circulation, the owner should accept the assets from
the insolvency manager or transfer them to other persons (section 104
§ 2). Such assets as, inter alia, communal infrastructure
facilities of vital importance for a region are to be transferred to
a municipal authority. The authority accepts responsibility for the
designated use of the facilities within one month of receipt of the
respective notification from the insolvency manager (section 104 §
4). Transfer of the facilities to the municipal authorities is
conducted as is (“по фактическому
состоянию”)
without further conditions. The facilities are financed from the
respective budgets (Article 104 § 5).
2. Ruling no. 8-П of 16 May 2000 by the
Constitutional Court
- By Ruling no. 8-П of
16 May 2000 the Constitutional Court of the Russian Federation
verified the compatibility of Article 104 § 4 of the Federal
Insolvency Act with the Russian Constitution. The Court held, in
particular:
“4. [...] Communal infrastructure having vital
importance for a region constituting a debtor's estate is being used
not only in the owner's private interests but also in the public
interests protected by the State. Therefore, the relations concerning
its functioning and use for a designated purpose are public in
nature. In regulating this area, the legislator may decide, with
regard to public purposes, that certain objects necessary for the
survival of the population may be transferred to the relevant
municipal authority in the course of the insolvency proceedings.
[This ... serves the purpose of] redistribution of social functions
between public authorities at different levels”.
The Constitutional Court decided that the provisions allowing the
transfer of various objects of special importance to society,
including communal infrastructure objects, to local authorities were
put in place in order to ensure that their designated use complied
with the Constitution of the Russian Federation. However, the
practical interpretation of these provisions by the domestic courts
might have contradicted their constitutional meaning. The
Constitutional Court found that these provisions could not be
interpreted as allowing for the transfer of such facilities to local
authorities without payment to creditors during insolvency
proceedings, of reasonable and fair compensation which is able to
secure a fair balance between the demands of the general interest of
the community and the requirements of the protection of the
individual's fundamental rights. The court further held the said
provision to be unconstitutional in so far as it allowed the property
transfer without effective judicial control.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION AND
ARTICLE 1 OF PROTOCOL No. 1
- The
applicant complained, under Article 1 of Protocol No. 1 to the
Convention, that the judgments of 7 December 2000 and 3 December 2001
had not been enforced. The Court will examine this complaint under
Article 6 of the Convention and Article 1 of Protocol No. 1
thereto. These provisions, in so far as relevant, read as follows:
Article 6
“In the determination of his civil rights and
obligations ..., everyone is entitled to a fair ... hearing ... by
[a] ... tribunal...”
Article 1 of Protocol No. 1
“Every natural or legal person is entitled to the
peaceful enjoyment of his possessions. No one shall be deprived of
his possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way
impair the right of a State to enforce such laws as it deems
necessary to control the use of property in accordance with the
general interest or to secure the payment of taxes or other
contributions or penalties.”
A. Admissibility
1. Alleged abuse of the right of petition
- The
Government submitted that the amount awarded by the judgment of 7
December 2000 had been paid to the applicant by the debtor company
between October 2000 [sic] and February 2001. They considered
that the applicant had abused her right of petition because she had
not informed the Court that the judgment in question had already been
enforced. They claimed that her application should be struck out of
the list of cases.
- The
applicant disagreed. She pointed out that, contrary to the
Government's submission, the execution of the judgment could not have
started in October 2000, that is, two months before that very
judicial decision had been issued. In any event, the Government had
failed to substantiate their argument with any evidence of an actual
payment made to her pursuant to the judgment.
- The
Court reiterates that, except in extraordinary cases, an application
may only be rejected as abusive if it is knowingly based on factual
errors (see Akdivar and Others v. Turkey, 16 September 1996,
§§ 53 54, Reports of Judgments and Decisions
1996-IV,; I.S. v. Bulgaria (dec.), no. 32438/96, 6 April 2000;
and Varbanov v. Bulgaria, no. 31365/96, § 36, ECHR
2000-X). It notes that the parties did not submit any documents, such
as bank documents, confirming that the applicant had actually
received the money transfers referred to by the Government or that
these payments had indeed been made pursuant to the judgment of
7 December 2000. In the absence of any documentary evidence of
the payments, the Court is unable to conclude that the applicant's
submissions are knowingly based on factual errors. The
objection must accordingly be dismissed.
2. Compatibility ratione personae (responsibility of the
State)
a. The parties' submissions
- The
Government submitted that the State could not be held liable for the
continued non-enforcement of the judgments. Firstly, the company was
not a State body. Furthermore, in accordance
with Articles 113 and 114 of the Civil Code, the debtor company, a
municipal unitary enterprise, was a separate legal entity having
the right of economic control over the property allocated to it. Even
though the company had been founded by a decision of the local
authorities and could not, in accordance with Article 295 of the
Civil Code, conduct any transaction leading to encumbrance or
alienation of the real estate, it enjoyed sufficient independence in
the wide range of its activities. With reference to Article 114 §
7 of the Civil Code, the Government argued that the State was not
answerable for the company's debts.
- Furthermore,
in Russian law the owner could be held liable for unpaid debts of a
municipal unitary enterprise only where the owner had caused the
enterprise's insolvency. The Government argued that this was not the
case. The authorities ordered the company to be
liquidated, because it had become unprofitable. The Town
Council had transferred the company's property to MUP Teploenergiya,
a municipal unitary enterprise, in order
to ensure the continued heating supply of the town. The company's
assets were withdrawn from circulation and their transfer to a
different company by the authorities' decision was justified by a
vital public interest. As regards the manner of the transfer, the
criminal proceedings against the authorities had been discontinued.
Therefore, the transfer of the company's asset was lawful, and it
could not be said that the owner caused the company's insolvency.
- Finally, they submitted that, by contrast with the
case of Mykhaylenky and Others v. Ukraine (nos. 35091/02,
35196/02, 35201/02, 35204/02, 35945/02, 35949/02, 35953/02, 36800/02,
38296/02 and 42814/02, § 46, ECHR 2004 XII),
the company enjoyed sufficient institutional and operational
independence from the State to absolve the State from responsibility
under the Convention for its acts and omissions. Indeed, there
was nothing in the present case to suggest that the State either was
a principal debtor of the company or that its control extended to the
applicant's terms of employment. The State had not prohibited the
seizure of the company's property. On the contrary, the debtor
company was an independent entity and was not, as such, controlled by
any State body.
- The
Government concluded, accordingly, that the judgment was given
against a private debtor. To this extent, the case was similar to the
cases of Reynbakh v. Russia and Bobrova v. Russia, in
which the Court found that the principle that
judgments must be executed cannot be interpreted as compelling the
State to substitute itself for a private defendant in the case of the
latter's insolvency (see Reynbakh v. Russia, no.
23405/03, § 18, 29 September 2005, and Bobrova v. Russia,
no. 24654/03, § 16, 17 November 2005). They maintained that
the judgments against the company could not be enforced owing to the
company's lack of funds, and in these circumstances the State could
not be held responsible for the continued non-enforcement of the
judgments. The measures applied by the authorities were adequate and
sufficient and they acted diligently in order to assist the creditor
in execution of a judgment (see Fociac v. Romania,
no. 2577/02, §§ 69–70, 3 February 2005). They
invited the Court to reject the complaint as incompatible ratione
personae.
- The applicant maintained that
the debtor company was, in fact, a State-run enterprise controlled by
Yakutsk Town Council and financed from the town budget. Its
liquidation was ordered by the authorities. Moreover, the Town
Council had transferred the company's property to a newly-created
company MUP Teploenergiya. The latter had the same customers
and suppliers, performed exactly the same
functions and was registered at the same address as its
predecessor. The debtor enterprise could not have been regarded as
private, since it supplied heating to all premises in Yakutsk, in
accordance with pre-established tariffs. In
these circumstances the Town Council was liable for the debts of the
company if the latter lacked funds to honour its obligations, as
decided by the judgment of 7 December 2000 in the applicant's
favour.
b. The Court's assessment
- The
Court reiterates at the outset that, where an applicant complains of
an inability to enforce a court award in his or her favour, the
extent of the State's obligations under Article 6 and Article 1 of
Protocol No. 1 varies depending on whether the debtor is the
High Contracting Party within the meaning of Article 34 of the
Convention or a private individual (see Anokhin v. Russia
(dec.), no. 25867/02, 31 May 2007). Where a judgment is against the
State, the latter must take the initiative to enforce it fully and in
due time (see Akashev v. Russia, no. 30616/05, §§
21–23, 12 June 2008, and Burdov v. Russia, no. 59498/00,
§§ 33-42, ECHR 2002-III). When the debtor is a private
individual or company, the position is different, since the State is
not, as a general rule, directly liable for debts of private
individuals or companies and its obligations under the Convention are
limited to providing the necessary assistance to the creditor in the
enforcement of the respective court awards, for example, through a
bailiff service or insolvency procedures (see, for example, Kesyan
v. Russia, no. 36496/02, 19 October 2006, and Fociac,
cited above, § 70).
- Given
the special status of municipal unitary enterprises under Russian law
(see paragraphs 35-40 above), they can be qualified neither as State
authorities, such as the local administration, nor placed in the same
category as ordinary private companies. On the one hand, a municipal
unitary enterprise is set up by a public authority, which remains the
owner of the property, retains control over the use of property in
accordance with the designated purpose, receives part of the
enterprise's profit and has the right to reorganise or liquidate the
enterprise and to transfer its assets to another legal person. On the
other hand, a municipal unitary enterprise enjoys independence in its
operational activities and the authorities are not responsible for
its debts under domestic law.
- In
deciding whether the municipal company's acts or omissions are
attributable under the Convention to the municipal authority
concerned, the Court will have regard to such factors as the
company's legal status, the rights that such status gives it, the
nature of the activity it carries out and the context in which it is
carried out, and the degree of its independence from the authorities
(see, mutatis mutandis, Radio France and Others v. France
(dec.), no. 53984/00, ECHR 2003-X (extracts), with further
references). The Court will notably have to consider whether the
company enjoyed sufficient institutional and operational independence
from the State to absolve the latter from its responsibility under
the Convention for its acts and omissions (see Mykhaylenky and
Others, cited above, § 44, and, mutatis mutandis,
Shlepkin v. Russia, no. 3046/03, § 24, 1 February
2007).
- As
regards the company's legal status, the Government argued that
municipal enterprises are incorporated under the domestic law as
separate legal entities and that the State is absolved from the
responsibility for its debts, save in a limited number of cases
specified in Article 56 of the Civil Code. In the Court's view, the
company's legal status under the domestic law, however important, is
not decisive for the determination of the State's responsibility for
the company's acts or omissions under the Convention. Indeed, on
several occasions, the Court has held the State liable for companies'
debts regardless of their formal classification under domestic law
(see, among others, mutatis mutandis, Mykhaylenky and
Others, cited above, § 45; Lisyanskiy v. Ukraine, no.
17899/02, § 19, 4 April 2006; Cooperativa Agricola
Slobozia-Hanesei v. Moldova, no. 39745/02, §§ 18-19, 3
April 2007; Grigoryev and Kakaurova v. Russia, no. 13820/04, §
35, 12 April 2007; and R. Kaÿapor and Others v. Serbia,
nos. 2269/06, 3041/06, 3042/06, 3043/06, 3045/06 and 3046/06, §
98, 15 January 2008). Accordingly, the applicant company's domestic
legal status as a separate legal entity does not, on its own, absolve
the State from its responsibility under the Convention for the
company's debts.
- As
regards the company's institutional and operational independence from
the State, the Court notes the Government's argument that the degree
of the State's involvement in the company's activities cannot be
equated with that in the Mykhaylenky and Others case (cited
above). At the same time, the Court notes that the company's
independence was limited by the existence of strong institutional
links with the municipality and by the constraints attached to the
use of the assets and property. The Court notes in this respect that
the city of Yakutsk was the company's owner in accordance with
domestic law and retained ownership of the property conferred to the
company. The Town Council approved all transactions with that
property, controlled the company's management and decided whether the
company should have continued its activity or been liquidated.
- The
company's institutional links with the public administration were
particularly strengthened in the instant case by the special nature
of its activities. As one of the main heating suppliers in the city
of Yakutsk, the company provided a public service of vital importance
to the city's population. The company's assets were withdrawn from
circulation and enjoyed special status under the domestic law.
- The
Court notes that the relations arising from the management of
communal infrastructure of vital importance were qualified by the
Constitutional Court of the Russian Federation as public in nature
(see judgment of 16 May 2000, cited above). Accordingly, the
Constitutional Court concluded that the legislator may decide, having
regard to the public purposes, that certain objects necessary for the
survival of the population, may be transferred to the respective
municipal authority in the course of insolvency proceedings. The
Government itself noted that the Town Council transferred the
company's property lawfully and in the public interest.
- The
public nature of the municipal company's functions and its ensuing
dependence on the municipal authorities were amply demonstrated by
the process of the company's liquidation. The Administration decided
to wind up the company and, furthermore, disposed of the company's
assets as it saw fit: they were transferred to MUP Teploenergiya, a
newly-created unitary enterprise performing the same functions as the
debtor company (compare, mutatis mutandis, Lisyanskiy, cited
above, § 19).
- The
Court notes the Government's argument that the municipality was not
the company's main debtor and should thus not be considered to have
caused the company's insolvency. However, this fact does not in
itself obviate the company's institutional and operational dependence
on the municipal authorities as demonstrated above.
- In
view of the foregoing, and given in particular the public nature of
the company's functions, the significant control over its assets by
the municipal authority and the latter's decisions resulting in the
transfer of these assets and the company's subsequent liquidation,
the Court concludes that the company did not enjoy sufficient
institutional and operational independence from the municipal
authority. Accordingly, notwithstanding the company's status as a
separate legal entity, the municipal authority, and hence the State,
is to be held responsible under the Convention for its acts and
omissions (see Mykhaylenky and Others, cited above, § 44;
Lisyanskiy, cited above, § 20; Shlepkin, cited
above, § 24; Grigoryev and Kakaurova, cited above, §§
35-36; and Kaÿapor and Others, cited above, § 98).
- The
Government's objection must therefore be dismissed.
3. Non-exhaustion
- The
Government argued that the applicant had failed to exhaust the
domestic remedies available to her, because she had not complained to
the court about the bailiffs' and the insolvency manager's
shortcomings. The applicant disagreed, having pointed out that she
had raised her problem before various domestic authorities, but to no
avail.
- The Court reiterates that it is incumbent on the
Government claiming non-exhaustion to satisfy the Court that the
remedy was an effective one available in theory and in practice at
the relevant time (see Akdivar and Others, cited above, §
68). In the present case, the Government have not shown how the
suggested remedies would have met these requirements (compare, for
example, John Sammut and Visa Investments Limited v. Malta
(dec.), no. 27023/03, §§ 39–46, 16 October 2007). The
Court notes, in particular, that insolvency proceedings in respect of
the company started in 2001, the applicant had been placed on the
list of the company's creditors and notified thereof by the
insolvency manager. By the time the insolvency proceedings commenced,
the debtor company had already been unable to meet the creditors'
claims for some time. The Court concludes that, in these
circumstances, any civil action against the authorities would not
bring the applicant closer to her goal, that is the payment of the
judgment debt (see Grigoryev and Kakaurova, cited above,
§ 29).
The Court finally notes that, insofar as the judgments given in the
applicant's favour were apparently not enforced owing to the alleged
lack of funds on the part of the debtor company, this deficit was
caused, to a large extent, by the transfer of the main funds to a
newly created municipal enterprise by the decision of the Town
Council, which the applicant was not even able to contest before the
courts. In such circumstances, the Court finds
that the applicant was absolved from lodging complaints against the
bailiffs' conduct since the reasons for the non-enforcement of the
judgment were beyond the bailiffs' influence (see, mutatis
mutandis, Mykhaylenky
and Others, cited above, § 39).
The Court accordingly dismisses the Government's objection.
4. Conclusion
- The
Court further notes that this complaint is not manifestly ill founded
within the meaning of Article 35 § 3 of the Convention. It
further notes that it is not inadmissible on any other grounds. It
must therefore be declared admissible.
B. Merits
- The
Government submitted that the judgment of 7 December 2000 was fully
enforced between October 2000 and February 2001, that is, within a
reasonable time. The applicant did not submit the writ of execution
to the liquidation commission and did not make a complaint against
the insolvency manager to a court. The insolvency manager in her
letters informed the applicant that her claims under the judgment had
been included in the registry of the creditor's claims by mistake.
- The
applicant maintained her claims. She submitted that she had not and
could not have received payments under the first judgment in her
favour between October 2000 and February 2001, because the judgment
itself was not issued until 7 December 2000 and the writ of execution
was not forwarded to the debtor company until March 2001.
- The
Court reiterates at the outset that an unreasonably long delay in the
enforcement of a binding judgment may breach the Convention. To
decide if the delay was reasonable, the Court will look at how
complex the enforcement proceedings were, how the applicant and the
authorities behaved, and what the nature of the award was (see
Raylyan v. Russia, no. 22000/03, § 31, 15 February
2007).
- Turning
to the present case, the Court notes that the judgment of 3 December
2001 has not yet been enforced. The delay of enforcement has thus
lasted over seven years. As regards the judgment of 7 December 2000,
the Court is not persuaded that the execution of the court award
could have started in October 2000, that is, two months earlier than
the judgment in the applicant's favour was delivered. In any event,
it is not in possession of any documents showing that the payments
referred to by the Government had actually been made. The Court
considers that the judgment of 7 December 2000 has accordingly
remained unenforced for more than eight years to date.
- The
periods of seven and eight years are prima facie incompatible with
the Convention. The Government justify the delay mainly with regard
to the respective liquidation and disbandment of the defendants, but
the Court has previously rejected this excuse in similar
circumstances (see Shlepkin, cited above, § 25).
- The
Court reiterates that, having previously rejected such a
justification in similar circumstances (see Shlepkin, cited
above, §§ 24-25) it does not see any reason to reach a
different conclusion in the present case. Indeed, the company's debts
were found to be imputable to the State authorities, which had thus
to ensure that the judgment debt was paid in a timely and appropriate
manner. While liquidation proceedings may objectively justify some
limited delays in enforcement, the continuing non-enforcement of the
judgments in the applicant's favour for seven or eight years could
hardly be justified in any circumstances. The facts of the present
case would rather suggest that the municipal authorities did not
consider themselves bound by the obligation to honour the judgment
debt after they had decided to liquidate the debtor company and to
create a new one in its place.
- The
foregoing considerations are sufficient to enable the Court to
conclude that there has been a violation of Article 6 § 1 of the
Convention and Article 1 of Protocol No. 1.
II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
- The applicant further
complained under Article 4 of the Convention that she did not receive
payment for her work at the municipal enterprise and, under Article 6
of the Convention, that the proceedings in her case had been unfair.
- The
Court has examined these complaints as submitted by the applicant.
However, having regard to all the material in its possession, it
finds that these complaints do not disclose any appearance of a
violation of the rights and freedoms set out in the Convention or its
Protocols. It follows that this part of the application must be
rejected as being manifestly ill-founded, pursuant to Article 35 §§
3 and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article
41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- The applicant claimed 355,840.98 Russian roubles (RUB)
in respect of pecuniary damage. Of this sum, RUB 16,632.32 and RUB
50,367.14 represented the debt owed by the enterprise pursuant to the
judgments in the applicant's favour, RUB 28,350 was for unpaid
severance benefits and RUB 260,504.52 was for inflation losses.
In support of her claims, she submitted a detailed calculation of the
inflation losses based on the refinancing rate of the Central Bank of
Russia. She further claimed 3,000 euros (EUR) in respect of
non-pecuniary damage.
- The
Government submitted that no just satisfaction should be awarded to
the applicant because her rights under the Convention had not been
violated. Alternatively, they argued that the finding of a violation
would constitute sufficient just satisfaction.
- As
regards the claim for pecuniary damage, the Court does not discern
any causal link between the claim of unpaid severance and the
applicant's non-enforcement complaint; it therefore rejects this
claim. At the same time, the Court notes that the judgments of 7
December 2000 and 3 December 2001 have remained unenforced. It
further notes that the Government did not comment on the applicant's
claims for pecuniary damage and did not object to the method of
calculation suggested. Making its estimate on the basis of the
information at its disposal, the Court awards her EUR 1,837
under this head, plus any tax that may be
chargeable, and dismisses the remainder of her claims under this
head.
- As
regards the claim for non-pecuniary damage, the Court considers it
reasonable to award the applicant EUR 3,000 plus
any tax that may be chargeable in respect of non-pecuniary
damage.
B. Costs and expenses
- The
applicant also claimed RUB 567.68 for postal expenses. The Government
submitted that the applicant's claim should be rejected because the
applicant had failed to substantiate it with any documents.
- According
to the Court's case-law, an applicant is entitled to the
reimbursement of costs and expenses only in so far as it has been
shown that these have been actually and necessarily incurred and are
reasonable as to quantum. In the present case, regard being had to
the information in its possession and the above criteria, the Court
considers it reasonable to award the sum of EUR 16 under this head.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the non-enforcement complaint under
Article 6 of the Convention and Article 1 of Protocol No. 1
admissible and the remainder of the application inadmissible;
- Holds that there has been a violation of Article
6 of the Convention and Article 1 of Protocol No. 1;
- Holds
(a) that
the respondent State is to pay the applicant, within three months of
the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, the following amounts, plus
any tax that may be chargeable, to be converted into Russian roubles
at the rate applicable on the date of the settlement:
(i)
EUR 1,837 (one thousand eight hundred
and thirty-seven euros) in respect of pecuniary damage;
(ii)
EUR 3,000 (three thousand euros) in respect of non-pecuniary damage;
(iii)
EUR 16 (sixteen euros) in respect of costs and expenses;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 8 April 2010, pursuant to
Rule 77 §§ 2 and 3 of the Rules of Court.
Søren Nielsen Christos Rozakis
Registrar President
