REISNER v. TURKEY - 46815/09 (Judgment (Just Satisfaction) : Court (Second Section)) [2016] ECHR 1065 (01 December 2016)

In the case of Reisner v. Turkey,

The European Court of Human Rights (Second Section), sitting as a Chamber composed of:

          Julia Laffranque, President,
          Işıl Karakaş,
          Nebojša Vučinić,
          Paul Lemmens,
          Jon Fridrik Kjølbro,
          Stéphanie Mourou-Vikström,
          Georges Ravarani, judges,
and Hasan Bakırcı, Deputy Section Registrar,

Having deliberated in private on 8 November 2016,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 46815/09) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a German national, Mr Michael Reisner (“the applicant”), on 18 August 2009. The applicant was represented by Ms J. Ertürk, a lawyer practising in Ankara. The Turkish Government (“the Government”) were represented by their Agent.

2. In a judgment delivered on 21 July 2015 (“the principal judgment”), the Court held that the interference with the applicant’s right to enjoyment of his possessions could not be considered lawful, and that the applicant had been made to bear a disproportionate individual burden, in breach of Article 1 of Protocol No. 1 to the Convention. The Court further held that the applicant’s right of access to court, in the third set of proceedings, had been breached and that there had therefore also been a violation of Article 6 § 1 of the Convention (see Reisner v. Turkey, no. 46815/09, §§ 45-61, 21 July 2015).

3. Under Article 41 of the Convention the applicant sought just satisfaction for the damage he had sustained as a result of the violation of the Convention and Protocol.

4. Since the question of the application of Article 41 of the Convention was not ready for decision, the Court reserved it and invited the Government and the applicant to submit, within three months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., § 68, and point 4 of the operative provisions).

5. On 14 December 2015 the panel of the Grand Chamber declined to accept the referral request of the Government. Accordingly, the principal judgment became final on that date.

6. The applicant and the Government each submitted observations.

THE LAW

7. 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

1. The parties’ submissions

(a) The applicant

8. In respect of pecuniary damage, the applicant submitted different claims based on two different calculation methods. At the outset, he stated that he had held 650 German certificates in Demirbank and explained that one German certificate was the equivalent of 500 Turkish shares. The applicant had thus held 325,000 shares in Demirbank.

9. The applicant based his first calculation method on the alleged book value of Demirbank at the time it was taken over by the Savings Deposit Insurance Fund (Tassarruf Mevduat Sigorta Fonu - hereinafter referred to as “the Fund”). He alleged that the value of Demirbank amounted to approximately 2,037,000,000 euros (EUR) at the time, and the bank had a total of 275,000,000,000 shares on the stock market. He accordingly calculated that his loss had amounted to approximately EUR 2,400. He also asked for interest. In sum he requested EUR 5,052.91, if this method of calculation were to be adopted.

10. In his second calculation method he calculated his loss on the basis of the market value of his shares in the stock market. To this end, he argued that the most reasonable approach would be to take the average market value of a share over a period of one year. In this connection, the applicant stated that as rumours had started that the authorities would be taking over Demirbank, the value of the shares had fallen considerably on the stock market. Relying on the data provided by the Istanbul Stock Exchange, the applicant stated that the average value of a Demirbank share over one year was 3,068 Turkish liras - TRL - in 2000 (approximately EUR 0,005).

11. The applicant further claimed EUR 1,000 in respect of non-pecuniary damage.

(b) The Government

12. The Government firmly contested the claims. At the outset, they stated that in reaching a decision the Court should first take into account the financial problems encountered by Turkey at the material time, in particular between the end of 2000 and February 2001. They pointed out that at that time the Fund had taken over five banks, including Demirbank. The operating licences of these banks were revoked, and they were transferred to the Fund that carried out the liquidation, resolution and recovery activities of these banks. The Government underlined the fact that the only commitment made to the public during these proceedings was deposit insurance.

13. Referring to several expert reports, the Government further argued that at the time when Demirbank had been taken over by the Fund it had had no monetary value. They gave detailed information about the book value of Demirbank. In this connection, they explained that when the Fund took over Demirbank, it had also taken over the bank’s debts. They further explained that the Fund had spent approximately 2.7 billion United States dollars (USD) to save Demirbank. In the Government’s view, the applicant had not suffered any pecuniary loss, as Demirbank had had no value when it was taken over by the authorities.

14. The Government further observed that during the domestic proceedings no decision had been taken regarding the financial situation of Demirbank. The decision of the banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu, hereinafter referred to as “the Board”), dated 6 December 2000, had been found unlawful and annulled because of procedural shortcomings. Indeed, in its judgment of 18 December 2003 the Joint Administrative Chambers of the Supreme Administrative Court had concluded that the Board should have first ordered Demirbank to take specific measures under section 14(2) of the Banking Activities Act before applying section 14(3) of the Act. In view of the foregoing information, the Government contended that the bank shares had had no value at the time and therefore asked the Court not to award any pecuniary compensation to the applicant.

2. The Court’s assessment

15. The Court reiterates that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore, as far as possible, the situation existing before the breach (see Brumărescu v. Romania (just satisfaction) [GC], no. 28342/95, § 19, ECHR 2001-I).

16. The Contracting States that are parties to a case are in principle free to choose the means whereby they will comply with a judgment in which the Court has found a breach. This discretion as to the manner of execution of a judgment reflects the freedom of choice attaching to the primary obligation of the Contracting States, under Article 1 of the Convention, to secure the rights and freedoms guaranteed. If the nature of the breach allows restitutio in integrum, it is for the respondent State to implement it. If, however, national law does not allow - or allows only partial - reparation to be made for the consequences of the breach, Article 41 empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate (see Papamichalopoulos and Others v. Greece (Article 50), 31 October 1995, § 34, Series A no. 330-B).

17. In the principal judgment, the Court found that the applicant, as a shareholder, had been made to bear a disproportionate individual burden as a result of the unlawful taking over of Demirbank by the Savings Deposit Insurance Fund. Thus, in the circumstances of the present case, an award of compensation for the pecuniary loss in question seems to be the most appropriate just satisfaction for the applicant.

18. The applicant maintained that he had suffered pecuniary loss, and based his calculations on two different methods, the results of which differed (see paragraphs 8-10 above).

19. The Government contested the claims, and argued that Demirbank’s book value was negative at the time of the events. In their view, the applicant, as a shareholder, had not suffered any pecuniary damage which was due to the taking over of the bank.

20. In view of the foregoing, the Court observes that there is a considerable difference between the damage allegedly suffered by the applicant and the claims of the Government. In order to determine the pecuniary compensation that should be awarded to the applicant, the Court should therefore draw its own conclusions, on the basis of the documents in the file and the submissions of the parties.

21. In this connection, the Court notes that the Government alleged that the applicant had suffered no pecuniary damage because the book value of Demirbank was negative when it was taken over by the Fund. The Court observes that the applicant was simply a minor shareholder of Demirbank, and as a shareholder he had no involvement in the management of the bank and was not responsible for its debts. In this connection, the Court notes that the market value and book value of a company could vary considerably. While the market value is the value of a company on the stock exchange, the book value pertains to the net asset value of a company, which is determined by subtracting liabilities from its total assets. A company’s debts are also taken into account in the calculation of its book value. In view of the foregoing, the Court considers that in the circumstances of the present case the book value is not the correct basis to rely on when calculating the applicant’s pecuniary loss.

22. The Court further observes that in the light of the material in its possession, in particular the data collected from the Istanbul Stock Exchange Market, it is clear that a day prior to the taking over of Demirbank, namely on 5 December 2000, Demirbank shares had monetary value.

23. Although the applicant claimed that in determining the market value of his shares the average value of one share over a period of year should be taken into account, the Court cannot agree with this approach. As the applicant has stated, rumours had already started that the authorities would be taking over Demirbank, and the applicant could have sold his shares. The Court therefore considers that the average market value of a Demirbank share on 5 December 2000 should be taken into account when determining the applicant’s pecuniary loss.

24. The Court notes that according to the Istanbul Stock Exchange Market, the average value of one Demirbank share on 5 December 2000 was equal to 756 Turkish liras (TRL at the time). The applicant held 650 German certificates: one German certificate was the equivalent of 500 Turkish shares. Accordingly, the applicant held a total of 325,000 Turkish shares in Demirbank on 5 December 2000. On this basis, and bearing in mind the data provided by the Stock Exchange Market, one day prior to the illegal taking over of Demirbank, namely on 5 December 2000, the market value of the applicant’s shares amounted to TRL 245,700,000.

25. Taking into account the lapse of time and the effects of inflation, and in accordance with the inflation calculator used by the Central Bank of the Republic of Turkey (http://www.tcmb.gov.tr), the Court finds that 245,700,000 Turkish liras (TRL) would currently correspond to 1,697 Turkish liras (TRY - equivalent to EUR 514).

26. Consequently, the Court awards EUR 514 to the applicant for pecuniary damage.

27. As regards the applicant’s claim for non-pecuniary damage, having regard to the facts of the case, in the circumstances of the present case the finding a violation of Article 6 and Article 1 of Protocol No. 1 constitutes in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicant.

B. Costs and expenses

28. The applicant claimed EUR 1,252 for costs and expenses incurred before the domestic proceedings and EUR 745 for his lawyer’s fee during the proceedings before the Court.

29. The Government contested the claims.

30. 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.

31. In the present case, regard being had to the documents in its possession and its case-law, the Court rejects the claim for costs and expenses incurred in the domestic proceedings, which have not been proved. However, it considers it reasonable to award the applicant EUR 500 in respect of legal fees incurred in the proceedings before the Court.

C. Default interest

32. The Court considers it appropriate that the default interest rate 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,

1. Holds

(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i) EUR 514 (five hundred and fourteen euros), plus any tax that may be chargeable, in respect of pecuniary damage;

(ii) EUR 500 (five hundred euros), plus any tax that may be chargeable to the applicant, 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;

2. Holds that the finding of a violation constitutes in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicant;

3. Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 1 December 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Hasan Bakırcı Julia Laffranque
Deputy Registrar President

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You are here: BAILII >> Databases >> European Court of Human Rights >> REISNER v. TURKEY - 46815/09 (Judgment (Just Satisfaction) : Court (Second Section)) [2016] ECHR 1065 (01 December 2016) URL: http://www.bailii.org/eu/cases/ECHR/2016/1065.html Cite as: ECLI:CE:ECHR:2016:1201JUD004681509, [2016] ECHR 1065, CE:ECHR:2016:1201JUD004681509