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VOSTOKMASH AVANTA v. UKRAINE - 8878/03 [2007] ECHR 736 (20 September 2007)
URL: http://www.bailii.org/eu/cases/ECHR/2007/736.html
Cite as:
[2007] ECHR 736
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FIFTH
SECTION
CASE OF VOSTOKMASH AVANTA v. UKRAINE
(Application
no. 8878/03)
JUDGMENT
STRASBOURG
20 September
2007
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 Vostokmash Avanta v. Ukraine,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Mr P. Lorenzen, President,
Mr V.
Butkevych,
Mrs M. Tsatsa-Nikolovska,
Mr R.
Maruste,
Mr J. Borrego Borrego,
Mrs R.
Jaeger,
Mr M. Villiger, judges,
and Mrs C.
Westerdiek, Section Registrar,
Having
deliberated in private on 28 August 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
The
case originated in an application (no. 8878/03) against Ukraine
lodged with the Court under Article 34 of the Convention for the
Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by the company Vostokmash Avanta (“the
applicant”), on 1 November 2001.
The
applicant was represented by Mr Mikhail Aleksandrovich Kapustin, its
director. The Ukrainian Government (“the Government”)
were represented by their Agent, Mrs Valeriya Lutkovska.
On
30 May 2005 the Court decided to communicate the complaint concerning
the non-enforcement of the judgment in its favour to the Government.
Under the provisions of Article 29 § 3 of the Convention, it
decided to examine the merits of the application at the same time as
its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
The
applicant is a Ukrainian-Kazakh company located in the city of
Zaporizhzhya.
In
2000 the applicant instituted proceedings against the Joint Stock
Company “Dniprovsky Metallurgical Kombinat” (hereinafter
“the JSC”), in which the State held 98.81 % of the
shares, for failure to pay under a contract for delivery of iron ore.
On
29 August 2000 the Arbitration Court of the Dnipropetrovs'k Region
awarded the applicant UAH 1,139,560.09
in compensation against the JSC for failure to comply with the
contractual obligations. The court also attached the defendant's
accounts. It issued two orders in this respect: one for the recovery
of property worth a total of UAH 800,541.26
and another for the recovery of the sum of UAH 339,018.83.
On
5 September 2000 the Bailiffs' Service initiated the enforcement
proceedings.
Between
2000 and 2005 numerous bankruptcy proceedings were initiated against
the JSC by at least eight companies:
- On
28 August 2000 by the “Kryukivsky Vagonobudivnyy Zavod” –
terminated on unspecified date;
- On
7 March 2001 by the “Afilia” company –
terminated on 16 October 2001 as the JSC paid the debt;
- On
19 October 2001 by the “Kristal” company –
terminated on 18 March 2002 as the plaintiff failed to have the
bankruptcy announcement published;
- On
19 March 2002 by the “Intermet” company –
terminated on 28 January 2003 as the JSC paid the debt;
- On
29 January 2003 by the “Nezalezhnist” company –
terminated on 18 September 2003 as the plaintiff withdrew his
claim;
- On
22 September 2003 by the “Ukrstalkonstruktsiya” company –
terminated on 27 May 2004 as the plaintiff failed to have the
bankruptcy announcement published;
- On
27 May 2004 by the “Rolikon” company –
terminated on 16 May 2005;
- On
17 May 2005 by the “Tsesiya” company – the
bankruptcy proceeding are pending to date.
The
respective court's rulings on opening these bankruptcy proceedings
ordered suspension of the enforcement proceedings against the JSC and
introduction of the moratorium on a payment of debts to its
creditors.
Between
30 November 2000 and 18 April 2005 the Arbitration Court of the
Dnipropetrovs'k Region (as of June 2001 - the Commercial Court of the
Dnipropetrovs'k Region) rejected the applicant's numerous requests to
initiated bankruptcy proceeding against the JSC as such proceedings
were already pending upon other companies' requests.
On
11 July 2001 the Commercial Court of the Dnipropetrovs'k Region, upon
the applicant's request, modified the modalities of enforcing the
judgment of 29 August 2000. In particular, it decided to attach the
debtor's property.
On
23 August 2001 the Bailiffs' Service resumed the enforcement
proceedings and suspended them due to the application of the
moratorium.
On
4 February 2002 the Commercial Court of the Dnipropetrovs'k Region
rejected the applicant's request to initiated bankruptcy proceeding
against the JSC. On 15 May 2002 and 24 April 2003 the Higher
Commercial Court and the Supreme Court, respectively, rejected the
applicant's cassation appeal.
On
6 February 2004 the State Property Fund sold the State-owned shares
of the JSC to private persons. Under the terms of the sales, the
latter undertook to pay all the outstanding debts of the JSC.
The
judgment of 29 August 2000 in the applicant's favour remains
unenforced.
II. RELEVANT DOMESTIC LAW
The
relevant domestic law is summarised in the judgment of Sokur
v. Ukraine (no. 29439/02, § 17-22, 26 April 2005).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF
THE CONVENTION AND ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
The
applicant complained under Article 6 § 1 of the
Convention about the lengthy non-enforcement of the judgment of 29
August 2000 and about a violation of its right to the peaceful
enjoyment of possessions as guaranteed by Article 1 of Protocol No.
1. The Articles invoked, in so far as relevant, provide as follows:
Article 6 § 1
“In the
determination of his civil rights and obligations ... everyone is
entitled to a fair and public hearing within a reasonable time by an
independent and impartial tribunal established by law...”
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
The
Government raised objections, contested by the applicant, regarding
exhaustion of domestic remedies similar to those already dismissed in
a number of the Court's judgments regarding non-enforcement against
the State-owned companies (see e.g. Sokur v Ukraine (dec.),
no. 29439/02, 16 December 2003 and Trykhlib v.
Ukraine, no. 58312/00, §§ 39-43, 20 September
2005). The Court considers that these objections must be rejected for
the same reasons.
The Court concludes that the applicant's complaints
under Article 6 § 1 of the Convention and Article
1 of Protocol No. 1 raise issues of fact and law under the
Convention, the determination of which requires an examination of the
merits. It finds no ground for declaring these complaints
inadmissible. The Court must therefore declare them admissible.
B. Merits
In
their observations on the merits of the applicant's complaints, the
Government put forward arguments similar to those in the cases of
Romashov v. Ukraine and Voytenko v. Ukraine,
contending that there had been no violation of either Article 6 § 1
of the Convention or Article 1 of Protocol No. 1
(see Romashov v. Ukraine, no. 67534/01, 27 July 2004, § 37
and Voytenko v. Ukraine, no. 18966/02, 29 June 2004,
§ 37).
The Government further maintained that, although the
debtor company was a State-owned enterprise before 6 February 2004,
it was a separate legal entity and the State could not be held
responsible for its debts under domestic law. Moreover, on
6 February 2004 the State Property Fund sold its 98.81% of
the share capital of that company to private persons. Accordingly,
the enforcement of the judgment given in the applicant's favour could
not be conducted at the expense of the State.
The
applicant disagreed.
The
Court recalls that it has already held that the State was liable for
the debts of a State-owned company, despite the fact that the company
was a separate legal entity, and, therefore, the State was
responsible for the ultimate failure to pay to an applicant the
amounts awarded to him in the judgments against such company (see,
for instance, 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, §§ 43 46, ECHR
2004 XII).
Furthermore, the Court considers that the fact that
the State sold its share in the company to private persons could not
release the State from its obligation to honour a judgment debt which
had arisen before the shares were sold. If the State transfers such
an obligation to a new owner of the shares, as it was in the present
case (see paragraph 14 above), the State must ensure that the new
owner complies with the requirements, inherent in Article 6 § 1
of the Convention and Article 1 of Protocol No. 1,
that a final, binding judicial decision does not remain inoperative
to the detriment of a party. In view of the above considerations, the
Court finds that the State is responsible for the enforcement of the
judgment in the applicant's favour throughout the duration of the
enforcement proceedings (see Solovyev v. Ukraine,
no. 4878/04, § 21, 14 December 2006).
The
Court notes that the judgment of 29 August 2000 remains unenforced
for six years and eleven months.
The
Court recalls that it has already found violations of Article 6 § 1
of the Convention and Article 1 of Protocol No. 1
in cases raising issues similar to the present application (see, for
instance, Romashov, cited above, §§ 42-46, and
Voytenko, cited above, §§ 53-55).
Having
examined all the material in its possession, the Court considers that
the Government have not put forward any fact or argument capable of
persuading it to reach a different conclusion in the present case.
There
has, accordingly, been a violation of Article 6 § 1
of the Convention and Article 1 of Protocol No. 1.
II. OTHER COMPLAINTS
The applicant further complained under Article 6
§ 1 of the Convention about the refusal of the domestic courts
to institute bankruptcy proceedings upon its requests.
However,
in the light of all the materials in its possession, the Court finds
that they 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 declared
inadmissible as being manifestly ill-founded, pursuant to Article 35
§§ 1, 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 the unsettled judgment debt owed to it and UAH
580,692
of inflation and interest rate as well as 42,514 euros (EUR) in
respect of non-pecuniary damage.
The
Government maintained that the State was not liable for
non-enforcement of the judgment in the applicant's favour, that the
applicant should have claimed compensation at the domestic level and
that its claim for pecuniary and non-pecuniary damage were
unsubstantiated.
In
so far as the applicant claimed the amount awarded to it by the
judgment at issue, the Court considers that the Government should pay
it the outstanding debt (see paragraph 6 above) in settlement of its
pecuniary damage.
As
regards the applicant's claim concerning the inflation losses, the
Court notes that the applicant's calculations are not supported by
any official documents, which would enable the Court to determine the
amount. Consequently, it rejects this part of the claim (see e.g.,
Glova and Bregin v. Ukraine, nos. 4292/04 and 4347/04,
§ 29, 28 February 2006). In so far as the applicant claimed
the interest rate, the Court considers that the applicant remains
entitled to claim this compensation in the course of domestic
proceedings.
As
to the remainder of the applicant's just satisfaction claim, the
Court, making its assessment on an equitable basis, as required by
Article 41 of the Convention, awards the applicant EUR 2,000
(two thousand euros) in respect of non-pecuniary damage.
B. Costs and expenses
In
the present case the applicant failed to submit any claims; the Court
therefore makes no award.
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 complaint concerning the
non-enforcement of the judgments given in the applicant's favour
admissible and the remainder of the application inadmissible;
Holds that there has been a violation of Article
6 § 1 of the Convention;
Holds that there has been a violation of Article
1 of Protocol No. 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 unsettled
debt owed to it under the judgment of 29 August 2000, as well as EUR
2,000 (two thousand euros) in respect of non-pecuniary damage, to be
converted into the national currency of the respondent State at the
rate applicable at the date of settlement, plus any tax that may be
chargeable;
(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 20 September 2007,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
