European Court of Human Rights

FIRST SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 26856/04
by Praskovya Ivanovna POKUTNAYA
against Russia

The European Court of Human Rights (First Section), sitting on 3 July 2008 as a Chamber composed of:

Christos Rozakis, President,
Nina Vajić,
Anatoly Kovler,
Khanlar Hajiyev,
Dean Spielmann,
Giorgio Malinverni,
George Nicolaou, judges,
and Søren Nielsen, Section Registrar,

Having regard to the above application lodged on 10 June 2004,

Having regard to the decision to apply Article 29 § 3 of the Convention and examine the admissibility and merits of the case together.

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Ms Praskovya Ivanovna Pokutnaya, is a Russian national who was born in 1950 and lives in Proletarskiy, a village in the Belgorod Region. The Russian Government (“the Government”) were represented by Mr P. Laptev, the former Representative of the Russian Federation at the European Court of Human Rights.

A.  The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

The applicant was a shareholder of a private joint-stock road-building company “Rakityanskaya DSPMK” (“Ракитянская ДСПМК”). On an unspecified date in 2001 she applied to a court to oblige the company to redeem her 54 nominal shares.

On 15 October 2001 the Commercial Court of the Belgorod Region declared the company insolvent. On 18 February 2002 an insolvency administrator, Mr N., was appointed for the insolvency proceedings.

On 15 April 2002 the Rakityanskiy District Court obliged the company to redeem the 54 nominal shares held in the company by the applicant. On 2 July 2002 the Belgorod Regional Court upheld the judgment and it became final and enforceable.

On 5 August 2002 the applicant sought enforcement in court.

On 13 August 2002 the court sent the writ of execution to the local Bailiff’s Office.

On 16 August 2002 the bailiff served the writ of execution on Mr A. instead of Mr N., the administrator. However, Mr A. forwarded the writ to Mr N. without delay and the writ was received by Mr. N. on 22 August 2002.

As the shares were not redeemed by the company, the applicant complained about the bailiffs’ failure to act to the court and to the local Prosecutor’s Office.

On 26 November 2002 the applicant’s complaints were upheld by the Rakityanskiy District Court. The court reproached the bailiff for negligence in serving the writ on the wrong person and stated that as the applicant had lodged her claim with the court before the company went insolvent, the enforcement proceedings should have been carried out by the bailiff within the civil procedure in accordance with the Law on Enforcement Procedure (Закон РФ “Об исполнительном производстве”).

On 2 June 2003 the same court again upheld an identical complaint lodged by the applicant and ordered the bailiff to pursue the enforcement proceedings.

On 4 August 2003 the Commercial Court of the Belgorod Region closed the insolvency proceedings, having declared the creditors’ registered claims paid off. The company had not redeemed the applicant’s shares as she was fifth in the line of creditors and the company’s assets did not suffice.

On 16 October 2003 the Presidium of the Belgorod Regional Court quashed the decision of 2 June 2003 and discontinued the proceedings. The court found that the instruction contained in the operative part of the judgment of 15 April 2002 provided for service of the writ of execution on the company’s insolvency administrator for enforcement. This requirement had been fully complied with by the bailiff. The Presidium of the Belgorod Regional Court also found that there had been procedural flaws, noting, inter alia, that the Rakityanskiy District Court had disregarded the previous decision concerning the same complaint and pointed out that it had failed to indicate the legal grounds for upholding the applicant’s complaint.

B.  Relevant domestic law

Under section 9 of the Federal Law on Enforcement Proceedings of 21 July 1997, a bailiff must enforce a judgment within a period of two months.

The Russian Law on Enforcement Proceedings (no. 119-ФЗ of 21 July 1997) designates the court bailiffs’ service as the authority charged with enforcement of court decisions (section 3 § 1). Court judgments can also be executed by tax authorities, banks, financial institutions, other organisations, State officials and individuals – all of these are not considered to be the enforcement authorities (section 5).

COMPLAINTS

The applicant complained under Article 1 of Protocol no. 1 of the Convention that the company had not complied with the judgment and that, despite the fact that the actions of the bailiffs were found unlawful by the domestic courts, no effective actions had been taken by them in order to safeguard the enforcement of the judgment.

THE LAW

The applicant complained about the non-enforcement of the domestic judgments. The Court will examine this complaint under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1. As far as relevant, these Articles 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.”

The Government argued that this complaint was inadmissible as manifestly ill-founded. The State had not been responsible for the debts of the company, because the company was a private entity. The bailiffs had complied with the obligation to forward the writ to the insolvency administrator. From that time on it was the responsibility of the administrator to distribute the debts among the company’s creditors. The Government brought to the Court’s attention the fact that the administrator was a person registered as an individual entrepreneur, for whose actions the State could not be held liable. Further, the Government noted that the applicant had been a shareholder of the joint-stock company “Rakityanskaya DSPMK”. Pursuant to section 2 of the Federal Joint-Stock Companies Act of 26 December 1995, shareholders were not liable for their company’s obligations and bore the risk of losses connected with its activity within the limit of the value of the stock belonging to them. Thus claims brought by a shareholder of the company could be satisfied only after it had settled with all its creditors within the framework of bankruptcy proceedings. The Government pointed out that the applicant had not been a creditor of the open joint-stock company “Rakityanskaya DSPMK” because pursuant to section 2 of the Federal Insolvency Act of 8 January 1998 creditors in relation to monetary obligations were bankruptcy creditors with the exception of participants in the legal entity, as far as liabilities resulting from such participation were concerned.

The applicant argued that her complaint was admissible. Even if the company had been a private company, it had to comply with the judgment. The bailiffs had acted wrongly since they had incorrectly forwarded the writ to the administrator and idled.

The Court reiterates that execution of a judgment given by any court must be regarded as an integral part of the “trial” for the purposes of Article 6 of the Convention. (see Hornsby v. Greece, judgment of 19 March 1997, Reports of Judgments and Decisions 1997 II, pp. 510-11, § 40, and Immobiliare Saffi v. Italy [GC], no. 22774/93, § 63, ECHR 1999 V). However, the right of “access to court” does not impose an obligation on a State to enforce every judgment of a civil character without having regard to the particular circumstances of a case (see Sanglier v. France, no. 50342/99, § 39, 27 May 2003). The State has a positive obligation to organise a system for enforcement of judgments that is effective both in law and in practice and ensures their enforcement without undue delay (see Fuklev v. Ukraine, no. 71186/01, § 84, 7 June 2005). When the authorities are obliged to act in order to enforce a judgment and they fail to do so, their inactivity can engage the State’s responsibility on the ground of Article 6 § 1 of the Convention (see Scollo v. Italy, judgment of 28 September 1995, Series A no. 315-C, § 44).

The Court reiterates that it is for each State to equip itself with legal instruments which are adequate and sufficient to ensure the fulfilment of the positive obligations imposed upon it (see Ruianu v. Romania, no. 34647/97, § 66, 17 June 2003). The Court’s only task is to examine whether the measures applied by the Russian authorities in the present case were adequate and sufficient. In cases such as the present one, which necessitated action by a debtor who was a private entity, the State’s obligations under the Convention are limited to “mere” assistance in the enforcement of the respective court awards, for instance, through the bailiffs’ service or a court-appointed trustee in bankruptcy proceedings (see, for example, Shestakov v. Russia (dec.), no. 48757/99, 18 June 2002; Krivonogova v. Russia (dec.), no. 74694/01, 1 April 2004; and Kesyan v. Russia, no. 36496/02, 19 October 2006).

In the case at hand the debtor, the open joint-stock company “Rakityanskaya DSPMK”, was declared insolvent on 15 October 2001 by the Commercial Court of the Belgorod Region. The judgment obtained by the applicant on 15 April 2002 was thus delivered after the company had been declared insolvent. The only action which was required of the state agent, the bailiff, involved serving the writ of execution on the company’s insolvency administrator in order for him to proceed with enforcement. As the bailiff had fulfilled his obligation, the State had, consequently, complied with its positive obligation under the invoked Convention Articles.

Thus, having regard to all the material in its possession, and in so far as these complaints fall within its competence ratione materiae, 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 the application must be rejected as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.

For these reasons, the Court unanimously

Decides to discontinue the application of Article 29 § 3 of the Convention and declares the application inadmissible.

Søren Nielsen Christos Rozakis
Registrar President