AS TO THE ADMISSIBILITY OF
by OOO LINK OIL SPB
The European Court of Human Rights (First Section), sitting on 25 June 2009 as a Chamber composed of:
Sverre Erik Jebens,
George Nicolaou, judges,
and Søren Nielsen, Section Registrar,
Having regard to the above application lodged on 17 November 2005,
Having deliberated, decides as follows:
The applicant is a private company OOO “Link Oil SPB” (Общество с ограниченной ответственностью «Линк Ойл СПб») located in Saint-Petersburg. It is represented before the Court by its Director General, Mr S. Sgibnev.
On 25 September 2007 the applicant company was declared bankrupt by the Commercial Court of Saint-Petersburg and Leningrad Region (hereinafter “the Saint-Petersburg Commercial Court”). On 6 June 2008 Mr S. Sgibnev informed the Court that he would continue the proceedings in the present case on behalf of the bankrupt company.
A. The circumstances of the case
The facts of the case, as submitted by the applicant company, may be summarised as follows.
On 24 January 2002, the applicant company signed a contract with the Federal State Enterprise “Oktyabrskaya Railways” (Федеральное государственное унитарное предприятие «Октябрьская железная дорога Министерства путей сообщения Российской Федерации», hereinafter “the railway company”) for use of the railways infrastructure. Under the contract, the railway company was to provide certain services relating to cargo transportation. The services had to be charged in accordance with the price list of the Russian Ministry for Railways. According to the agreements between the parties, the payments were to be made in a centralised manner by setting the relevant sums off the special accounts to which the applicant company regularly transferred funds.
1. First litigation between the parties
On 8 February 2002, the applicant company sued the railway company in the Saint-Petersburg Commercial Court, claiming a sum of 1,774,854 Russian roubles (RUB) (66,255 euros (EUR)), which was allegedly overcharged earlier that month in violation of the contract. On 21 March 2002 the court dismissed the applicant company’s claim, finding that it was not a party in the transportation contract and was not entitled to bring judicial proceedings as a third-party financer.
On 20 June 2002 the judgment was upheld on appeal.
On 22 August 2002 the Federal Commercial Court for the North-Western Circuit quashed the lower courts’ decisions and ordered the railway company to restore the full amount claimed on the applicant company’s account.
On 17 February 2003 the Supreme Commercial Court, sitting in a committee of three judges, dismissed the railway company’s application for supervisory review of the judgment of 22 August 2002.
On 3 February 2004 the bailiffs started the enforcement proceedings. No information was provided about their outcome.
2. Second litigation between the parties
Relying upon the abovementioned judgment in its favour, the applicant company brought fresh proceedings on 24 September 2003 before the Saint-Petersburg Commercial Court for recovery of RUB 1,787,537,924 (EUR 61,300,000), a total allegedly overcharged on its account between 1 February and 31 December 2002.
On 19 February 2004 the court dismissed the applicant company’s claims, relying on similar reasons as those indicated in its decision of 21 March 2002 mentioned above.
On 6 July 2004 the Federal Commercial Court for the North-Western Circuit quashed the decision and sent the case back to the first instance, ordering another company, OOO “Kinef” (OOO «Кинеф») to take part in the proceedings as a third party.
On 16 December 2004, the Saint-Petersburg Commercial Court again dismissed the applicant company’s claims.
On 16 February 2005 the Thirteenth Commercial Court of Appeal quashed the judgment, ordering the defendant, the Russian Railway Company (ОАО «Российские железные дороги»), to restore the full amount claimed on the applicant company’s account.
On 4 April 2005 the Federal Commercial Court for the North-Western Circuit upheld the judgment.
On 11 May 2005 the bailiffs started enforcement proceedings.
On 12 May 2005 the defendant lodged an application for supervisory review with the Supreme Commercial Court and requested to stay the enforcement proceedings.
On 19 May 2005 the Supreme Commercial Court stayed the enforcement proceedings.
On 27 July 2005 the Supreme Commercial Court, sitting in a committee of three judges, decided to refer the case to the Presidium of the Supreme Commercial Court for supervisory review.
On 18 October 2005 the Presidium of the Supreme Commercial Court quashed the judgments of 16 February and 4 April 2005 in the applicant company’s favour and sent the case back to the first instance. The court notably considered that the lower courts erred in the assessment of the factual relations between the parties involved in the transportation business at issue. Referring to Article 304 § 1 of the Code of Commercial Procedure, the court concluded that the judgments of 16 February and 4 April 2005 had violated the uniformity in the application of domestic law.
On 3 April 2006 the Saint-Petersburg Commercial Court reconsidered the case in the light of the Supreme Commercial Court’s findings and dismissed the applicant company’s claims. The judgment was upheld on 27 June 2006 by the Thirteenth Commercial Court of Appeal and, on 11 October 2006, by the Federal Commercial Court for the North-Western Circuit.
On 15 January 2007 the Supreme Commercial Court, sitting in a committee of three judges, dismissed the applicant company’s application for supervisory review.
B. Relevant domestic law
1. Cassation review in commercial proceedings
Judgments of commercial courts of appeal enter into legal force upon their delivery (Article 271 § 5). Judgments of first instance courts and of appeal courts may be challenged in cassation instance within two months after their entry into legal force (Article 273 and 276 § 1).
2. Supervisory review in commercial proceedings
(a) Old Code of Commercial Procedure
The Code of Commercial Procedure of 5 May 1995 (No. 70-ФЗ) in force before 2003 provided that final judgments and decisions of commercial courts were amenable to supervisory review initiated on an application by the President of the Supreme Commercial Court or his deputy or by the Prosecutor General of the Russian Federation or his deputy (Articles 180 and 181).
(b) New Code of Commercial Procedure
On 1 January 2003 Chapter 36 of the new Code of Commercial Procedure “Proceedings for the review of courts’ decisions by way of supervision” (“Производство по пересмотру судебных актов в порядке надзора”) entered into force.
According to Article 292, an application for supervisory review may be lodged with the Supreme Commercial Court by the parties to the case or certain other persons entitled by this Code, if they consider that the contested judicial decision substantially violates their rights and legitimate interests in commercial or other economic activities due to a breach or improper application by a commercial court of material or procedural law. The application for supervisory review may be lodged within three months after the contested judicial decision enters into force, if all other judicial remedies were exhausted.
According to the transitional provisions of the Law on the Introduction of the Code of Commercial Procedure of 24 July 2002 (Федеральный закон «О введении в действие Арбитражного процессуального кодекса РФ» No. 96-ФЗ), the supervisory review proceedings against the court decisions delivered before 1 January 2003 could be brought before the Supreme Commercial Court within three months from this date (Article 9).
The admissibility of the application (вопрос о принятии заявления или представления к производству) is decided by a single judge within five days after receipt of the application (Article 295). Once declared admissible, the application is considered by a committee of judges, which decides, within one month after receipt of the application or of the case-file, whether to send the case to the Presidium of the Supreme Commercial Court for supervisory review (Article 299). If the conditions provided for in Article 304 are satisfied, the court makes a decision to send the case for supervisory review and transmits the case to the Presidium within five days after this decision (Article 299). The Presidium will consider the case within three months after the decision to transmit the case to the Presidium (Article 303).
Article 304, as in force between 2003 and 2005, provided as follows:
Article 304 Grounds for revising or repealing by way of supervision of the judicial decisions entered into legal force
“Judicial decisions of the commercial courts entered into legal force shall be revised or repealed if the Presidium of the Supreme Commercial Court of the Russian Federation reviewing the case by way of supervision finds that the contested judicial decision:
1) violates the uniformity of the interpretation of the legal norms by commercial courts;
2) prevents the delivery of a lawful judicial decision in another case;
3) violates the rights and legitimate interests of an undetermined number of people or other public interests.”
On 5 April 2005, the Federal Law of 31 March 2005 (No. 25-ФЗ) entered into force replacing the point 2 above by the following:
“2) violates the human and citizens’ rights and freedoms in accordance with the universally recognised principles and norms of international law and the international treaties of the Russian Federation;”
3. Reopening of commercial proceedings on the basis of newly discovered circumstances
Article 311 of the Code of Commercial Procedure provides for reopening of commercial proceedings on the basis of newly discovered circumstances. One of the grounds allowing such reopening is a violation of the Convention found by the European Court of Human Rights in the examination of a particular case by a commercial court on account of which the applicant complained to the European Court (Article 311 § 7).
The applicant company complained under Article 6 and Article 1 of Protocol No. 1 about a violation of the legal certainty requirement through quashing of binding and enforceable judgments in its favour by the Supreme Commercial Court in supervisory-review proceedings. It also complained under the same provisions of non-enforcement of these judgments. Referring to Article 13, the applicant company also complained of the lack of domestic remedy against decisions taken in the supervisory-review proceedings.
A. Alleged violation of legal certainty in the supervisory-review proceedings before the Supreme Commercial Court
The applicant company complained that the quashing of the binding and enforceable judgments of 16 February and 4 April 2005 in its favour violated the legal certainty requirement and thus its right to a court under Article 6 § 1 of the Convention and to peaceful enjoyment of its possessions under Article 1 of Protocol No.1. Insofar as relevant, these Articles read 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 [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 applicant company supports its complaints by reference to the Court’s case-law finding violations of the above provisions on account of quashing of binding and enforceable judgments by way of supervisory review in Russia and Ukraine (Ryabykh v. Russia, no. 52854/99, ECHR 2003 IX; Sovtransavto Holding v. Ukraine, no. 48553/99, ECHR 2002 VII).
The Court reiterates that legal certainty, which is one of the fundamental aspects of the rule of law, presupposes respect for the principle of res judicata, that is the principle of the finality of judgments. A departure from that principle is justified only when made necessary by circumstances of a substantial and compelling character, such as correction of fundamental defects or miscarriage of justice (see Brumărescu v. Romania [GC], no. 28342/95, § 61, ECHR 1999 VII; Ryabykh v. Russia, no. 52854/99, §§ 51-52, ECHR 2003 IX).
The Court recalls that it has already found a violation of the legal certainty requirement on account of supervisory review exercised by the Supreme Commercial Court under the old Code of Commercial Procedure in force before 2003. The Court then found that final judgments were liable to challenge indefinitely due to the President’s and Deputy President’s discretionary powers to launch such proceedings without any time-limit (see Arshinchikova v. Russia, no. 73043/01, § 35, 29 March 2007).
The Court notes, however, that the supervisory-review procedure in the Supreme Commercial Court has undergone substantial changes since 2003 (see Relevant domestic law cited above). The Court has thus to assess whether the new procedure, as used in the present case, complies with the requirement of legal certainty enshrined in the Convention.
The Court notes at the outset that the reform abolished since 2003 the discretionary powers of the President and Deputy President of the Supreme Commercial Court to initiate supervisory review proceedings.
Under the new Code, the application for supervisory review may be lodged with the Supreme Commercial Court only by the parties or certain other persons affected within three months of the entry into force of the contested judicial decision, and only if all other judicial remedies were exhausted. The admissibility of the application is to be decided by a single judge within five days after receipt of the application. Once declared admissible, the application is to be considered by the Supreme Commercial Court, sitting in a committee of judges, within one month after receipt of the application or, if appropriate, after receipt of the case-file from a lower court. If the grounds for supervisory review are satisfied, the court delivers a decision to transmit the case to the Presidium of the Supreme Commercial Court; the case is transmitted to the Presidium within five days after this decision; and the Presidium decides on whether to revise or repeal the contested judicial decision within three months of the decision to transmit the case to the Presidium. The grounds for supervisory review are explicitly limited by the Code (see Relevant domestic law cited above); they notably include since 5 April 2005 violations of human rights provided for by the international treaties of the Russian Federation.
The above procedure makes the supervisory review in the Supreme Commercial Court structurally different from the one exercised by courts of general jurisdiction under the Code of Civil Procedure, which entered into force on 1 February 2003. The latter was repeatedly found by the Court not to ensure respect for the legal-certainty requirement for a number of reasons. Indeed, once launched, supervisory-review proceedings could last indefinitely through various levels of supervisory-review adjudication (see Denisov v. Russia (dec.), no. 33408/03, 6 May 2004; Sobelin and Others v. Russia, nos. 30672/03, 30673/03, 30678/03, 30682/03, 30692/03, 30707/03, 30713/03, 30734/03, 30736/03, 30779/03, 32080/03 and 34952/03, § 57, 3 May 2007). Furthermore, the laxity of the time-limits for institution of the supervisory-review proceedings in courts of general jurisdiction allowed defendants to lodge consecutive applications and to challenge the judgment even later than one year after it became binding and enforceable (see Prisyazhnikova and Dolgopolov v. Russia, no. 24247/04, § 25, 28 September 2006). The Court also found that the statutory time-limit of one year for lodging a supervisory-review complaint was at times rendered nugatory in practice, thus seriously frustrating the applicants’ reliance on the judgments in their favour (see Kulkov and Others v. Russia, nos. 25114/03, 11512/03, 9794/05, 37403/05, 13110/06, 19469/06, 42608/06, 44928/06, 44972/06 and 45022/06, §§ 25 and 31, 8 January 2009).
Yet, no such issue appears to arise in the supervisory review as it was exercised in the present case by the Supreme Commercial Court in accordance with Chapter 36 of the new Code of Commercial Procedure.
The Court notes that on 16 February 2005 the Thirteenth Commercial Court of Appeal, disagreeing with the first-instance commercial court, granted the applicant company’s claims on appeal. The defendant brought cassation proceedings against this judgment before the Federal Commercial Court for the North-Western Circuit, which upheld the judgment on 4 April 2005. Within three months of that date, on 12 May 2005, the defendant challenged these decisions before the Supreme Commercial Court. The latter immediately stayed the enforcement of the judgment pending its review. The committee of three judges decided on 27 July 2005 to transmit the case to the Presidium for supervisory review. The Presidium examined the case in adversarial proceedings and quashed the lower courts’ decisions of 16 February and 4 April 2005 on the basis of one of the three grounds provided for by Article 304 of the Code. The proceedings were then continued in the light of the Presidium’s findings through the same four levels of jurisdiction and concluded by a dismissal of the applicant company’s claims.
Thus, the binding and enforceable decisions delivered by the commercial courts in the applicant company’s favour were not liable to challenge indefinitely, but only once, before a supreme judicial instance, upon the defendant party’s request, on the basis of restricted grounds and within a clearly defined and limited time-frame. As a result, the procedure followed in the present case was not incompatible with the principle of legal certainty enshrined in the Convention (see, mutatis mutandis, MPP Golub v. Ukraine (dec.), no. 6778/05, ECHR 2005 XI). In the Court’s view, the supervisory review so construed appears as an ultimate element in the chain of domestic remedies at the disposal of the parties rather than an extraordinary means for reopening of judicial proceedings in a case (compare AO “Uralmash” (dec.), no. 13338/03, 10 April 2003).
The Court therefore discerns no breach of the legal certainty requirement in the supervisory-review proceedings conducted before the Supreme Commercial Court in the present case.
That the judgments in the applicant company’s favour became binding and enforceable before the supervisory review does not alter the Court’s conclusion. First, the enforcement proceedings were lawfully stayed by the court pending the supervisory review. Second, a judgment that has become binding and enforceable is not necessarily final under the Convention. Indeed, in numerous Contracting States, supreme judicial instances deliver final judgments after lower courts’ judgments have become binding and enforceable. This situation is not in itself incompatible with the principle of legal certainty.
In view of the foregoing, the Court concludes that the applicant company’s complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
B. Other alleged violations
The applicant company complained about non-enforcement of the judgments delivered in their favour by the Thirteenth Commercial Court of Appeal and the Federal Commercial Court for the North-Western Circuit on 16 February and 4 April 2005 respectively. They also complained about violation of Article 13 in relation to the quashing of these judgments in supervisory-review proceedings.
The Court notes that on 12 May 2005 the Supreme Commercial Court stayed the enforcement of the two judgments in the applicant company’s favour and on 18 October 2005 quashed both judgments. In view of these circumstances and of its conclusions above about the supervisory-review proceedings, the Court finds no appearance of such violations.
It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Søren Nielsen Christos Rozakis