AS TO THE ADMISSIBILITY OF
by Marina NIKOLAISHVILI
The European Court of Human Rights (Second Section), sitting on 7 June 2009 as a Chamber composed of:
Ireneu Cabral Barreto,
Nona Tsotsoria, judges,
and Françoise Elens-Passos, Deputy Section. Registrar,
Having regard to the above application lodged on 26 July 2004,
Having regard to the parties’ observations,
Having deliberated, decides as follows:
The applicant, Mrs Marina Nikolaishvili, is a Georgian national who was born in 1952 and lives in Tbilisi. The respondent Government were represented by their Agent, Mr B. Bokhashvili of the Ministry of Justice.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
The applicant was one of the six founding partners and a holder of 24% of the shares of a limited liability company (“the company”) set up on 12 June 1996 to run a retail shop. The shop, privatised by those partners in 1994 and valued at some 50,100 Georgian laris (GEL) (approximately 22,000 euros (EUR)), was designated as the company’s founding capital.
In 1996, a certain Mrs P. brought a court action contesting the lawfulness of the privatisation of the shop and, in a decision of 23 July 1997, the Mtatsminda District Court in Tbilisi declared the privatisation agreement null and void.
After the decision of 23 July 1997 became binding, the applicant and another founding partner of the company, Mr N., entered into friendly settlement negotiations with Mrs P. On 6 November 1998 they reached an agreement, according to the written terms of which the applicant and Mr N. were “to cede” to Mrs. P., respectively, 12% and 8% of their company shares. The agreement did not specify Mrs P.’s counter-obligations, if any.
On 19 November 1998 the Presidium of the Tbilisi City Court, on the basis of both parties’ request, quashed in a supervisory review the decision of 23 July 1997 and ordered the parties to abide by the conditions of their friendly settlement of 6 November 1998; the company was ordered to amend its registration records in the Corporate Register accordingly.
As disclosed by the minutes of the company partners’ general meeting on 24 December 1998, the applicant considered that Mrs P. should pay compensation for the agreed cession of the shares, as this had been her pledge during the friendly settlement negotiations. However, since Mrs P. now insisted on obtaining those shares free of charge, the applicant stated that she would not cede her part. The applicant’s position was maintained by Mr N. and other partners, and the unanimous decision was not to admit Mrs. P. as a new partner.
On 22 February 1999 the Mtatsminda District Court, pursuant to Mrs P.’s request, issued a resolution on the redistribution of the company shares in accordance with the decision of 19 November 1998 and entered the consequent amendments into the Corporate Register. Thus, Mrs P. was designated as a new partner with 20% of the company shares, 12% of which was transferred from the applicant’s possession.
On 24 August 2000 the applicant brought an action before the Krtsanisi Mtatsminda District Court, requesting that the resolution of 22 February 1999 be declared null and void, and that the disputed 12% of the company shares be returned to her. The applicant, relying on the relevant provisions of the Act of 28 October 1994 on Entrepreneurship (“the Act on Entrepreneurship”), claimed that Mrs P. lacked the standing to request amendment of the company’s registration records, and that consequently the resolution of 22 February 1999 had been unlawful.
On 4 September 2002 the Krtsanisi-Mtatsminda District Court, finding the applicant’s reading of the Act on Entrepreneurship to be erroneous, dismissed her action. That decision, however, was overturned by the Tbilisi Regional Court on 7 February 2003 in the applicant’s favour. The appeal court reasoned that the decision of 19 November 1998 had not rendered Mrs P. a partner nor transferred any shares to her, but had simply ordered the company to enforce the friendly settlement of 6 November 1998. Since the company’s decision-making body – the partners’ general meeting – had refused, on 24 December 1998, to accept her as a new partner, Mrs P. should have challenged that decision in adversarial proceedings. The appellate court further reasoned that, by virtue of section 46 § 5 of the Act on Entrepreneurship, consent to a partial cession of the company’s shares had to be recorded in writing at a general meeting of the partners.
On 30 December 2003 the Supreme Court, at a hearing attended by the applicant and her advocate, overturned the appellate judgement of 7 February 2003 and dismissed the applicant’s action. Acting as the court of cassation it pronounced the operative part of its decision orally that day. A complete, reasoned copy of the judgment of 30 December 2003 was served on the applicant’s advocate on 5 February 2004.
The Supreme Court stated that since the company had refused to abide by the binding court decision of 19 November 1998 of its own accord, the resolution of 22 February 1999 had simply enforced that decision. In any event Mrs P. could have applied to a bailiff, and the resultant enforcement proceedings would have led to the same result. The court of cassation acknowledged that, as a rule, written approval of the conclusions of the partners’ general meeting was required for a partial cession of company shares. However, in the case at hand, the friendly settlement agreement of 6 November 1998 had implicitly amounted to such an approval, since all the partners of the company had had a genuine interest in the maintenance of the privatised shop. As to the price of the disputed shares, the Supreme Court concluded that the company had agreed to cede them not in exchange for monetary compensation, but rather as a quid pro quo for Mrs P.’s commitment to abandon her claim for the annulment of the privatisation.
B. Relevant domestic law
1. The Act of 28 October 1994 on Entrepreneurship, as worded at the material time
Section 4 § 1
“1. A company is registered by a court entry in the [Corporate] Register.”
Section 5 §§ 1, 4 and 6 - “The conditions for registration”
“1. An entry in the [Corporate] Register can be requested by a partner of the company...
4. As regards a limited liability company..., a registration request should contain information about the founding partners’ contributions and the number of their respective shares...
6. A change in the circumstances which serves as the basis for the registration of a company under section 5 § 4 ... must also be entered in the [Corporate] Register ...”
Section 46 § 1, 3 and 5 - “A partner’s rights and responsibilities [in a limited liability company]”
“1. A partner has the right to alienate (gasxviseba) or to bequeath his or her shares.
3. The cession (daTmoba) of shares by a partner takes place in the form of a notarised agreement. A notarised agreement is also required for the alienation (gasxviseba) of shares.
5. A partial alienation of shares is only possible with the company’s approval, [which document] must contain information about the identity of the purchaser and the price...of each share...”
Neither section 46 nor any other provision of the Act accounted for the difference between the notions of “alienation of shares” (wilis gasxviseba) and “cession of shares” (wilis daTmoba), if any.
Article 47 § 3 – “The partners’ general meeting [in a limited liability company]”
“3. If the articles of incorporation do not establish otherwise, the partners’ general meeting decides on all issues, including those related to ... the acquisition and handover of shares...”
The applicant complained under Article 1 and 17 of the Convention, as well as Article 1 of Protocol No. 1, that her company shares had been taken by Mrs. P. through the allegedly arbitrary court resolution of 22 February 1999.
1. As to the complaint under Article 1 of Protocol No. 1
The complaint under Article 1 of Protocol No. 1 concerns the alleged misappropriation of the applicant’s company shares. This provision reads, in its relevant part, as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions...”
a. The parties’ submissions
The Government stated that the application, lodged with the Court on 26 July 2004, was belated, in so far as the operative part of the final domestic decision had been pronounced on 30 December 2003. The remainder of the Government’s arguments addressed the merits of the complaint under Article 1 of Protocol No. 1.
The applicant disagreed with the Government’s position.
b. The Court’s assessment
The Court notes that the applicant’s company shares, which represented not only an indirect claim on the company’s assets but also entitled her to participate in the corporate management, clearly constituted her “possessions” within the meaning of Article 1 of Protocol No. 1 (see, for example, Sovtransavto Holding v. Ukraine, no. 48553/99, §§ 91 and 92, ECHR 2002 VII).
Rather than addressing the Government’s objection as regards the alleged failure to comply with the six-month rule, the Court considers it appropriate, first, to determine the limits of its jurisdiction ratione temporis and to establish whether the loss of the applicant’s shares, a result of the private transaction, could engage the respondent State’s responsibility under Article 1 of Protocol No. 1 (cf. Voyager Limited v. Turkey no. 35045/97, 4 September 2001).
The Court reiterates that, in accordance with the generally recognised rules of international law, the provisions of the Convention and its Protocols do not bind a Contracting Party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the relevant international treaty with respect to that Party. According to the general rule, the Court’s temporal jurisdiction is to be determined, with due regard to the particular circumstances of the given case, in relation to the scope of the Convention right at stake and the nature of the facts constitutive of the alleged interference (see Blečić v. Croatia [GC], no. 59532/00, §§ 70 and 77, ECHR 2006-...; Šilih v. Slovenia [GC], no. 71463/01, §§ 145 and 146, 9 April 2009).
As to the scope of the right in question, the Court reiterates that domestic remedies under Article 1 of Protocol No. 1 are not normally detachable from the act of alleged interference. Thus, where a breach of property rights and a refusal to redress it occurred, respectively, before and after the entry into force of Protocol No. 1 with respect to the State in question, the date of the latter act is immaterial for the determination of the Court’s temporal jurisdiction (see Blečić, cited above, §§ 77-93; Malhous v. the Czech Republic (dec.) [GC], no. 33071/96, ECHR 2000-XII).
Returning to the circumstances of the present case, the Court observes that the alleged misappropriation of the applicant’s company shares occurred on 22 February 1999, when the Mtatsminda District Court amended the company’s records in the Corporate Register. This definite taking of the applicant’s shares was clearly an instantaneous act which did not produce any continuing situation under Article 1 of Protocol No. 1 (see Blečić, cited above, § 86; Almeida Garrett, Mascarenhas Falcão and Others v. Portugal, nos. 29813/96 and 30229/96, § 43, ECHR 2000 I; Fatullayev v. Azerbaijan (dec.), no. 33875/02, 28 September 2006; Sholos v. Ukraine (dec.), no. 11780/05, 24 March 2009).
Consequently, given that Article 1 of Protocol No. 1 entered into force with respect to Georgia only on 7 June 2002, the Court considers that, in the particular circumstances of the present case, it lacks the temporal jurisdiction to look into the alleged misappropriation of the applicant’s shares by a purportedly arbitrary resolution of 22 February 1999; the subsequent judicial proceedings are, according to the Court’s case-law, immaterial in this regard.
In the light of the above conclusion, there is no need to enquire whether the respondent State could be held responsible for the determination of the applicant’s private dispute.
It follows that the applicant’s complaint under Article 1 of Protocol No. 1 is incompatible ratione temporis with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.
2. The remainder of the application
As to the complaints under Article 1 and 17 of the Convention, the Court, in the light of all the material in its possession, finds that the applicant’s submissions do not disclose any appearance of an arguable issue under these provisions.
It follows that this part of the application must be declared inadmissible as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Elens-Passos Françoise Tulkens
Deputy Registrar President