CASE OF SULJAGIĆ v. BOSNIA AND HERZEGOVINA
(Application no. 27912/02)
3 November 2009
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 Suljagić v. Bosnia and Herzegovina,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
Nicolas Bratza, President,
David Thór Björgvinsson,
Mihai Poalelungi, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 13 October 2009,
Delivers the following judgment, which was adopted on that date:
There appeared before the Court:
(a) for the Government
Ms M. Mijić, Agent,
Ms Z. Ibrahimović, Deputy Agent,
Ms B. KujundZić, Assistant Agent,
Mr A. DZombić, Minister of Finance of the Republika Srpska,
Ms D. Aleksić, Assistant Minister of Finance of the Republika Srpska,
Mr T. Ćurak, Assistant Minister of Finance of the Federation of Bosnia and Herzegovina,
Mr E. Kubat, Adviser to Minister of Finance of the Federation of Bosnia and Herzegovina,
Mr M. Lučić, Director for Finance of the Brčko District of Bosnia and Herzegovina, Advisers;
(b) for the applicant
Mr E. Suljagić, Counsel,
Mr S. Imamović, Assistant Counsel.
The Court heard addresses by Mr Suljagić and Ms Mijić.
I. THE CIRCUMSTANCES OF THE CASE
A. Relevant background to the present case
B. The present case
II. RELEVANT DOMESTIC LAW AND PRACTICE
In the Republika Srpska, bonds are to be amortised by 28 February 2013 in ten instalments (on 28 February and 28 August every year from 28 August 2008 to 28 February 2013) together with interest on the bonds (at an annual rate of 2.5%). The first three instalments were paid, as planned, on 28 August 2008, 28 February and 28 August 2009. In the event of late payment, default interest is to be paid at the statutory rate.
In the Federation of Bosnia and Herzegovina, bonds are to be amortised by 27 March 2015 in eight instalments as follows: 7.5% of the entire debt is to be paid on 27 September 2008, 9% on 27 September 2009, 11% on 27 September 2010, 12% on 27 September 2011, 13% on 27 September 2012, 15% on 27 September 2013, 15.5% on 27 September 2014 and 17% on 27 March 2015. Interest on the bonds (at an annual rate of 2.5%) is to be paid on 27 March and 27 September every year from 27 September 2008 to 27 March 2015. The first instalments of the principal debt and of interest on the bonds (both due on 27 September 2008) were paid on 14 May 2009. It would appear that the instalments due on 27 March and 27 September 2009 have not yet been paid.
Lastly, under the old amortisation plan, the Brčko District paid the first instalments of the principal debt and of interest on the bonds (both due on 27 September 2008) on 24 December 2008 and the second instalment of interest on the bonds (due on 27 March 2009) on 11 June 2009. Pursuant to the new plan, bonds are now to be amortised by 31 March 2015 in seven instalments as follows: 9.5% of the entire debt is to be paid on 30 September 2009, 11.5% on 30 September 2010, 12.5% on 30 September 2011, 14% on 30 September 2012, 16.5% on 30 September 2013, 17.5% on 30 September 2014 and 18.5% on 31 March 2015. Interest on the bonds (at an annual rate of 2.5%) is to be paid on 31 March and 30 September every year from 30 September 2009 to 31 March 2015. The instalment due on 30 September 2009 has been paid in time. In case of the late payment of any forthcoming instalment, default interest is to be paid at the statutory rate.
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
“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. Applicability of Article 1 of Protocol No. 1
B. Compliance with Article 1 of Protocol No. 1
1. Applicable rule of Article 1 of Protocol No. 1
In such circumstances, the present case falls to be examined under the third rule of Article 1 of Protocol No. 1 (see also Trajkovski v. “the former Yugoslav Republic of Macedonia” (dec.), no. 53320/99, ECHR 2002 IV).
2. General principles
(a) Principle of lawfulness
The principle of lawfulness also presupposes that the applicable provisions of domestic law are sufficiently accessible, precise and foreseeable in their application.
(b) Principle of a legitimate aim in the public/general interest
Furthermore, the notion of “public interest” is necessarily extensive. In particular, the decision to enact laws expropriating or controlling property or affording publicly funded compensation for expropriated property will commonly involve consideration of political, economic and social issues. The Court has declared that, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, it will respect the legislature's judgment as to what is “in the public interest” unless that judgment is manifestly without reasonable foundation. This logic applies to such fundamental changes of a country's system as the transition from a totalitarian regime to a democratic form of government, the reform of the State's political, legal and economic structure and indeed the dissolution of the State followed by a brutal war, phenomena which inevitably involve the enactment of large-scale economic and social legislation.
(c) Principle of a “fair balance”
The concern to achieve this balance is reflected in the structure of Article 1 of Protocol No. 1 as a whole. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measures applied by the State, including measures depriving a person of his of her possessions. In each case involving the alleged violation of that Article the Court must, therefore, ascertain whether by reason of the State's action or inaction the person concerned had to bear a disproportionate and excessive burden.
3. Application of the above principles to the present case
(a) The applicant's submissions
(b) The Government's submissions
(c) The third parties' submissions
(d) The Court's assessment
The Court has also taken note of the fact that the neighbouring countries, in which similar repayment schemes were set up, agreed to pay considerably higher interest rates: 5% in Croatia and 2% in Montenegro and Serbia.
Nevertheless, given the respondent State's wide margin of appreciation (see paragraph 42 above) and, in particular, the need to reconstruct the national economy following a devastating war, the Court does not consider this factor sufficient in itself to render the current legislation contrary to Article 1 of Protocol No. 1. It agrees in this regard with the Constitutional Court of Bosnia and Herzegovina (see paragraph 28 above).
II. APPLICATION OF ARTICLE 46 OF THE CONVENTION
“1. The High Contracting Parties undertake to abide by the final judgment of the Court in any case to which they are parties.
2. The final judgment of the Court shall be transmitted to the Committee of Ministers, which shall supervise its execution.”
A. The parties' submissions
B. The Court's assessment
1. General principles
62. Another important aim of the pilot-judgment procedure is to induce the respondent State to resolve large numbers of individual cases arising from the same structural problem at domestic level, thus implementing the principle of subsidiarity which underpins the Convention system. Indeed, the Court's task as defined by Article 19, that is, to “ensure the observance of the engagements undertaken by the High Contracting Parties in the Convention and the Protocols thereto”, is not necessarily best achieved by repeating the same findings in large series of cases (see, by analogy, E.G. v. Poland (dec.), no. 50425/99, § 27, ECHR 2008-...). The object of the pilot-judgment procedure is to facilitate the speediest and most effective resolution of a dysfunction affecting the protection of the Convention rights in question in the national legal order (see Wolkenberg and Others v. Poland (dec.), no. 50003/99, § 34, ECHR 2007 XIV). While the respondent State's action should primarily aim at the resolution of such a dysfunction and at the introduction, where appropriate, of effective domestic remedies in respect of the violations in question, it may also include ad hoc solutions such as friendly settlements with the applicants or unilateral remedial offers in line with the Convention requirements. The Court may decide to adjourn the examination of all similar cases, thus giving the respondent State an opportunity to settle them in such various ways (see, by analogy, Broniowski, cited above, § 198, and Xenides-Arestis v. Turkey, no. 46347/99, § 50, 22 December 2005). If, however, the respondent State fails to adopt such measures following a pilot judgment and continues to violate the Convention, the Court will have no choice but to resume the examination of all similar applications pending before it and to take them to judgment so as to ensure effective observance of Convention (see, by analogy, E.G. v. Poland, cited above, § 28).
2. Application of the principles to the present case
(i) The Court decides to adjourn adversarial proceedings for six months from the date on which the present judgment becomes final in any cases pertaining to “old” foreign-currency savings in the Federation of Bosnia and Herzegovina and the Brčko District in which the applicants have obtained verification certificates (see, by analogy, Burdov v. Russia (no. 2), no. 33509/04, § 146, 15 January 2009). This decision is without prejudice to the Court's power at any moment to declare inadmissible any such case or to strike it out of its list in accordance with the Convention.
(ii) The Court may declare inadmissible in accordance with the Convention any cases pertaining to “old” foreign-currency savings in which the applicants have not obtained verification certificates, because it has found a violation of Article 1 of Protocol No. 1 only with respect to delays in the implementation of the current legislation (see paragraph 55 above) and those who have not obtained a verification certificate cannot be considered to be affected by those delays (see paragraph 29 above). That being said, the respondent State must ensure that the relevant deadlines are extended for at least six months from the date on which the present judgment becomes final to enable everyone to obtain a verification certificate.
(iii) Lastly, the Court may declare inadmissible any cases pertaining to “old” foreign-currency savings in the Republika Srpska, even if the applicants have obtained verification certificates, because no delays in the implementation of the current legislation occurred in that Entity.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
“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.”
B. Costs and expenses
FOR THESE REASONS, THE COURT UNANIMOUSLY
(a) that government bonds are issued in the Federation of Bosnia and Herzegovina;
(b) that any outstanding instalments are paid in the Federation of Bosnia and Herzegovina;
(c) that the Federation of Bosnia and Herzegovina undertakes to pay default interest at the statutory rate in the event of late payment of any forthcoming instalment;
(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, EUR 5,000 (five thousand euros) in respect of non-pecuniary damage and EUR 729 (seven hundred and twenty nine euros) in respect of costs and expenses, plus any tax that may be chargeable, to be converted into convertible marks at the rate applicable at the date of settlement;
(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;
Done in English, and notified in writing on 3 November 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş Aracı Nicolas Bratza
Deputy Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the concurring opinion of Judge Mijović is annexed to this judgment.
CONCURRING OPINION OF JUDGE MIJOVIĆ
Although I have voted with the majority in the Chamber on all the operative provisions of the judgment, my reasoning with respect to a violation of Article 1 of Protocol No. 1 to the Convention differs to a certain extent from the views expressed in the judgment.
According to the present judgment, Article 1 of Protocol No. 1 has been violated because of the deficient implementation of the domestic legislation on “old” foreign-currency savings, whilst in my personal opinion, a violation should be based on the solutions and measures contained in the legislation in question. The Chamber found that the current legislation as such was compatible with Article 1 of Protocol No. 1 but that it was its state of implementation that was unsatisfactory (namely, because government bonds in the Federation of Bosnia and Herzegovina had not yet been issued and certain instalments had not yet been paid).
It is my view, however, that the current legislation - perhaps it is better to say the contested measures - does not in itself strike a “fair balance” between the demands of the general interest of the community and the requirement of the protection of the individual's rights.
The problem of “old” foreign-currency savings has a very long history and, as pointed out in the judgment, dates back to the 1980s. It survived the dissolution of the SFRY, and Bosnia and Herzegovina assumed full liability for this sort of claim. Preliminary data show that the associated public debt exceeds 1 billion euros. Given the overall circumstances, and above all the need to reconstruct the national economy, it is reasonable to accept that the owners of so-called “frozen” bank accounts cannot be paid their money without a carefully designed repayment scheme. That is a part of the judgment's reasoning I do support.
Where I disagree with the Chamber, however, is with regard to the legislative provision concerning the reduction of the interest rate to 0.5% for the period from 1 January 1992 to 15 April 2006, a measure that I consider neither justified nor proportional. In accordance with an official report submitted by the Government (see the judgment, paragraph 54) it is obvious that the relevant interest rate appears to be much higher - 2.33% on average). Compared to the interest rate in the neighbouring countries1, which have more or less experienced similarly catastrophic effects of the armed conflict and the ongoing reforms and have set up similar “old” foreign-currency savings repayment schemes, this interest rate of 0.5% is the lowest. The Chamber was of the opinion that this issue fell “within the State's margin of appreciation”, whilst in my opinion this interest rate provision would be more than sufficient in itself to render the current legislation contrary to Article 1 of Protocol No. 1.
On the other hand, if the Chamber had opted for this line of reasoning, either the State or the Entities and the Brčko District would have had to pass new legislation which might subsequently have proven more time-consuming, economically challenging and questionable, and very discouraging for almost one quarter of the Bosnia and Herzegovina population - people who are not merely tired of waiting but are already at an advanced age and in despair. That is why I decided to vote with the majority.
1 Zakon o deviznom poslovanju, published in the Official Gazette of the SFRY no. 66/85, amendments published in the Official Gazette nos. 13/86, 71/86, 2/87, 3/88, 59/88 and 82/90.
2 Zakon o bankama i drugim finansijskim organizacijama, published in the Official Gazette of the SFRY no. 10/89, amendments published in the Official Gazette nos. 40/89, 87/89, 18/90, 72/90 and 79/90.
3 Zakon o deviznom poslovanju i kreditnim odnosima, published in the Official Gazette of the SFRY no. 15/77, amendments published in the Official Gazette nos. 61/82, 77/82, 34/83, 70/83 and 71/84.
1 Zakon o obligacionim odnosima, published in the Official Gazette of the SFRY no. 29/78, amendments published in the Official Gazette nos. 39/85, 45/89 and 57/89.
2 Zakon o sanaciji, stečaju i likvidnosti banaka i drugih finansijskih organizacija, published in the Official Gazette of the SFRY no. 84/89, amendments published in the Official Gazette no. 63/90.
3 Odluka o načinu izvršavanja obaveza Federacije po osnovu jemstva za devize na deviznim računima i deviznim štednim ulozima građana, građanskih pravnih lica i stranih fizičkih lica, published in the Official Gazette of the SFRY no. 27/90.
4 Uredba sa zakonskom snagom o preuzimanju i primjenjivanju saveznih zakona koji se u Bosni i Hercegovini primjenjuju kao republički zakoni, published in the Official Gazette of the Republic of Bosnia and Herzegovina no. 2/92 of 11 April 1992.
5 Zakon o prenosu sredstava društvene u drZavnu svojinu, published in the Official Gazette of the Republika Srpska no. 4/93 of 28 April 1993, amendments published in the Official Gazette nos. 29/94 of 28 November 1994, 31/94 of 27 December 1994, 9/95 of 19 June 1995, 19/95 of 2 October 1995, 8/96 of 10 April 1996 and 20/98 of 15 June 1998.
6 Zakon o pretvorbi društvene svojine, published in the Official Gazette of the Republic of Bosnia and Herzegovina no. 33/94 of 25 November 1994.
1 Odluka o uslovima i načinu isplata dinara po osnovu definitivne prodaje devizne štednje domaćih fizičkih lica i korišćenju deviza sa deviznih računa i deviznih štednih uloga domaćih fizičkih lica za potrebe liječenja i plaćanja školarine u inostranstvu, published in the Official Gazette of the Republic of Bosnia and Herzegovina no. 4/93 of 6 March 1993.
2 Odluka o uslovima i načinu davanja kratkoročnih kredita bankama na osnovu definitivne prodaje deponovane devizne štednje građana i efektivno prodatih deviza od strane građana, published in the Official Gazette of the Republika Srpska no. 10/93 of 15 July 1993, amendments published in the Official Gazette no. 2/94 of 21 February 1994.
3 Zakon o utvrđivanju i realizaciji potraZivanja građana u postupku privatizacije, published in the Official Gazette of the Federation of Bosnia and Herzegovina no. 27/97 of 28 November 1997, amendments published in the Official Gazette nos. 8/99 of 5 March 1999, 45/00 of 25 October 2000, 54/00 of 26 December 2000, 32/01 of 24 July 2001, 27/02 of 28 June 2002, 57/03 of 21 November 2003, 44/04 of 21 August 2004 and 79/07 of 7 November 2007.
4 Uredba o ostvarivanju potraZivanja lica koja su imala deviznu štednju u bankama na teritoriju Federacije Bosne i Hercegovine, a nisu imala prebivalište na teritoriju Federacije Bosne i Hercegovine, published in the Official Gazette of the Federation of Bosnia and Herzegovina no. 44/99 of 30 October 1999.
1 Zakon o početnom bilansu stanja u postupku privatizacije drZavnog kapitala u bankama, published in the Official Gazette of the Republika Srpska no. 24/98 of 15 July 1998, amendments published in the Official Gazette no. 70/01 of 31 December 2001.
2 Zakon o privatizaciji drZavnog kapitala u preduzećima, published in the Official Gazette of the Republika Srpska no. 24/98 of 15 July 1998, amendments published in the Official Gazette nos. 62/02 of 7 October 2002, 38/03 of 30 May 2003 and 65/03 of 11 August 2003.
1 The convertible mark (BAM) uses the same fixed exchange rate to the euro (EUR) that the German mark (DEM) has (EUR 1 = BAM 1.95583).
1 Zakon o izmirenju obaveza po osnovu računa stare devizne štednje, published in the Official Gazette of Bosnia and Herzegovina no. 28/06 of 14 April 2006, amendments published in the Official Gazette nos. 76/06 of 25 September 2006 and 72/07 of 26 September 2007.
2 Zakon o uslovima i načinu izmirenja obaveza po osnovu računa stare devizne štednje emisijom obveznica u Republici Srpskoj, published in the Official Gazette of the Republika Srpska no. 1/08 of 4 January 2008.
1 Odluka o emisiji obveznica Republike Srpske za izmirenje obaveza po osnovu verifikovanih računa stare devizne štednje, published in the Official Gazette of the Republika Srpska no. 20/08 of 5 March 2008.
2 Odluka o rasporedu po godinama dospijeća obveznica Bosne i Hercegovine koje se izdaju radi izmirenja obaveza po osnovu računa stare devizne štednje za Federaciju Bosne i Hercegovine i Brčko Distrikt Bosne i Hercegovine, published in the Official Gazette of Bosnia and Herzegovina no. 29/08 of 8 April 2008.
3 Odluka o emisiji obveznica Brčko Distrikta za izmirenje obaveza po osnovu verifikovanih računa stare devizne štednje, published in the Official Gazette of the Brčko District no. 19/09.
1 5% in Croatia and 2% in Serbia and Montenegro