European Court of Human Rights

Information Note on the Court’s case-law No. 178

October 2014

Liseytseva and Maslov v. Russia - 39483/05 and 40527/10

Judgment 9.10.2014 [Section I] See: [2014] ECHR 1043

Article 6

Enforcement proceedings

Article 6-1

Reasonable time

State’s failure to enforce final judgments within a reasonable time: violation

Facts - Both applicants worked for municipally owned companies which operated under a specific legal regime which entitled them to the so-called “right of economic control”. Companies operating under this regime did not own their assets and could conduct activities only in so far as they did not go beyond their statutory goals and purposes. They were not liable for the debts of their owners, and the owners were normally not liable for the companies’ debts. The applicants instituted proceedings against the companies for salary arrears and the domestic courts found in their favour. However, by the time the court orders became final, the companies had become insolvent. The applicants then instituted proceedings against the municipalities that owned the companies but these were dismissed as the municipalities were found to have no liability for the insolvencies. At the time of the European Court’s judgment, the judgments in the applicants’ favour remained unenforced.

Law - Article 6 of the Convention and Article 1 of Protocol No. 1

(a)  Admissibility (compatibility ratione personae and the respondent State’s responsibility for the companies’ debts) - State-controlled enterprises enjoyed some degree of legal and economic independence. However, they had several features that distinguished them from “classic” private companies, as under domestic law the State could control the crucial aspects of such companies’ activity and the scope of the State’s control could be further enhanced in view of the particular functions performed. Therefore, the existing legal framework did not provide such companies with a degree of institutional and operational independence that would absolve the respondent State from responsibility for such companies’ debts.

In the first applicant’s case, the debtor company had provided public transport services to several groups of individuals free of charge, conditional on the cost of those services being reimbursed from public funds later. However, public authorities had failed to comply with their undertaking in a timely manner, thus triggering the company’s difficult financial situation. Moreover, the municipality had disposed of the company’s property as they saw fit. It thus appeared that the company’s assets and activities were controlled and managed by the State to a decisive extent at the relevant time and that the company had not enjoyed sufficient institutional and operational independence. Accordingly, the municipal authority, and hence the State, was to be held responsible under the Convention for the judgment debt in the first applicant’s favour.

As for the second applicant’s case, its institutional links with the public administration had been strengthened by the special nature of its activities as it provided water and heating services which, by their nature, were of vital importance to the local population. The property allocated for these purposes accordingly enjoyed special treatment under the domestic law. Moreover, the tariffs for the heating and water supply services provided by the company were set by the district administration, and the tariff-setting policy adopted by the local administration had considerable effect on the company’s financial situation. Therefore, the company’s core activities constituted “public duties performed under the control of the authorities”. Furthermore, the actual degree of State control over the company was demonstrated by the fact that, in 2005-06, the district administration, after disposing of the company’s assets, decided to close it, with the result that it was unable to satisfy the applicant’s claims in the insolvency proceedings. These circumstances clearly showed that a strong degree of State control had been exercised by the municipal authority over the debtor company, which had not enjoyed the level of institutional or operational independence necessary to exclude the responsibility of the municipal authority, and hence the State, to pay the debt in the second applicant’s favour.

Conclusion: preliminary objection dismissed (unanimously).

(b)  Merits

Article 6: Given the finding of State liability for the debts owed to the applicants in the present case, the period of non-execution should include the period of debt recovery in the course of the liquidation proceedings. The judgment in the second applicant’s favour had remained unenforced for slightly more than one year and eight months by the date of the debtor company’s liquidation. Three judgments in favour of the first applicant had remained partially unenforced for periods ranging between two and a half years and more than three years before the company had ceased to exist. While liquidation proceedings could objectively justify some limited delays in enforcement, the continuing non-execution of the judgments in the applicants’ favour for several years could hardly be justified in any circumstances. Therefore, by failing for several years to take the necessary measures to comply with the final judgments in the instant case, the domestic authorities had deprived the provisions of Article 6 § 1 of all useful effect.

Conclusion: violation (unanimously).

Article 1 of Protocol No. 1: By failing, for a considerable period, to take the necessary measures to comply with the final judgment the domestic authorities had prevented the applicants from receiving in full the money to which they were entitled. This amounted to a disproportionate interference with their peaceful enjoyment of possessions.

Conclusion: violation (unanimously).

The Court also found a violation of Article 13 of the Convention.

Article 41: EUR 3,000 to the first applicant and EUR 1,500 to the second applicant in respect of non-pecuniary damage; EUR 338 to the first applicant and EUR 2,020 to the second applicant in respect of pecuniary damage.

(See also Shlepkin v. Russia, 3046/03, 1 February 2007; Grigoryev and Kakaurova v. Russia, 13820/04, 12 April 2007; and Yershova v.Russia, 1387/04, 8 April 2010)

 

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