THIRD SECTION

CASE OF KARPESH v. RUSSIA

(Application no. 26920/09)

JUDGMENT

STRASBOURG

14 March 2017

This judgment is final but it may be subject to editorial revision.

In the case of Karpesh v. Russia,
The European Court of Human Rights (Third Section), sitting as a Committee composed of:
	Luis López Guerra, President,
	Dmitry Dedov,
	Branko Lubarda, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 21 February 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 26920/09) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Ms Taisiya Semenovna Karpesh (“the applicant”), on 18 April 2009.
2.  The Russian Government (“the Government”) were represented by Mr G. Matyushkin, Representative of the Russian Federation at the European Court of Human Rights.
3.  On 16 May 2011 the application was communicated to the Government.
THE FACTS
I.  THE CIRCUMSTANCES OF THE CASE
4.  The applicant was born in 1940 and lives in Tambov.
A.  Decision in the applicants’ favour against the debtor company
5.  On 8 August 2003 the Justice of the Peace of the 1st Court Circuit of the Leninskiy District of the Tambov Region ordered Municipal unitary enterprise of housing maintenance No. 1 («УМПЖХ №1», hereinafter “debtor company”) to pay 348 euros (EUR) to Ms Lisova Aleksandra Semenovna. The judgment became final on 19 August 2003.
6.  On 11 September 2003 the Bailiffs’ Service initiated enforcement proceedings.
7.  Following Ms Lisova’s death, on 08 July 2005 the Justice of the Peace of the 1st Court Circuit of the Leninskiy District of the Tambov Region replaced the initial applicant, Mrs Lisova, by her successor, Mrs Karpesh, in the enforcement proceedings.
8.  The award was subsequently index-linked in the course of the enforcement proceedings by the decisions of 02 March 2006 (final on 14 March 2006), 09 April 2007 (final on 20 April 2007), 09 January 2008 (final on 22 January 2008), and 27 March 2008 (final on 08 April 2008). Each decision replaced and cancelled the previous one.
9.  The award has not been paid to the applicant to date.
B.  Available information on the debtor company
10.  The company was incorporated as a municipal unitary enterprise set up by a decision of the local administration and provided housing maintenance services. The company had “the right of economic control” (право хозяйственного ведения) over the assets allocated to it by the administration in order to carry out their statutory activities.
11.  On 30 May 2008 the debtor company was declared insolvent and liquidation proceedings started. As a result, the company was liquidated on 27 May 2009.
II.  RELEVANT DOMESTIC LAW
12.  The domestic provisions relevant to the cases on the legal status of State and municipal unitary enterprises with the right of economic control are summarised in Liseytseva and Maslov v. Russia (nos. 39483/05 and 40527/10, §§ 54-127, 9 October 2014), and Samsonov v. Russia ((dec.) no. 2880/10, 18 September 2014).
13.  In particular, the Federal Law on Enforcement Proceedings no. 229‑FZ of 2 October 2007 provides that once a legal entity is declared insolvent and liquidation proceedings (конкурсное производство) are initiated, the execution of the writs of execution should be discontinued and the writs of execution transferred to the liquidator (конкурсный управляющий).
THE LAW
I.  ALLEGED VIOLATION OF ARTICLES 6 AND 13 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
14.  The applicant complained of the non-enforcement of domestic decisions given in their favour and of the lack of any effective remedy in domestic law. They relied on Article 6 § 1 and Article 13 of the Convention and on Article 1 of Protocol No. 1 to the Convention, which read as follows:
Article 6 § 1
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
Article 13
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
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.”
A.  Submissions by the parties
1.  The Government
15.  The Government argued that the debtor company was a commercial organisation independent from the authorities. They accordingly submitted that the debts of company were not attributable to the State.
16.  The Government further claimed that the applicant had failed to exhaust the domestic remedies, in particular, to submit her claims to the liquidator.
2.  The applicants
17.  The applicant maintained that the debtor company had been, in fact, a State‑run enterprise controlled by the administration and that the State was responsible for the company’s debts.
B.  Admissibility
1.  Compatibility ratione personae
18.  The Court has held that the existing legal framework in Russia does not provide unitary enterprises with a degree of institutional and operational independence that would absolve the State from responsibility under the Convention for the debts of such companies (see Liseytseva and Maslov, cited above, §§ 193-204). In order to determine the issue of State responsibility for the debts of unitary enterprises the Court must examine whether and how the extensive powers of control provided for in domestic law were actually exercised by the authorities in the present case.
19.  The Court notes that the debtor company was set up for providing services of housing maintenance. In Liseytseva and Maslov (cited above, § 208) the Court held that such companies’ institutional links with the public administration were particularly strengthened by the special nature of their activities (see also Yershova v. Russia, no. 1387/04, § 58, 8 April 2010).
20.  In the light of the above the Court finds that the company did not enjoy sufficient institutional and operational independence from the municipal authorities and dismisses the Government’s ratione personae objection. Accordingly, the municipality, and hence the State, is to be held responsible under the Convention for the debts owed by the respondent company to the applicants in accordance with the final judgments in their favour.
2.  Exhaustion of domestic remedies
21.  The Government maintained that the applicant had had to submit her claims to the liquidator. However, under Russian law once a legal entity is declared insolvent and liquidation proceedings are initiated, the bailiffs should discontinue the execution proceedings and transfer the writs of execution to the liquidator (see paragraph 13 above). In the case at hand, the applicant submitted the writs of execution to the Bailiffs’ service and the enforcement proceedings started on 11 September 2003 (see paragraph 6 above). The liquidation proceedings in respect of the company started on 30 May 2008 (see paragraph 11 above). Accordingly, it was the bailiffs’ duty to make sure that the writ of execution in respect of the applicant reached the liquidator in due course. The Court is satisfied that, having submitted the writ of execution to the appropriate authority, the applicant exhausted the relevant domestic remedies.
22.  In the light of the above the Court finds that the Government’s objection should be dismissed.
3.  Conclusion
23.  The Court further notes that the applicant’s complaints under Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1 to the Convention are not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention and they are not inadmissible on any other grounds. They must therefore be declared admissible.
C.  Merits
24.  The Court notes that the judgment in the applicant’s favour has not been enforced up to date.
25.  The Court has established above that the State is responsible under the Convention for the debts owed by the respondent company (see paragraph 20 above). By failing to comply with the judgment the national authorities prevented the applicant from receiving the money they could reasonably have expected to receive. The Court found a violation of Article 6 of the Convention and Article 1 of the Protocol No. 1 to the Convention in respect of issues similar to those in the present case (see Liseytseva and Maslov, cited above, §§ 208-24).
26.  As regards to the effective remedies the Court has already held in respect to similar situations in Liseytseva and Maslov (cited above, §§ 165‑72) that there were no effective remedies in the applicants’ attempt to obtain either the execution of the awards made against the municipal unitary enterprises or the compensation of the alleged violations.
27.  Accordingly, there has been a violation of Article 6 § 1 and Article 13 of the Convention and of Article 1 of Protocol No. 1 to the Convention on account of the non-enforcement of the final and binding judgment in the applicant’s favour and the lack of effective remedies.
II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
28.  Article 41 of the Convention provides:
“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.”
A.  Damage
29.  The applicant claimed 32,530,70 Russian roubles (RUB) in respect of pecuniary damage and 14,000 euros (EUR) in respect of non-pecuniary damage.
30.  The Government submitted that the amounts claimed were excessive and unreasonable.
31.  In view of its findings above the Court finds it appropriate to award the applicant in full the sum that had been initially adjudged to her by domestic courts (EUR 328) in respect of pecuniary damage. The Court also considers it reasonable and equitable to award the applicant EUR 2,000, plus any tax that may be chargeable, in respect of non-pecuniary damage (Voronkov v. Russia, no. 39678/03, §§ 68‑69, 30 July 2015).
B.  Costs and expenses
32.  The applicant did not claim costs and expenses. Accordingly, the Court considers that there is no call to award her any sum on that account.
C.  Default interest
33.  The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 6 § 1 and Article 13 of the Convention and Article 1 of Protocol No. 1 to the Convention;

3.  Holds
(a)  that the respondent State is to pay the applicant, within three months the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i)  EUR 348 (three hundred forty-eight euros) in respect of pecuniary damage;
(ii)  EUR 2,000 (two thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(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;

4.  Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 14 March 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Fatoş Aracı	Luis López Guerra
	Deputy Registrar	President