European Court of Human Rights

 

 

 

SECOND SECTION

CASE OF ZÜLFİKARİ v. TURKEY

(Applications nos. 6372/05 and 52543/07)

 

 

 

 

JUDGMENT
(Just satisfaction)

 

 

 

 

 

 

 

 

STRASBOURG

13 October 2020

 

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

In the case of Zülfikari v. Turkey,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

          Valeriu Griţco, President,
          Arnfinn Bårdsen,
          Peeter Roosma, judges,
and Hasan Bakırcı, Deputy Section Registrar,

Having deliberated in private on 22 September 2020,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1.  The case originated in two applications (nos. 6372/05 and 52543/07) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Turkish nationals, Mr Kazım Zülfikari and Mr Gökhan Pekcan (“the applicants”), on 11 January 2005 and 26 November 2007 respectively.

2.  In a judgment delivered on 19 March 2019 (“the principal judgment”), the Court joined the applications and held that the interference with the applicants’ right to the peaceful enjoyment of their possessions, namely the State’s takeover of their shares in a bank (“Yaşarbank”), could not be considered lawful within the meaning of Article 1 of Protocol No. 1 (see Zülfikari and Pekcan v. Turkey, nos. 6372/05 and 52543/07, §§ 31 and 51-57, 19 March 2019).

3.  Under Article 41 of the Convention, the applicants sought just satisfaction for the damage they had sustained as a result of the violation of Article 1 of Protocol No. 1.

4.  Since the question of the application of Article 41 of the Convention was not ready for decision, the Court reserved it in whole and invited the Government and the applicants to submit, within six months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., § 64, and point 4 of the operative provisions).

5.  On 18 June 2019 Mr Zülfikari (“the first applicant”) requested the referral of the case to the Grand Chamber, arguing that the Court’s decision to reserve the examination of Article 41 prevented him from obtaining adequate redress for the violation found. He also submitted his just satisfaction claims.

6.  On 21 August 2019 Mr Pekcan (“the second applicant”) submitted his observations.

7.  On 9 September 2019 a panel of the Grand Chamber declined to accept the first applicant’s referral request. Accordingly, the principal judgment became final on that date.

8.  On 17 December 2019 the Government invited the Court to strike the applications out of its list of cases on account of the Compensation Commission’s competence to examine and grant compensation to applicants in cases where the Court has reserved the question of just satisfaction under Article 41 of the Convention.

THE LAW

9.  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

1.    The parties’ submissions

(a)    The applicants

(i) Application no. 6372/05

10.  The first applicant claimed 12,000,000 euros (EUR) in respect of pecuniary damage. In support of his claim he submitted an expert report which specified that the value of his shares would have amounted to a maximum of EUR 10,460,164 in June 2018.

11.  In respect of non-pecuniary damage, the first applicant claimed EUR 10,000.

(ii) Application no. 52543/07

12.  In respect of pecuniary damage, the second applicant claimed EUR 1,427,734. He based his calculation method on the market value of Yaşarbank’s shares on 22 December 1999, the date the bank had been transferred to the Savings Deposit Insurance Fund, and applied interest rates based on the weighted average interest rates of Turkish banks and the rates declared by the European Central Bank.

13.  The second applicant further claimed EUR 56,731 in respect of non-pecuniary damage.

(b)    The Government

14.  The Government contested the applicants’ claims, finding them unsubstantiated and excessive. By a letter dated 17 December 2019, the Government invited the Court to strike the remainder of the applications out of its list of cases, stating that the applicants could seek redress before the Compensation Commission as the domestic law now allowed for the reparation of the violation found under Article 1 of Protocol No. 1.

2.    The relevant legal framework and practice

15.  The Compensation Commission was set up by Law no. 6384 in order to provide for the settlement, by means of compensation, of applications lodged with the Court concerning the length of judicial proceedings and non-enforcement or delayed enforcement of judicial decisions. A full description of the relevant domestic law can be found in Turgut and Others v. Turkey ((dec.), no. 4860/09, §§ 19-26, 26 March 2013).

16.  The Compensation Commission’s competence was recently extended by Presidential Decree no. 809 of 7 March 2019, published in the Official Gazette on 8 March 2019. Accordingly, the Compensation Commission is now competent to examine and grant compensation to applicants in cases where the Court has found a violation of Article 1 of Protocol No. 1 without giving a decision on compensation or in cases where it has reserved the question under Article 41 of the Convention, provided that an application is made to it within one month following the notification of the Court’s final judgment (see Kaynar and Others v. Turkey, nos. 21104/06 and 2 others, § 24, 7 May 2019).

3.    The Court’s assessment

17.  As the Court has held on a number of occasions, a judgment in which the Court finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, § 32, ECHR 2000-XI). The Contracting States that are parties to a case are in principle free to choose the means whereby they will comply with a judgment in which the Court has found a breach. This discretion as to the manner of execution of a judgment reflects the freedom of choice attached to the primary obligation of the Contracting States under the Convention to secure the rights and freedoms guaranteed (Article 1). If the nature of the violation allows of restitutio in integrum it is the duty of the State held liable to effect it, the Court having neither the power nor the practical possibility of doing so itself. If, however, national law does not allow - or allows only partial - reparation to be made for the consequences of the breach, Article 41 empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate (see Guiso-Gallisay v. Italy (just satisfaction) [GC], no. 58858/00, § 90, 22 December 2009).

18.  In the principal judgment, the Court held that the deprivation of the applicants shares in Yaşarbank following the bank’s takeover by the State had not been in accordance with the law. In so doing, the Court took account of its previous judgment in the main shareholders’ case, where it had concluded that the provision that had constituted the basis of the impugned transfer had lacked foreseeability as it had been applied only two days after the entry into force of the amendment allowing for the transfer of the ownership of the bank’s shares (see Yaşar Holding A.Ş. v. Turkey, no. 48642/07, §§ 91-101, 4 April 2017). It found no reason to reach a different conclusion in the present case, especially as the applicants, as minority shareholders who had bought their shares on the Istanbul Stock Market, were not involved in the management of the bank (see Zülfikari and Pekcan v. Turkey, cited above, § 53). The Court went on to conclude that the question of the application of Article 41 of the Convention was not ready for decision and reserved it in whole, taking into account the fact that it had also been reserved in the case of Yaşar Holding A.Ş. (cited above, § 108).

19.  In Yaşar Holding A.Ş. the Court eventually struck the remainder of the application out of its list of cases, in view of the agreement reached by the parties on account of a protocol which granted the applicant a new banking licence (see Yaşar Holding A.Ş. v. Turkey (just satisfaction - striking out), no. 48642/07, §§ 7-9, 22 October 2019). In view of the final resolution reached in that case, the Court considers that it does not have sufficient information to determine objectively the applicants’ pecuniary loss in the present case.

20.  The Court notes that the Compensation Commission is now competent to examine just satisfaction claims in applications where the Court has found a violation of Article of Protocol No. 1 but has not ruled on the applicants’ claims for just satisfaction under Article 41 of the Convention or has decided to reserve the question (see paragraph 16 above). The Court further notes that in the recent case of Kaynar and Others (cited above), where it found a violation of Article 1 of Protocol No. 1 on account of the legislative interference that had deprived the applicants of the opportunity to have their land registered, it decided to strike out the part of the application relating to Article 41 of the Convention on the basis that the Compensation Commission could decide the question in a better-informed manner (ibid., §§ 76-78). Emphasising the subsidiary character of the Convention system of human rights protection and the importance of facilitating the performance of the respective tasks of the Court and the Committee of Ministers under Articles 41 and 46 of the Convention, the Court concluded in that case that the Compensation Commission, as the national authority with expertise in compensation, having the appropriate legal and technical means, would be better equipped to calculate the question of compensation.

21.  The Court further notes that it has taken the same approach in similar cases where the complexities flowing from the difficulty of calculating the pecuniary damage led it to strike out the question of just satisfaction by referring the question to the Compensation Commission (see Gümrükçüler and Others v. Turkey (just satisfaction), no. 9580/03, §§ 36-43, 7 February 2017; Silahyürekli v. Turkey (just satisfaction), no. 16150/06, §§ 16-20, 29 October 2019; and Dürrü Mazhar Çevik and Münire Asuman Çevik Dağdelen v. Turkey (just satisfaction), no. 2705/05, §§ 14-19, 29 October 2019).

22.  In view of the above, the Court concludes that the aforementioned remedy is capable of providing redress in respect of the violation found under Article 1 of Protocol No. 1. Having regard to the difficulty it faces in determining the amount of pecuniary loss suffered by the applicants in the present case, it sees no reason to depart from the conclusion reached in Kaynar and Others (cited above) and considers that it is no longer justified to continue the examination of this part of the applications (Article 37 § 1 (c) of the Convention). Moreover, in the light of the above considerations, the Court is satisfied that respect for human rights as defined in the Convention and the Protocols thereto does not require it to continue the examination the applications (Article 37 § 1 in fine). In that connection, it emphasises that, should the circumstances so justify, the applications could be restored to the list in accordance with Article 37 § 2 of the Convention (see Gümrükçüler and Others, cited above, § 42, and Cıngıllı Holding A.Ş. and Cıngıllıoğlu v. Turkey (just satisfaction), nos. 31833/06 and 37538/06, § 47, 28 January 2020).

23.  Consequently, the part of the case regarding the applicants’ claim in respect of pecuniary damage under Article 41 of the Convention should be struck out from the list of cases (see Kaynar and Others, cited above, § 78).

24.  The Court further observes that, in line with the aforementioned presidential decree, the Compensation Commission is also competent to examine and rule on claims in respect of non-pecuniary damage. Accordingly, in the light of its conclusions with regard to pecuniary damage, the part of the case relating to the applicants’ claim in respect of non-pecuniary damage should also be struck out of the list (ibid., § 82).

B.     Costs and expenses

25.  The first applicant claimed 23,259 Turkish liras (TRY) for the costs and expenses incurred before the domestic courts and TRY 16,100 for those incurred before the Court. As regards the costs and expenses incurred before the domestic courts, he submitted a copy of the official invoice demonstrating that he had paid 23,259,940,000 old Turkish liras in court fees on 21 February 2000. In support of his claim for costs incurred before the Court, he submitted the Istanbul Bar Association’s scale of fees.

26.  The second applicant claimed TRY 10,000 and EUR 222,229 for the costs and expenses incurred before the Court. In that regard he submitted a contract signed with his lawyer on 5 August 2007, according to which he had paid TRY 10,000 on that date and had undertaken to pay 15% of any compensation awarded by the Court.

27.  The Government contested those claims.

28.  In accordance with the Court’s case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court allows the first applicant’s claim for the costs incurred before the domestic courts and awards him EUR 13,000. As regards the costs incurred before the Court, the Court notes that the first applicant merely referred to the Istanbul Bar Association’s scale of fees and failed to submit any supporting documents in respect of his claims. In those circumstances, and bearing in mind the terms of Rule 60 §§ 2 and 3 of the Rules of Court, the Court makes no award in respect of the first applicant’s claim regarding the costs incurred before it (see Hasan Döner v. Turkey, no. 53546/99, §§ 59-61, 20 November 2007, and Yılmaz Yıldız and Others v. Turkey, no. 4524/06, § 57, 14 October 2014).

29.  The Court awards the second applicant EUR 5,000 under this head.

C.    Default interest

30.  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.      Decides to strike the remainder of the applications out of its list of cases in so far as they relate to the claims in respect of pecuniary and non-pecuniary damage under Article 41 of the Convention;

2.      Holds

(a)   that the respondent State is to pay the applicants, within three months, the following amounts in respect of costs and expenses, plus any tax that may be chargeable to the applicants, to be converted into Turkish liras at the rate applicable at the date of settlement:

(i)         EUR 13,000 (thirteen thousand euros), to the first applicant, Mr Zülfikari;

(ii)       EUR 5,000 (five thousand euros), to the second applicant, Mr Pekcan;

(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;

3.   Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 13 October 2020, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

   Hasan Bakırcı                                                                      Valeriu Griţco
Deputy Registrar                                                                       President