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FOURTH
SECTION
CASE OF
BANCA VIAS v. MOLDOVA
(Application
no. 32760/04)
JUDGMENT
STRASBOURG
6
November 2007
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 Banca Vias v. Moldova,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Mr J. Casadevall, President,
Mr G.
Bonello,
Mr K. Traja,
Mr S. Pavlovschi,
Mr L.
Garlicki,
Mr J. Šikuta,
Mrs P. Hirvelä,
judges,
and Mrs F. Aracı, Deputy Section Registrar,
Having
deliberated in private on 9 October 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 32760/04) against the Republic
of Moldova lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a Moldovan company, Banca VIAS (in the process
of liquidation), (“the applicant”), on 16 July 2004.
- The
Moldovan Government (“the Government”) were represented
by their Agent at the time, Mr V. Pârlog.
- The
applicant alleged, in particular, that the failure to enforce the
non-enforcement of the final court judgment in its favour dated 26
February 2002 had violated its rights guaranteed by Article 6 §
1 of the Convention. In essence, it also complained about a violation
of its rights protected by Article 1 of Protocol No. 1 to the
Convention.
- The
application was allocated to the Fourth Section of the Court. On
12 January 2006 the President of that Section decided to
communicate the application to the Government. Under the provisions
of Article 29 § 3 of the Convention, it was decided to examine
the merits of the application at the same time
as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The applicant is registered in Chişinău.
- The
facts of the case, as submitted by the parties, may be summarised as
follows.
1. Background of the case (changes of status of the
applicant's debtor)
- The State company “Vibropribor” (“SCV”)
was created on 14 May 1995 and was registered in the State Register
of Companies.
- On 3 July 1996 the “Vibropribor”
joint-stock company (“V.”) was registered by the State
Register of Companies. V. was the result of the reorganisation of SCV
into a joint-stock company, based on a founding contract between the
Department of Privatisation (“the Department”) and two
private companies.
- In
1998 the Department initiated court proceedings for the annulment of
the contract for the founding of V., alleging that it had been
concluded in violation of the law, and for restitutio in integrum.
On 14 September 1998 the Economic Court of Moldova rejected that
request as unfounded. That judgment was upheld by the Appeals Chamber
of the Economic Court on 24 May 1999 and by the Supreme Court of
Justice on 29 September 1999. That judgment was final.
- The
Department requested the re-opening of the proceedings, invoking an
incorrect assessment of the facts and law in the previous judgments.
- On
22 February 2001 the Economic Court rejected that request on res
judicata grounds.
- On 25 June 2001 the Appeals Chamber of the Economic
Court accepted the request, ordering the liquidation of V. and
restitutio in integrum. That judgment was final.
- In execution of this judgment, on 23 August 2001 the
Department ordered the creation of a liquidation commission which was
charged, inter alia, with determining V.'s debts toward third
parties and debts owed to V. and with the payment of V.'s debts
following the Department's approval.
- In
2002 the Prosecutor General requested the Supreme Court of Justice to
re-open the proceedings and to quash the 1998-1999 judgments.
- On 11 March 2002 the Supreme Court of Justice accepted
that request and quashed the judgments of 14 September 1998, of 24
May 1999 and of 29 September 1999. The court adopted a new judgment,
declaring null and void the contract for the founding of V. The court
found that the two private founding companies had not fulfilled their
obligations by failing to transfer their contributions to V.'s
capital. As a result, V.'s registration in the State Register of
Companies was annulled on 18 May 2002 and SCV was registered instead
(“the new SCV”), stating in its statute that the company
was created on the basis of “Vibroaparat” company (which
existed before V.'s creation). The new SCV's address mentioned in the
statute was 10 Gagarin str. in Chişinău.
- On 3 April 2002 the Department requested a revision of
the final judgment of 25 June 2001. On 24 April 2002 the Appeals
Chamber of the Economic Court accepted that request and changed the
formulation of the judgment from an order for the liquidation of V.
to a declaration that V. had not been lawfully founded and that all
its assets should be returned as they were on 3 July 1996. The
court relied on the judgment of the Supreme Court of Justice of
11 March 2002 as the basis for the change of formulation, since
that judgment had annulled the contract for the founding of V.
- On
20 November 2002 the Supreme Court of Justice rejected a request for
the revision of its judgment of 11 March 2002.
2. The credit issued by the applicant to V. and
enforcement proceedings
- On 8 August 1997 the applicant issued a credit to V.
in the amount of 3,472,965 Moldovan lei (MDL). As established by the
prosecutor's office in subsequent criminal proceedings against V.'s
president, the money had been used for the purchase of equipment. In
accordance with a contract dated 20 August 1997 V. pledged movable
property valued at MDL 1,428,000 as a guarantee of complying
with the contract. V.'s address mentioned in the contract was 10
Gagarin str. in Chişinău.
- In
1999 the applicant went into liquidation, proceedings which still
continue. On 18 September 2001 the Department informed the applicant
about the initiation of V.'s liquidation proceedings (see paragraph 13
above). On 2 October 2001 the applicant asked V.'s liquidation
commission to be listed as one of V.'s creditors, mentioning the
amount of the credit debt. It is unclear what the commission's
response was.
- The
applicant initiated court proceedings against V. On 26 February 2002
the Chişinău Economic Court awarded the applicant
MDL 3,383,991 (the equivalent of 294,623 euros (EUR) at the
time). There was no appeal and the judgment became final 15 days
later. On 14 March 2002 the court issued an enforcement warrant.
- On 25 March 2002 the bailiff gave the opportunity to
V. to pay its debt to the applicant. Following its refusal, on 2
April 2002 the bailiff seized two of V.'s building situated at 10
Gagarin str. in Chişinău in order to sell them at an
auction. According to an expert report dated 30 April 2002 and filed
at the Centru District Court's request, one of those buildings (“D”)
had a total surface of over 5,400 m2 and at the time its
market value was MDL 4,800,000 or 358,200 United States Dollars
(USD). The bailiff made an auction announcement in the local press
for the sale of V.'s “D” building, setting the initial
price at MDL 4,800,000. The first auction was declared invalid due to
the lack of potential buyers.
- Following
V.'s complaint (under its new name of SCV as a result of becoming
again a State company following the judgment of the Supreme Court of
Justice of 11 March 2002, see paragraph 15 above), on 2 July 2002 the
Centru District Court stayed the enforcement proceedings pending the
outcome of SCV's complaint against the actions of the bailiff.
- On 18 July 2002 the applicant appealed against the
decision of the State Register of Companies of 18 May 2002 to annul
V.'s registration (see paragraph 15 above) on the grounds that it had
been taken in violation of the law, the authorities having failed to
properly liquidate V. and to pay its debt to the applicant.
- On 23 July 2003 the applicant requested a change in
the method of enforcement of the final judgment of 26 February 2002,
leaving it to the court to choose the most appropriate way of
enforcement. The applicant referred to V.'s building seized in 2002
for sale at an auction and to the impossibility of enforcing the
judgment by selling that building in view of the removing of V.'s
name from the State Register of Companies. They claimed that the
applicable legal provisions dealing with the manner of liquidating a
company, including the payment of its debts, had not been followed in
V.'s case.
- On 11 December 2003 the Economic Court rejected that
request. The court found, in particular, that the applicant had not
proved that the new SCV was V.'s successor since no act for the
transfer of assets between these two companies had been submitted to
the court.
- On
29 January 2004 the Appeals Chamber of the Economic Court upheld
that judgment. That judgment was final. The court found that the
applicant had not submitted proof that the assets, rights and
obligations of V. had been transferred to SCV after the annulment of
the contract for the founding of V.
II. RELEVANT DOMESTIC LAW
- The
relevant domestic law has been set out in Prodan v. Moldova
(no. 49806/99, ECHR 2004 III (extracts)).
- In addition, the relevant provisions of the Civil
Code, in force until 12 June 2003, read as follows:
“Article 38
A legal person ceases to exist through liquidation or
re-organisation (merger, division and acquisition)...
The process of liquidation is established by [...] law.
Article 39
In the case of the merger or division of legal persons,
their property (rights and obligations) are transferred to the newly
created legal persons.
If a legal person is acquired by another legal person,
its property (rights and obligations) are transferred to the
acquiring legal person.”
THE LAW
- The
applicant complained about a violation of its rights guaranteed under
Article 6 of the Convention and Article 1 of Protocol No. 1 to the
Convention resulting from the failure to enforce the final judgment
of 26 February 2002.
Article
6 § 1 of the Convention, in so far as relevant, provides:
“1. In the determination of his civil
rights and obligations ... everyone is entitled to a fair hearing ...
within a reasonable time...”
Article
1 of Protocol No. 1 to the Convention reads as follows:
“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.”
I. ADMISSIBILITY
- The
Court considers that the applicant's complaints under Article 6 § 1
of the Convention and Article 1 of Protocol No. 1 to the Convention
raise questions of law which are sufficiently serious that their
determination should depend on an examination of the merits. No
grounds for declaring them inadmissible have been established. The
Court therefore declares these complaints admissible. In accordance
with its decision to apply Article 29 § 3 of the
Convention (see paragraph 4 above), the Court will immediately
consider the merits of these complaints.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION AND OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
- The applicant complained that the non-enforcement of
the final judgment in its favour had violated its rights under
Article 6 § 1 and Article 1 of Protocol No. 1 to the
Convention. It submitted that it had asked the courts to request the
documents relating to V.'s liquidation, but allegedly the courts
considered that unnecessary. The Government did not comment on this
latter claim.
- The
Government submitted that the authorities had taken all reasonable
steps to ensure the enforcement of the judgment and that enforcement
became impossible in view of the complex legal situation created by
the annulment of the creation of V.
- The
Court reiterates that “execution of a judgment given by any
court must ... be regarded as an integral part of the “trial”
for the purposes of Article 6” (see Hornsby v. Greece
judgment of 19 March 1997, Reports of Judgments and Decisions
1997-II, p. 510, § 40, and Prodan, cited above,
§ 52). The Court also recalls that a “claim”
can constitute a “possession” within the meaning of
Article 1 of Protocol No. 1 to the Convention if it is sufficiently
established to be enforceable (see Prodan, cited above, §
59).
- Moreover, “the State has a positive obligation
to organise a system for enforcement of judgments that is effective
both in law and in practice and ensures their enforcement without any
undue delay” (Fuklev v. Ukraine, no. 71186/01,
§ 84, 7 June 2005). When the authorities fail to act in
order to enforce a judgment despite their legal obligation, their
inactivity can engage the State's responsibility (see Scollo
v. Italy, judgment of 28 September 1995, Series A no. 315 C,
§ 44; Istrate v. Moldova, no. 53773/00,
§§ 55 and 61, 13 June 2006).
-
The Court notes that in the present case the applicant has a final
court judgment which the authorities failed to enforce. The reason
for the non-enforcement is the “non-existence” of the
debtor and its assets. It is plain, however, that this non-existence
resulted from the judgment of 24 April 2002 (see paragraph 16
above), annulling V.'s creation.
- The Court also notes that the applicant does not
contest the reasons for annulling V.'s creation, but only the manner
in which its property was dealt with thereafter. While the first
order for V.'s liquidation (see paragraph 12 above) was followed by
the creation of a liquidation commission which was charged with the
payment of debts owed by V. to its creditors (see paragraph 13
above), no such procedure appears to have been followed after the
order for the annulment of the creation of V. There was nothing in
the courts' judgments or other authorities' decisions regarding the
fate of V.'s assets apart from the court order of 24 April 2002 to
return the assets to where they were on 3 July 1996 (see
paragraph 16 above). This order can only be interpreted as the
transfer of V.'s assets back to the State company which existed
before it was transformed into V. (see paragraphs 7 and 8 above),
given that the two other companies which had participated in the
creation of V. could not claim any of its assets, following the
finding by the courts that they had not made any contribution to V.'s
property (see paragraph 15 above).
- The
Court observes that, following the annulment of V.'s founding, the
applicant asked the competent authorities and the courts to ensure
the enforcement of the judgment in its favour and asked a court to
determine whether V. had been properly liquidated, including whether
it had previously paid all its debts (see paragraphs 23 and 24
above). Apparently, the court did not consider it necessary to make
such a determination (see paragraph 31 above).
- The Court does not have to decide whether the domestic
law had been followed in the present case. It also finds it
unnecessary to determine whether it was the new SCV which obtained
V.'s property as a result of the judgment of 24 April 2002 or any
other person or company. What matters is that V. ceased to exist and
its entire property was alienated without the payment of its debts.
The Court considers that it is contrary to basic principles of
fairness for the authorities to allow the liquidation of a company,
by whatever means, and the transfer of its property to any third
party, without having paid its debts, within the limits of any assets
it may have at the time of liquidation. However, this is what, in
essence, resulted from the various judgments adopted in the present
case. As a result, V. no longer exists, nor does it have any
assets and the judgment in favour of the applicant cannot be
enforced. The Court concludes that the impossibility to enforce the
judgment is directly attributable to the State.
- The
Court has found violations of Article 6 § 1 of the
Convention and Article 1 of Protocol No. 1 to the Convention in
numerous cases concerning the failure to enforce final judgments
(see, among other authorities, Prodan, cited above, and
Lupacescu and Others v. Moldova, nos. 3417/02,
5994/02, 28365/02, 5742/03, 8693/03, 31976/03, 13681/03, and
32759/03, 21 March 2006).
- Having
examined the material submitted to it, and in view of its finding of
the State's responsibility for the impossibility to enforce (see
paragraph 38 above), the Court notes that the file does not contain
any element which would allow it to reach a different conclusion in
the present case.
- Accordingly,
the Court finds, for the reasons given in those cases, that the
failure to enforce the judgment of 23 April 1999 constitutes a
violation of Article 6 § 1 of the Convention and Article 1 of
Protocol No. 1 to the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- 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
- The
applicant claimed EUR 320,477 for pecuniary and non-pecuniary damage.
It relied on the average National Bank's base interest rates for the
relevant period.
- The
Government submitted that in view of the absence of any liability of
the State, the applicant could not claim any damages. However, should
the Court consider that such damages were to be paid, the calculation
should be based on the specific National Bank's base interest rates
for each period and not taken as an average. Moreover, the practice
of the commercial banks in Moldova did not provide, as a rule, for
compound interest to be calculated. They considered also that the
applicant had not proved that any non-pecuniary damage had been
caused to it.
- The
Court considers that the applicant must have been caused pecuniary
and non-pecuniary damage as a result of the failure to enforce the
final judgment in its favour. Judging on an equitable basis, it
awards the applicant EUR 301,000.
B. Costs and expenses
- The
applicant claimed EUR 95 for costs and expenses. It submitted copies
of bills for translation and postal expenses.
- The
Government considered that this amount was excessive and not
supported by relevant evidence.
- On
the basis of the materials of the case, the Court accepts this claim
in full.
C. Default interest
- The
Court considers it appropriate that the default interest 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
- Declares the application admissible;
- Holds that there has been a violation of
Article 6 § 1 of the Convention;
- Holds that there has been a violation of Article
1 of Protocol No. 1 to the Convention;
- Holds
(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 301,000
(three hundred and one thousand euros) in respect of pecuniary and
non-pecuniary damage, and EUR 95 for costs and expenses, to be
converted into the national currency of the respondent State at the
rate applicable at the date of settlement, plus any tax that may be
chargeable;
(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;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 6 November 2007, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş
Aracı Josep Casadevall
Deputy Registrar President
