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THIRD
SECTION
CASE OF KHACHATRYAN v. ARMENIA
(Application
no. 31761/04)
JUDGMENT
STRASBOURG
1
December 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 Khachatryan v. Armenia,
The
European Court of Human Rights (Third Section), sitting as a Chamber
composed of:
Josep
Casadevall,
President,
Elisabet
Fura,
Corneliu
Bîrsan,
Boštjan
M. Zupančič,
Alvina
Gyulumyan,
Egbert
Myjer,
Ann
Power, judges,
and
Santiago
Quesada, Section Registrar,
Having
deliberated in private on 10 November 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 31761/04) against the Republic
of Armenia lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by two Armenian nationals, Mr Mikhayel Khachatryan
(“the first applicant”) and Mrs Elyanora Khachatryan
(“the second applicant”), on 11 August 2004. The first
and the second applicants (jointly, “the applicants”)
were self-represented.
- The Armenian Government (“the Government”)
were represented by their Agent, Mr G. Kostanyan,
Representative of the Republic of Armenia at the European Court of
Human Rights.
- On
25 January 2006 the Court decided to give notice of the application
to the Government. Under the provisions of Article 29 § 3 of the
Convention, it decided to examine the merits of the application at
the same time as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
first and the second applicants were born in 1957 and 1962
respectively and live in Yerevan.
A. Background to the case
- The
applicants are a husband and wife who had worked for Hrazdanmash
Closed Joint-Stock Company (hereafter “Hrazdanmash”), a
company involved in manufacturing various machinery and equipment and
whose majority shareholder is the State.
- No
salary was paid to the staff for the years 1998-2000, since
Hrazdanmash was experiencing financial problems. In 2000 the majority
of Hrazdanmash's staff, including the applicants, were ordered to
take unpaid leave for an indefinite period.
- It
appears that in that period a number of court judgments were adopted
against Hrazdanmash, which was ordered to pay tax and other arrears
to the State budget, the Pension and Employment Fund and the Armenian
Railroad CJSC to a total amount of 589,009,285 drams (AMD). Several
sets of enforcement proceedings were instituted.
- It
further appears that in 2000 Hrazdanmash was restructured into an
open joint-stock company, the majority of its shares being retained
by the State.
- By
a decree of 24 April 2000 the Government decided to terminate the
enforcement proceedings against Hrazdanmash and other similar
companies and to refrain from seizing their property in order to
ensure effective management of State property, since the companies in
question were engaged in the 1998-2000 privatisation programme of
State property. It appears that this decree was repealed on 28
December 2000 and the enforcement proceedings were resumed.
B. The judgment given in favour of the applicants and
its enforcement
- On
17 May 2001 the relevant trade union instituted court proceedings
against Hrazdanmash in the interests of the staff, seeking arrears
for unpaid salary and other benefits.
- On
2 July 2001 the Kotayk Regional Court (Կոտայքի
մարզի առաջին
ատյանի դատարան)
granted the claim and ordered Hrazdanmash to pay a total of AMD
58,060,925, including AMD 211,864.51 and AMD 221,157.08 to the
first and the second applicant respectively.
- No
appeal was lodged against this judgment which became final.
- On
23 July 2001 the Kotayk Regional Division of the Department for the
Enforcement of Judicial Acts (ԴԱՀԿ
ծառայության
Կոտայքի մարզային
ստորաբաժանում
– “the DEJA”) instituted enforcement
proceedings no. 738. In the course of these proceedings the bailiff
decided to freeze Hrazdanmash's property and bank accounts.
- On
27 August 2001 the Government adopted decree no. 775, outlining the
actions to be taken in order to streamline the privatisation process
of companies having strategic importance, to foster investments in
such companies and to expand and develop production. Hrazdanmash was
listed among the companies in question.
- On
10 September 2001 the tax authorities instituted proceedings in the
Kotayk Regional Court against Hrazdanmash, seeking to declare it
bankrupt and to levy AMD 358,154,700.
- By
a letter of 11 September 2001 the Regional Court asked the executive
director of Hrazdanmash to submit observations in reply.
- By
a letter of September 2001 (exact date unclear) the First Deputy to
the Minister of Industry and Trade replied to the Regional Court's
letter, stating that Hrazdanmash was undergoing restructuring on the
basis of a governmental decree and that the Ministry of Industry and
Trade had applied to the Ministry of State Revenue with a request to
suspend the bankruptcy procedure until the restructuring was
finalised.
- On
13 September 2001 the DEJA decided to stay enforcement proceedings
no. 738 on the ground that bankruptcy proceedings had been instituted
in respect of Hrazdanmash. It appears, however, that the enforcement
proceedings were resumed on 19 October 2001 and that part of
Hrazdanmash's frozen property was sold at a public auction, as a
result of which the first and the second applicant were paid AMD
16,949 and AMD 17,693 respectively.
- On
12 November 2001 the bankruptcy proceedings were taken over by the
Commercial Court (ՀՀ
տնտեսական
դատարան).
- On
28 January 2001 the tax authorities withdrew the bankruptcy claim on
the basis of the Government decree of 27 August 2001.
- On
4 February 2002 the Commercial Court terminated the bankruptcy
proceedings on this ground.
- On
22 February 2002 the DEJA once again decided to stay enforcement
proceedings no. 738.
- On
24 October 2002 the Government adopted decree no. 1682-A, outlining
the actions to be taken in order to prepare Hrazdanmash for
privatisation, as required by Government decree no. 775 of 27 August
2001. The Minister of Trade and Economic Development was ordered to
take the polyclinic building belonging to Hrazdanmash and transfer
it, as State property, to the Kotayk Regional Administration. The
Minister was further ordered to clarify the extent of property
belonging to Hrazdanmash subject to sale and to come up with
benchmark data necessary for valuation of the property in question.
The Minister of Management of State Property was ordered, within two
months after receiving this data, to ensure the valuation of
Hrazdanmash's property, to carry out negotiations with potential
buyers and to come up with proposals to the Government.
- On
23 January 2003 the DEJA decided to resume enforcement proceedings
no. 738.
- On
27 March 2003 the Government, with reference to its decree no. 1682-A
of 24 October 2002, adopted decree no. 329-A, on the basis of which
Hrazdanmash was allowed to sell its property. The property in
question included the inventory contained in the company's numerous
buildings, while the identified buyers included various private
companies. The property was valued at a total of AMD 556,271,000 and
was to be sold at roughly 30% of its price. The proceeds of the sale
were to be directed by the company towards paying off its debts in
respect of the State budget. The buyer companies in return undertook
an obligation to the State to make investments of various amounts,
including creation of jobs. The Minister of Management of State
Property was to monitor the implementation of these sales agreements.
- On
7 July 2003 the DEJA stayed the enforcement proceedings on the basis
of this decree.
- On
23 July 2003 the Government adopted decree no. 955-A, according to
which it decided to sell its shares in Hrazdamash to a private
company. The shares were valued at AMD 531,616,000 and were to be
sold at roughly 17% of their price. The buyer in return undertook an
obligation towards the State to make investments in various amounts,
including creation of jobs.
- In
October 2003 the first applicant complained to the President of
Armenia about the non-enforcement of the judgment. It appears that
this complaint was forwarded to the DEJA.
- On
5 January 2004 the applicants contested the decision of 7 July 2003
before the Kotayk Regional Court. In the proceedings before the
Regional Court, the representative of the DEJA submitted, inter
alia, that the DEJA was not allowed to use the proceeds resulting
from the sale of Hrazdanmash's property towards the enforcement of
the judgment since they were to be directed to the State budget in
accordance with Government decree no. 329-A. He further submitted
that the enforcement proceedings remained stayed on the basis of
Government decree no. 955-A.
- On
29 January 2004 the Kotayk Regional Court dismissed the applicants'
claim. In doing so, the Regional Court found:
“... the enforcement proceedings were stayed by
the Kotayk Regional Division of the DEJA on the basis of Government
decree no. 329-A of 27 March 2003. According to Section 38 of the Law
on the Enforcement of Judicial Acts [(hereafter, the Law)] the
bailiff has the right to stay the enforcement proceedings if the
debtor is engaged in the fulfilment of any State assignment.
Therefore, the actions of the DEJA are lawful and well-grounded.”
- On
an unspecified date the applicants lodged an appeal.
- On
6 April 2004 the Civil Court of Appeal (ՀՀ
քաղաքացիական
գործերով վերաքննիչ
դատարան)
dismissed their appeal, confirming the findings of the Regional
Court. The Court of Appeal added that, following the sale of
Hrazdanmash's property, the proceeds were directed to the State
budget and the bailiff was not allowed to use that money for the
purpose of the enforcement proceedings. The Court of Appeal further
stated that on 23 July 2003 the Government, by its decree no. 955-A,
decided to privatise Hrazdanmash's stock. This decree, however, had
not been materialised and therefore no funds had been raised to pay
the salaries and to resume the enforcement proceedings.
- On
8 April 2004 the applicants lodged an appeal on points of law. They
argued, inter alia, that the reference to Section 38 of the
Law in the court judgments had been unlawful since Government decree
no. 329-A did not say anything about Hrazdanmash being engaged in the
fulfilment of any State assignment.
- On
14 May 2004 the Court of Cassation dismissed the appeal, stating that
the findings of the Court of Appeal had been correct.
- On
25 October 2006 the General Prosecutor's Office addressed a letter to
the DEJA, stating that Hrazdanmash owed money to the State and that
Government decree no. 329-A provided no legal basis for staying the
enforcement proceedings instituted in respect of the company.
- On
9 November 2006 the DEJA decided to resume the enforcement
proceedings, including enforcement proceedings no. 738, with
reference to the letter of the General Prosecutor's Office. It
appears that following this decision some further property and
amounts were seized from Hrazdanmash. No further amounts, however,
were paid to the applicants. It appears that enforcement proceedings
no. 738 are still pending.
II. RELEVANT DOMESTIC LAW
A. The Civil Code (in force from 1 January 1999)
- According
to Article 60, a legal entity is liable for its debts with the
entirety of the property belonging to it. The founder (shareholder)
of a legal entity is not liable for the debts of the legal entity,
and nor is the latter liable for the debts of its founder
(shareholder), except for the cases envisaged by this Code or by the
statute of the legal entity.
- According
to Article 106 § 3, the shareholders of a joint-stock company
are not liable for its debts and bear the risk of damages connected
with the company's activities within the limits of the value of the
shares belonging to them.
B. The Code of Civil Procedure (in force from 1 January
1999)
- According
to Article 160 § 1, as in force at the material time, the court
cannot examine applications seeking to annul those allegedly unlawful
acts of public authorities, the determination of whose conformity
with the Constitution of Armenia falls within the exclusive
jurisdiction of the Constitutional Court, such acts, pursuant to the
then Article 100 of the Constitution and Article 15 of the Civil
Code, including the decrees of the Government.
C. The Joint-Stock Companies Act (in force from 6
December 2001)
- According
to Section 3 §§ 1, 2 3 and 5, a company is liable for its
debts with the entirety of the property belonging to it. A company is
not liable for the debts of its shareholders. The shareholders of a
company are not liable for its debts, and bear the risk of damages
connected with the company's activities within the limits of the
value of the shares belonging to them. The Republic of Armenia and
the local authorities are not liable for the debts of a company. The
company in turn is not liable for the debts of the Republic of
Armenia and the local authorities.
D. The Law on the Enforcement of Judicial Acts (in
force from 1 January 1999)
- According
to Section 38 § 3, the bailiff has the right to stay the
enforcement proceedings if the debtor is engaged in the fulfilment of
any State assignment.
- Section
39 provides that, when staying or resuming enforcement proceedings,
the bailiff must adopt a decision. The stayed enforcement proceedings
are resumed upon the creditor's application or the bailiff's own
initiative, if the circumstances which led to the stay of the
proceedings cease to exist.
- According
to Sections 55 § 1 and 70, the distribution of proceeds received
from the sale of property is implemented by the bailiff. If the
debtor's property has been seized on the basis of several writs of
execution, the amount seized from the debtor shall be distributed
among the creditors in the following order of priority: (1)
satisfaction of pledge related claims; (2) satisfaction of claims for
compensation for damage to life and health, as well as alimony
claims; (3) satisfaction of claims for payment of salaries to staff
employed under employment contracts and claims for payment of
author's fees; and (4) satisfaction of claims for payment of debts in
respect of mandatory payments to the State budget.
E. Statute of Hrazdanmash
- According
to Paragraphs 1.1 and 1.4 of the Statute, the company was created by
the decision of the Presidium of the Supreme Soviet of Armenia of 6
May 1994. The company is liable for its debts with the entirety of
the property belonging to it. The company is not liable for the debts
of its shareholders. The company's shareholders are not liable for
its debts, and bear the risk of damages connected with the company's
activities within the limits of the value of the shares belonging to
them.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION AND ARTICLE 1 OF PROTOCOL NO. 1
- The
applicants complained of the non-enforcement of the court judgment
given in their favour. They relied on Article 6 § 1 of the
Convention and Article 1 of Protocol No. 1. The relevant parts of
these provisions read as follows:
Article 6 § 1 of the Convention
“In the determination of his civil rights and
obligations ... everyone is entitled to a fair ... hearing ... by [a]
... tribunal ...”
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. Admissibility
1. Competence ratione
temporis
- The
Court reiterates that its jurisdiction ratione temporis covers
only the period after the ratification of the Convention or its
Protocols by the respondent State. From the ratification date
onwards, all of the State's alleged acts and omissions must conform
to the Convention or its Protocols and subsequent facts fall within
the Court's jurisdiction even where they are merely an extension of
an already existing situation (see, among other authorities, Yağcı
and Sargın v. Turkey, 8 June 1995, § 40, Series A no.
319 A, and Almeida Garrett, Mascarenhas Falcão
and Others v. Portugal, nos. 29813/96 and 30229/96, § 43,
ECHR 2000 I).
- The
Court is competent to examine the facts of the present case for their
compatibility with the Convention only in so far as they occurred
after 26 April 2002, the date of entry into force of the Convention
in respect of Armenia. It may, however, have regard to the facts
prior to ratification inasmuch as they could be considered to have
created a situation extending beyond that date or may be relevant for
the understanding of facts occurring after that date (see Broniowski
v. Poland (dec.) [GC], no. 31443/96, §§ 74-77,
ECHR 2002-X; and Grigoryev and Kakaurova v. Russia, no.
13820/04, § 25, 12 April 2007).
- Turning
to the facts of the present case, the Court notes that the judgment
of 2 July 2001 remains largely unenforced to date. The period after
26 April 2002, that is more than seven and a half years, therefore
falls within the scope of the Court's jurisdiction ratione
temporis.
2. Compatibility ratione personae (responsibility of
the State)
- The
Government submitted that Hrazdanmash was a separate legal entity and
the State as its shareholder was not liable for its debts pursuant to
Articles 60 and 106 § 3 of the Civil Code, Article 3 §§
1 and 5 of the Joint-Stock Companies Act and Paragraph 1.4 of
Hrazdanmash's Statute.
- The
applicants submitted that they had sued Hrazdanmash for damages and
the courts had granted their claim. The Government and the bailiffs
not only ignored the court judgments, but also took away everything
belonging to Hrazdanmash. Consequently, the State must be held liable
for the failure to enforce the judgment.
- The
Court observes that while Hrazdanmash enjoyed under the law and its
statute a certain degree of legal and economic independence from the
State, its assets were to a large extent controlled and managed by
the State. In particular, by its decree of 24 October 2002 the
Government ordered the transfer of part of Hrazdanmash's property to
the Kotayk Regional Administration (see paragraph 23 above). By
another decree of 27 March 2003 the Government allowed the
company to sell a large portion of its property and ordered that the
proceeds be put towards paying off the company's debts owed to the
State budget (see paragraphs 25 above). As regards this latter
decree, it appears that by “debts” was meant the tax
arrears which the company was ordered to pay by the courts. However,
the decision ordering the seizure and sale of the company's property
– apparently for the purpose of enforcement of the relevant
court judgments – was not taken by the bailiff's service but by
the Government. Moreover, in doing so it appears that the relevant
procedure prescribed by the Law on the Enforcement of Judicial Acts,
which required that salary debts be paid off first and only then the
debts owed to the State budget, was not followed (see paragraph 43
above). It therefore appears that the State disposed of Hrazdanmash's
assets as it saw fit.
- The
Court further observes that the State also took measures aimed at
improving Hrazdanmash's financial situation by either annulling, even
if only temporarily, the arrears levied on it by the courts (see
paragraphs 7 and 9 above) or by fostering investments in the company
(see paragraphs 25 and 27 above). Moreover, Hrazdanmash, while being
a private entity, was engaged in the fulfilment of a State assignment
by a decree of the Government (see paragraph 30 above). This
assignment included, as already indicated above, the sale of
Hrazdanmash's property to private companies, which in return
undertook an obligation towards the State to make investments in the
company.
- The
Court lastly notes that the Government themselves admitted that the
State, while not being liable for Hrazdanmash's debts was,
nevertheless, taking measures to meet its liabilities, one such
measure being the adoption of decree no. 955-A (see paragraph 64
below). Having regard to the substance of this decree, the Court does
not see any provisions obliging the potential buyer to take over
Hrazdanmash's salary debts, contrary the Government's claim (see
paragraph 27 above). On the other hand, however, it appears from the
findings of the Court of Appeal that the State was intending to
direct the proceeds received from the sale of its shares in
Hrazdanmash towards the payment of salary debts (see paragraph 32
above). It therefore appears that the State itself had accepted a
certain degree of responsibility for the debts of Hrazdanmash.
- In
view of all the above factors, the Court considers that the debtor
company, despite the fact that it is formally a separate legal
entity, does not enjoy sufficient institutional and operational
independence from the State to absolve the latter from its
responsibility under the Convention (see Mykhaylenky and Others v.
Ukraine, nos. 35091/02, 35196/02, 35201/02, 35204/02, 35945/02,
35949/02, 35953/02, 36800/02, 38296/02 and 42814/02, § 44, ECHR
2004 XII; Lisyanskiy v. Ukraine, no. 17899/02, § 20,
4 April 2006; Shlepkin v. Russia, no. 3046/03, § 24, 1
February 2007; Grigoryev and Kakaurova v. Russia, no.
13820/04, § 35, 12 April 2007; and R. Kačapor and Others
v. Serbia, nos. 2269/06, 3041/06, 3042/06, 3043/06, 3045/06 and
3046/06, § 98, 15 January 2008). Consequently, the State is to
be held responsible for the salary debts incurred by Hrazdanmash.
- The
Court therefore concludes that the applicants' complaints are
compatible ratione personae with the provisions of the
Convention and dismisses the Government's objection in this respect.
3. Exhaustion of domestic remedies
- The
Government claimed that the applicants had failed to exhaust the
domestic remedies as required by Article 35 § 1 of the
Convention. Firstly, since the reason for staying the enforcement
proceedings was the Government decree of 27 March 2003, they had the
possibility of contesting that decree before the courts. Secondly,
the applicants could have instituted insolvency proceedings against
Hrazdanmash, as a result of which they could have received their
money. They had not, however, availed themselves of either of these
possibilities. Lastly, the applicants had the possibility to contest
the acts or omissions of the bailiffs before the courts at any point
after the institution of the enforcement proceedings on 23 July 2001.
However, they resorted to this possibility for the first time only on
4 January 2004.
- The
applicants submitted that they were not obliged to institute
bankruptcy proceedings against Hrazdanmash since it had a lot of
property and there was a final judgment given in their favour, which
was supposed to be enforced. Furthermore, they had written many
complaints to the Minister of Justice and the President of Armenia
and had instituted proceedings against the bailiffs. They had
therefore exhausted all the possible remedies.
- The
Court reiterates that the purpose of Article 35 § 1 of the
Convention is to afford the Contracting States the opportunity to
prevent or put right the violations alleged against them before those
allegations are submitted to the Court. However, the only remedies to
be exhausted are those which are effective in the sense either of
preventing the alleged violation or its continuation, or of providing
adequate redress for any violation that had already occurred (see
Kudła v. Poland [GC], no. 30210/96, §§ 152
and 158, ECHR 2000 XI). It is incumbent on the Government
claiming non-exhaustion to satisfy the Court that the remedy was an
effective one, available in theory and in practice at the relevant
time (see Akdivar and Others v. Turkey, 16 September 1996, §
68, Reports of Judgments and Decisions 1996 IV).
- The
Court notes at the outset that the first remedy suggested by the
Government was not even accessible to the applicants, since at the
material time they were prevented from contesting governmental
decrees before the courts by virtue of Article 160 § 1 of the
Code of Civil Procedure (see paragraph 39 above). Moreover, the
applicants did avail themselves of the only remedy available to them
against the decision to stay the enforcement proceedings by
contesting it before the courts (see paragraph 29 above).
- As
to the possibility of instituting bankruptcy proceedings, the Court
notes that the applicants had a judgment given in their favour which
was final and enforceable and whose execution was the responsibility
of the authorities, including, if necessary, the taking of such
measures as bankruptcy proceedings. Moreover, the bankruptcy
proceedings instituted by the tax authorities against Hrazdanmash
were discontinued because Hrazdanmash was involved in a governmental
privatisation programme (see paragraphs 14, 20 and 21 above) and it
is doubtful that such proceedings, if instituted by the applicants,
would have had a different outcome.
- The
Court finally notes that the judgment given in the applicant's favour
was apparently not enforced due to the allegedly insufficient funds
of the debtor whose debts have been found to be imputable to the
State (see paragraph 54 above), while most of the funds available
were transferred to the State budget by a governmental decree which
the applicants were not even able to contest before the courts. In
such circumstances, the Court finds that the applicants were absolved
from lodging complaints against the bailiffs' conduct since the
non-enforcement of the judgment was due to reasons which the bailiffs
could not influence (see, mutatis mutandis, Mykhaylenky and
Others, cited above, § 39).
- In
view of the above, the Court considers that the Government's
objection as to non-exhaustion cannot be accepted, since the remedies
referred to could not and still cannot prevent the continuation of
the alleged violation. The Court therefore dismisses this objection.
4. Conclusion
- The Court notes that these complaints are not
manifestly ill-founded within the meaning of Article 35 § 3 of
the Convention. It further notes that they are not inadmissible on
any other grounds. They must therefore be declared admissible.
B. Merits
- The
Government submitted that the State was not liable for the debts of
Hrazdanmash and its responsibility was limited to ensuring the proper
conduct of the enforcement proceedings through the bailiff's service,
whatever their outcome. They claimed that the relevant enforcement
proceedings had been conducted properly and the impossibility to
enforce the judgment fully was due to the lack of funds of a private
company. Furthermore, even if the State was not liable for the debts
of Hrazdanmash, the State was taking measures aimed at meeting the
liabilities of Hrazdanmash. In particular, Government decreed on 23
July 2003 to privatise Hrazdanmash's stock, obliging the buyer to pay
off Hrazdanmash's salary debts which, however, never materialised
because the buyer pulled out. The authorities had therefore taken all
reasonable steps to have the judgment enforced and thereby complied
with their obligations under Article 6 § 1 of the Convention and
Article 1 of Protocol No. 1.
- The
applicants claimed that the judgment given in their favour was not
properly enforced. Most of the company's property was either
embezzled or transferred to the State budget by governmental decrees.
Thus, they were deprived of a fair trial and of their possessions.
- The
Court reiterates that Article 6 § 1 secures to everyone the
right to have any claim relating to his or her civil rights and
obligations brought before a court or tribunal. In this way it
embodies the “right to a court”, of which the right of
access, that is the right to institute proceedings before courts in
civil matters, constitutes one aspect. However, that right would be
illusory if a Contracting State's domestic legal system allowed a
final, binding judicial decision to remain inoperative to the
detriment of one party. It would be inconceivable that Article 6 §
1 should describe in detail procedural guarantees afforded to
litigants – proceedings that are fair, public and expeditious –
without protecting the implementation of judicial decisions. To
construe Article 6 as being concerned exclusively with access to a
court and the conduct of proceedings would be likely to lead to
situations incompatible with the principle of the rule of law, which
the Contracting States undertook to respect when they ratified the
Convention. The execution of a judgment given by any court must
therefore be regarded as an integral part of the “trial”
for the purposes of Article 6 (see Burdov v. Russia, no.
59498/00, § 34, ECHR 2002-III).
- The
Court notes that it has already dismissed the Government's argument
that the State was not liable for the debts of Hrazdanmash (see
paragraph 54 above). In this respect, the Court reiterates that it is
not open to a State authority to cite lack of funds as an excuse for
not honouring a judgment. Admittedly, a delay in the execution of a
judgment may be justified in particular circumstances. However, it
may not be such as to impair the essence of the right protected under
Article 6 § 1 of the Convention (see Immobiliare Saffi v.
Italy [GC], no. 22774/93, § 74, ECHR 1999-V).
- The
Court further reiterates its case-law to the effect that the
impossibility for an applicant to obtain the execution of a judgment
making an award in his or her favour constitutes an interference with
the right to the peaceful enjoyment of possessions, as set out in the
first sentence of the first paragraph of Article 1 of Protocol No. 1
(see, among other authorities, Burdov, cited above, §
40, and Jasiūnienė v. Lithuania, no. 41510/98, §
45, 6 March 2003).
- The
Court notes that, to date, the judgment given in favour of the
applicants on 2 July 2001 remains to a large extent unenforced.
Consequently, the period of debt recovery in the applicants' case has
so far lasted more than eight years and four months, of which about
seven and half years fall within the Court's competence ratione
temporis. The Court finds that, by failing for years to take the
necessary measures to comply with the final judgment given in favour
of the applicants, the Armenian authorities impaired the essence of
their “right to a court” and for a considerable period
prevented – and are still preventing – the applicants
from receiving in full the money to which they were entitled, which
amounted to a disproportionate interference with their peaceful
enjoyment of possessions.
- Accordingly,
there has been a violation of Article 6 § 1 of the Convention
and Article 1 of Protocol No. 1.
II. 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
applicants claimed the full sum of the judgment award
(AMD 433,021.59) plus EUR 20,000 for pecuniary and non-pecuniary
damage respectively.
- The
Government submitted that the actual judgment debt constituted AMD
398,379.59 since the first and the second applicants were paid
AMD 16,949 and AMD 17,693 respectively in the course of
enforcement. As regards non-pecuniary damage, the applicants had
failed to show that there was any causal link between the violation
alleged and the damage claimed. In any event, the amount claimed was
excessive.
- The
Court notes that the first and the second applicants were paid sums
of money as a result of the enforcement proceedings (see paragraph 18
above). Thus, the claim for pecuniary damage cannot be allowed in
full. On the basis of the materials in its possession, the Court
awards EUR 365 to the first applicant and EUR 380 to the second
applicant in respect of pecuniary damage, which corresponds to the
outstanding debts due to the applicants. The Court further takes the
view that the applicants have suffered non-pecuniary damage as a
result of the violations found which cannot be made good by the
Court's mere finding of a violation. Ruling on an equitable basis,
the Court awards the applicants jointly EUR 1,000 in respect of
non-pecuniary damage.
B. 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 and Article 1 of Protocol No. 1;
- Holds
(a) that
the respondent State is to pay, within three months from the date on
which the judgment becomes final in accordance with Article 44 § 2
of the Convention, EUR 365 (three hundred and sixty-five euros) to
the first applicant and EUR 380 (three hundred and eighty euros) to
the second applicant in respect of pecuniary damage, and EUR 1,000
(one thousand euros) to the applicants jointly in respect of
non-pecuniary damage, plus any tax that may be chargeable on these
amounts, to be converted into the national currency of the respondent
State 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;
- Dismisses the remainder of the applicants' claim
for just satisfaction.
Done in English, and notified in writing on 1 December 2009, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Santiago Quesada Josep
Casadevall
Registrar President
