TUDOR-AUTO SRL AND TRIPLU-TUDOR SRL v. THE REPUBLIC OF MOLDOVA - 36341/03 (Judgment (Just Satisfaction) : Court (Second Section)) [2016] ECHR 155 (09 February 2016)

In the case of Tudor-Auto S.R.L. and Triplu-Tudor S.R.L. v. the Republic of Moldova,

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

          Işıl Karakaş, President,
          Julia Laffranque,
          Paul Lemmens,
          Valeriu Griţco,
          Ksenija Turković,
          Jon Fridrik Kjølbro,
          Georges Ravarani, judges,
and Stanley Naismith, Section Registrar,

Having deliberated in private on 19 February 2016,

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

PROCEDURE

1. The case originated in three applications (nos. 36341/03, 36344/03 and 30346/05) 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 Tudor-Auto S.R.L. and Triplu-Tudor S.R.L., two companies incorporated in Moldova (“the applicant companies”), on 10 October 2003 and 5 July 2005 respectively.

2. In a judgment delivered on 9 December 2008 (“the principal judgment”), the Court held that there had been a violation of Article 6 § 1 of the Convention on account of the failure to enforce the final judgments in favour of each of the applicant companies, as well as a violation of the same provision on account of the quashing of the final judgment in favour of Tudor-Auto S.R.L., that there had been a violation of Article 1 of Protocol No. 1 to the Convention on account of the failure to enforce the final judgments in favour of each of the applicant companies and that there had been a violation of Article 13 of the Convention on account of the lack of effective remedies in respect of the applicant companies’ complaints regarding the failure to enforce the judgments in their favour.

3. Under Article 41 of the Convention the applicant companies sought just satisfaction of 7,531,186 euros (EUR) and EUR 18,289,961 respectively, plus compensation for their costs and expenses.

4. Since the question of the application of Article 41 of the Convention was not ready for decision, the Court reserved it and invited the Government and the applicants to submit, within three months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., § 75, and point 6 of the operative provisions).

5. The applicants and the Government each filed observations.

THE LAW

6. 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. Pecuniary damage

1. The parties’ submissions

(a) The applicant companies’ submissions

7. In their updated claims under Article 41 of the Convention the applicant company “Triplu-Tudor S.R.L.” claimed EUR 10,321,386 for the pecuniary damage suffered as a result of the breaches of its rights under Article 6 of the Convention and of Article 1 of Protocol No. 1 to the Convention. It noted that, according to a report issued on 7 December 1998 by an expert from the “Central Scientific Research Laboratory in the Field of Judicial Expertise”, its losses for the first year during which it was prevented from continuing its activity amounted to 41,577,000 Moldovan lei (MDL, the equivalent of 3,100,355 United States Dollars at the time).

8. In the report, which was submitted by the applicant company, the expert noted that his calculations had been based on the applicant companies’ court action concerning the seizure of accounting documents and of other unspecified property by the Chișinău Prosecutor’s Office.

9. The applicant company agreed that future losses from its inability to continue its activity were, as pointed out by the Government, speculative. Therefore, they submitted that the Court should follow the approach it had taken in many other cases against Moldova concerning the calculation of losses caused by late enforcement of final judgments. In particular, they asked the Court to take as the basis for determining the compensation to be awarded the amount of losses during the first year after the failed renewal of their registration certificates (EUR 3,100,355) and to calculate the losses caused by its inability to use that money until the date of adoption of a judgment. They noted that in previous cases the Court had agreed to calculate losses incurred by referring to the average interest rates on short-term deposits in commercial banks in Moldova during the relevant period. After the entry into force of the new Civil Code on 12 June 2003 the domestic law provided for a specific method of calculating losses incurred as a result of delayed payments, described in Article 619 of the Civil Code (see, for instance, Mizernaia v. Moldova, no. 31790/03, §§ 14 and 28, 25 September 2007).

10. The applicant company annexed a table with calculations of the losses resulting from its inability to use the money (EUR 3,100,355) until March 2009 and considered that this amount should be adjusted to take into account any period after that date and up until the adoption of a judgment. The overall amount of losses incurred by the date of submission of its observations was thus equal to EUR 10,321,386.

11. The applicant company “Tudor-Auto S.R.L.” updated its claims under Article 41 of the Convention by making similar submissions in respect of the method of calculating its losses. The basis for the calculation, likewise determined in accordance with the 1998 expert report, was MDL 17,120,000 (EUR 1,276,621). Accordingly, the overall amount of losses incurred was equal to EUR 4,249,996.

(b) The Government’s submissions

12. The Government submitted that the applicant companies’ claims were speculative, as the insurance market in Moldova had fluctuated a lot during the relevant period, a number of companies having disappeared from the market. Moreover, they submitted statistical data showing that during 1999-2004 many insurance companies had registered losses. Furthermore, at the relevant time registration certificates for insurance activity had been issued for five-year periods, which meant that the applicant companies could not claim losses for more than five years in the absence of any evidence that they would have obtained a new registration certificates five years later.

13. In any event, the Government noted that the expert report on which the applicant companies had relied contained serious mistakes and had not been based on official data. This was all the more pertinent since it had not been done in order to calculate the companies’ losses from being unable to continue their activities, but to evaluate the losses caused by the seizure of documents by the Prosecutor’s Office during 1997. However, even if the methods of calculation and the data relied on by the expert in the 1998 report were taken as the basis for determining the applicant companies’ losses, analysis of the data showed that a mistake in the calculation had been made, resulting in losses ten times higher than the figure produced on the basis of the data in the 1998 report. Moreover, the Government questioned the expert’s use of the highest inflation figure for 1997 rather than the average one ‒ which should have been taken ‒ resulting in an additional artificial increase in the evaluation of the losses caused to the applicant companies.

14. In a report dated 21 September 2005 an expert evaluated the losses caused to the company Tudor-Auto S.R.L. during 1997 at MDL 10,855 (equivalent to USD 2,323 at the end of 1997).

15. A further report compiled at the Government’s request on 5 March 2009 by “First Audit International S.A.” found that the losses for the company “Triplu-Tudor S.R.L.” had amounted to MDL 1,405,823 (EUR 76,227) during the period 1997-2005. The losses of the applicant company “Tudor-Auto S.R.L.” had amounted to MDL 68,911 (EUR 3,736) during the same period. The report found that both companies had worked for only one year (1996) and analysed their performance in 1996 and the evolution of the insurance market in Moldova after that date.

16. The Government noted that registration certificates for insurance companies had been issued for five-year periods at the relevant time, without any guarantee of renewal. This meant that the applicant companies could only claim losses for five years. Accordingly, they argued that the lost revenue as calculated in the report of 5 March 2009 mentioned above and adjusted to a five-year period of validity of insurance registration certificates, amounted to MDL 522,286 (approximately EUR 44,300) in the case of the company “Triplu-Tudor S.R.L.” and MDL 25,572 (approximately EUR 2,180) in the case of the applicant company “Tudor-Auto S.R.L.”. The Government submitted official data concerning the revenues of insurance companies during 1999-2004, according to which 10 out of 46 insurance companies registered in Moldova had shown a negative balance for 1999 and 15 had made corresponding declarations the following year. The biggest insurance company in Moldova, with a capital of MDL 48 million (compared to MDL 1.7 million and 0.7 million respectively for the applicant companies) had declared the following results during the period 1999-2004: loss of MDL 12,400 in 1999, loss of MDL 8,542,800 in 2000, loss of MDL 2,083,600 in 2001, profit of MDL 134,200 in 2002, profit of MDL 3,631,000 in 2003 and profit of MDL 1,511,800 in 2004.

2. The Court’s assessment

17. The Court notes that the parties disagreed as to the correct method of calculating the damage sustained by the applicant companies. Each of them relied on expert reports, the results of which differ significantly (see paragraphs 7, 11, 14 and 15 above). However, even according to the 2009 report on which the Government relied, the applicant companies sustained a certain amount of damage.

18. The Court reiterates that a judgment in which it 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 Former King of Greece and Others v. Greece [GC] (just satisfaction), no. 25701/94, § 72).

19. The Court notes that the applicant companies asked for the losses incurred to be determined by reference to the initial loss for one year (1997). The resulting sum they proposed to treat as money which they had been unable to use since 1997 and thus to calculate further losses as if there had been a case of non-enforcement of a final judgment awarding them that sum. On that basis, the applicant companies argue that the Court should follow the approach it has taken in other cases against Moldova concerning the calculation of losses caused by late enforcement of final judgments (see, for instance, Prodan v. Moldova, no. 49806/99, § 73, ECHR 2004-III (extracts), Mizernaia, cited above, § 28, Nadulişneac v. Moldova, no. 18726/04, § 25, 16 October 2007). However, the Court cannot follow the approach suggested by the applicant companies. It notes that in the judgments of 31 March 1998, which were not enforced by the authorities and one of which was quashed in violation of Article 6 § 1 of the Convention, the applicant companies were not awarded sums of money, let alone the amount on the basis of which they have based their claim for pecuniary damages. Rather, the authorities were ordered to issue the applicant companies with new registration certificates. Therefore, the only losses for which the applicant companies can claim compensation are damages suffered as a consequence of the failure of the authorities to issue registration certificates as ordered in the judgments. Therefore, the Court will assess the damages on the basis of losses sustained by the applicant companies as they were not able to continue their insurance companies for the duration of the registration certificate.

20. In view of all the evidential material in the case file, including the expert reports from 2005 and 2009 (see paragraphs 14 and 15 above), and having regard to the uncertainty of the losses sustained as well as the fact that insurance registration certificates under domestic law were issued for periods of five years without any guarantee of renewal, the Court awards EUR 48,000 to the applicant company “Triplu-Tudor S.R.L.” and EUR 2,500 to the applicant company “Tudor-Auto S.R.L.”.

B. Non-pecuniary damage

21. The applicant companies claimed EUR 25,000 each in compensation for the non-pecuniary damage caused to them.

22. The Government considered that the applicant companies’ claims were all groundless and referred to their initial observations, in which they pointed out that in their original claims for just satisfaction in 2005 the applicant companies had not made any claims for compensation for non-pecuniary damage caused.

23. The Court recalls its case-law according to which a legal person and commercial company may have sustained non-pecuniary damage that may be compensated under Article 41 of the Convention (see, for example, Comingersoll S.A. v. Portugal [GC], no. 35382/97, § 35, ECHR 2000-IV, and Sovtransavto Holding v. Ukraine (just satisfaction), no. 48553/99, § 79, 2 October 2003).

24. In the present case, the Court considers that as a result of the failure to issue the applicant companies with renewed registration certificates, the companies effectively ceased to function and their management lost their jobs.

25. Ruling on an equitable basis the Court awards EUR 5,000 to the applicant company “Triplu-Tudor S.R.L.” and EUR 3,000 to the applicant company “Tudor-Auto S.R.L.” in respect of the non-pecuniary damage sustained (see Sovtransavto Holding, cited above, § 82, and Oferta Plus S.R.L. v. Moldova (just satisfaction), no. 14385/04, § 76, 12 February 2008).

C. Costs and expenses

26. The applicant companies claimed EUR 2,150 for their common legal costs. They relied on the contract with their lawyer, as well as a detailed time-sheet confirming the volume of work done on the cases (a total of 35 hours of work at an hourly rate of EUR 60).

27. The Government considered that the sums claimed were exaggerated and in part related to unnecessary submissions.

28. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 1,000.

D. Default interest

29. 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. Holds

(a) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Moldovan lei at the rate applicable at the date of settlement:

(i) EUR 48,000 (forty eight thousand euros), plus any tax that may be chargeable, in respect of pecuniary damage caused to the applicant company “Triplu-Tudor S.R.L.” and EUR 2,500 (two thousand five hundred euros), plus any tax that may be chargeable, in respect of pecuniary damage caused to the applicant company “Tudor-Auto S.R.L.”;

(ii) EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage caused to the applicant company “Triplu-Tudor S.R.L.” and EUR 3,000 (three thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage caused to the applicant company “Tudor-Auto S.R.L.”;

(iii) EUR 1,000 (one thousand euros) jointly to both applicant companies, plus any tax that may be chargeable to these companies, in respect of costs and expenses;

(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;

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

Done in English, and notified in writing on 9 February 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Stanley Naismith Işıl Karakaş
Registrar President

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