PROMIMPRO EXPORTS AND IMPORTS LIMITED AND SINEQUANON INVEST v. UKRAINE (European Court of Human Rights)

FIFTH SECTION
DECISION
Application no. 32317/10
PROMIMPRO EXPORTS AND IMPORTS LIMITED and SINEQUANON INVEST
against Ukraine

The European Court of Human Rights (Fifth Section), sitting on 10 September 2019 as a Committee composed of:

Síofra O’Leary, President,

Ganna Yudkivska
Lado Chanturia, judges,
and Milan Blaško, Deputy Section Registrar,

Having regard to the above application lodged on 28 May 2010,

Having regard to the observations submitted by the respondent Government and those submitted in reply by the applicant companies,

Having deliberated, decides as follows:

THE FACTS

1.  The applicant companies, Promimpro Exports and Imports Limited (“the first applicant company”) and Sinequanon Invest, SARL (“the second applicant company”), are private companies registered in Cyprus and Luxemburg respectively. They were represented before the Court by Mr J.‑J. Trinquet and Ms E.-M. Bollecker, lawyers practising in Paris and Strasbourg respectively.

2.  The Ukrainian Government (“the Government”) were represented by their Agent, Mr I. Lishchyna.

3.  On 1 August 2011 Ms Bollecker informed the Court that on 30 July 2010 the applicant companies had concluded a contract, whereby the first applicant company had assigned to the second applicant company its rights relating to a debt due to it (see paragraph 8 below). She also informed the Court that the latter company had expressed its wish to pursue in its own name the application lodged by the former company.

A.    The circumstances of the case

4.  The facts of the case, as submitted by the parties, may be summarised as follows.

5.  On 20 January 1998 the Arbitration Institute of the Stockholm Chamber of Commerce ordered Ukragrohim State Company belonging to the Ministry of Agriculture of Ukraine, in the absence of that company, to pay to the first applicant company 5,067,234 United States dollars (USD) for its failure to perform contractual obligations towards the latter and USD 2,533,616 in fine.

6.  On 6 September 2006 the Pecherskyy District Court of Kyiv allowed the first applicant company’s request for the recognition and enforcement in Ukraine of the above arbitral award and ordered Ukragrohim to pay it the above amounts. On 18 September 2006 that ruling became enforceable and the court issued an enforcement writ.

7.  On 30 November 2009 the bailiffs terminated the enforcement proceedings upon the first applicant company’s request of 9 October 2009 to return to it the enforcement writ unenforced (no copy of the request was provided by the applicant company, the reasons stated in it being unknown).

8.  By a contract of 30 July 2010, the first applicant company assigned to the second applicant company its right to claim the debt under the arbitral award (“assigned claim”) and “other ancillary rights of whatever nature attached to the assigned claim (if any)”.

9.  On 28 September 2010 the second applicant company informed the Ministry of Agriculture that it was Ukragrohim’s new creditor.

10.  The arbitral award of 20 January 1998 remains unenforced. In particular, on 4 July 1997 Ukragrohim was formally declared bankrupt by the Kyiv State Arbitration Court and, as of the date of lodging of the application, it was still registered as a State-owned company declared bankrupt and undergoing liquidation.

B.     Relevant domestic law and practice

11.  Articles 512-518 of the Civil Code provide for the possibility of replacing an original creditor by means of an assignment contract between the original creditor and the creditor acquiring rights under the contract.

12.  Pursuant to Article 512 of the Civil Code, Article 378 of the Code of Civil Procedure and section 8(5) of the Enforcement of Judgments Act, a creditor withdrawing from enforcement proceedings is replaced with a new creditor.

13.  In a resolution of 20 November 2013 the Supreme Court held that in order to succeed in claiming debts under an assignment contract, a new creditor must lodge a request with a court for the replacement of the original creditor as a party to the enforcement proceedings. The latter is deemed to be replaced from the moment of adoption of a relevant court ruling.

COMPLAINTS

14.  The applicant companies complained under Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 about non-enforcement of the arbitral award of 20 January 1998 which was confirmed by the ruling of 6 September 2006.

THE LAW

15.  The applicant companies complained about non-enforcement of the arbitral award of 20 January 1998. They referred to Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1, which read as follows:

Article 6 § 1

“In the determination of his civil rights and obligations … everyone is entitled to a … hearing within a reasonable time 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.”

16.  The Government submitted that on 30 November 2009 the enforcement proceedings had been terminated upon the first applicant company’s request of 9 October 2009. On 30 July 2010 it assigned its right to claim the debt to the second applicant company. In their view, therefore, its complaints were incompatible ratione personae with the Convention.

17.  The applicant companies disagreed. In their view, the request of 9 October 2009 had had no consequence for the enforcement of the arbitral award as Ukragrohim had been declared bankrupt. Furthermore, the first applicant company had assigned its right to claim the debt to the second applicant company, but not “its right to act which it continues to exercise”.

18.  As regards the first applicant company, the Court notes that its claims became enforceable on 18 September 2006. However, it withdrew the enforcement writ on 9 October 2009, which resulted in the termination of the enforcement proceedings on 30 November 2009. The Court considers that the withdrawal of the writ by the first applicant company, regardless of the possible reasons stated in its request, was an obstacle to enforcement of the arbitral award after 30 November 2009. Consequently, the authorities cannot be held responsible for the non-enforcement of the arbitral award after that date (see, mutatis mutandis, Gadzhikhanov and Saukov v. Russia, nos. 10511/08 and 5866/09, § 30, 31 January 2012).

19.  As to the State’s liability for the period from 18 September 2006 to 30 November 2009, when the enforcement proceedings in respect of the arbitral award were pending (see, mutatis mutandis, Andrusenko and Others v. Ukraine, no. 41073/02, § 24, 10 August 2006), the Court notes that under the contract of 30 July 2010 the first applicant company voluntarily and unequivocally ceded, in favour of the second applicant company, not only the “assigned claim”, that is its right to claim the debt under the arbitral award of 20 January 1998, but also any “other ancillary rights of whatever nature” attached to it. The parties have not explained how or why those “other ancillary rights” did not include the right to claim enforcement of the above award including, as the case may be, the right of an individual application before the Court in that regard.Even though the applicant companies stated that the first applicant company had assigned its right to claim the debt to the second applicant company, but not its “right to act which it continues to exercise”, they did not specify what they meant by that right. Nor did they argue that the “ancillary rights of whatever nature” attached to the “assigned claim” had not included the rights relating to the enforcement of the arbitral award. Nor did the contract of 30 July 2010 contain any qualification or exception in this respect. Lastly, the Court notes that in the letter of 1 August 2011 the second applicant company expressed its wish to pursue “in its own name” the application lodged by the first applicant company (see paragraph 3 above).

20.  In such circumstances, the Court considers that by the above contract the first applicant company fully transferred the rights relating to the enforcement of the arbitral award to the second applicant company. That contract thus removed the first applicant company’s victim status for the purposes of the present proceedings and it can no longer claim a violation of its rights under the Convention. Accordingly, its complaints are incompatible ratione personae with the provisions of the Convention and must be rejected under Article 35 § 3 (a) and 4 of the Convention.

21.  As to the second applicant company, the Court notes that even though under the contract of 30 July 2010 it acquired the right to claim the debt under the arbitral award of 20 January 1998, that right has never been acknowledged by the Ukrainian courts (see, a contrario, Regent Company v. Ukraine (dec.), no. 773/03, 10 April 2007, and Regent Company v. Ukraine, no. 773/03, §§ 55 and 61, 3 April 2008, where the Court concluded that the applicant company could claim to be a victim in relation to non-enforcement of an arbitral award following a transfer to it of the right to claim a debt under it from the original claimant, given that it had lodged a request with the courts to declare it as a new creditor and to substitute it for the original claimant in the enforcement proceedings on the grounds of their transfer contract, which the courts had allowed and recognised it as a new creditor in the enforcement proceedings). Indeed, the second applicant company has never been a party to the enforcement proceedings and it has never attempted to claim its succession to the debt it had acquired from the first applicant company before the courts, even though it had such a possibility (see paragraphs 12-13 above). Moreover, seeking a court ruling acknowledging its status as a creditor in respect of the debt in issue was a prerequisite, under domestic law, for it to formally acquire that status.

22.  The Court notes that the word “victim” within the meaning of Article 34 of the Convention denotes the person directly affected by the act or omission which is in issue (see, among many other authorities, Murray v. the Netherlands [GC], no. 10511/10, § 83, 26 April 2016). It reiterates that Article 34 of the Convention requires that an applicant must be able to claim to have been actually affected by the alleged violation. In the present case, however, it cannot be maintained that the second applicant company has formally acquired the victim status necessary to claim a violation of its own rights under the Convention (see, a contrario, Regent Company, judgment of 3 April 2008, cited above, §§ 55 and 61). Consequently, its complaints are also incompatible ratione personae with the provisions of the Convention and must be rejected pursuant to Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 3 October 2019.

Milan Blaško                                                     Síofra O’Leary
Deputy Registrar                                                      President

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