Last Updated on November 19, 2019 by LawEuro
THIRD SECTION
CASE OF GOBAYEV v. RUSSIA
(Application no. 48978/11)
JUDGMENT
STRASBOURG
15 October 2019
This judgment is final but it may be subject to editorial revision.
In the case of Gobayev v. Russia,
The European Court of Human Rights (Third Section), sitting as a Committee composed of:
Alena Poláčková, President,
Dmitry Dedov,
Gilberto Felici, judges,
and Stephen Phillips, Section Registrar,
Having deliberated in private on 24 September 2019,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 48978/11) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, MrRinatTaymurazovichGobayev (“the applicant”), on 14 July 2011.
2. The Russian Government (“the Government”) were represented initially by Mr G. Matyushkin, the Representative of the Russian Federation to the European Court of Human Rights, and then by his successor in that office, Mr M. Galperin.
3. On 17 December 2015 notice of the application was given to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1976 and lives in Beslan, in the Republic of North Ossetia-Alania.
5. He provided legal services to the municipal unitary enterprise, MUP BeslanskiyeElektricheskieSeti (Power Supply Networks of Beslan – “the debtor company”) but the company failed to pay for his services.
A. Available information about the debtor company
6. The debtor company was set up in 2006 in accordance with a decision of the head of the administration of the Pravoberezhnyy District of the Republic of North Ossetia-Alania (“the district administration”). According to section 1.5 of the debtor company’s articles of association, the district administration was the founder of the debtor company and the owner of its assets.
7. According to section 2 of its articles of association, the debtor company’s main objectives were to provide a secure electricity supply to consumers, to make a profit, and to improve the quality of the services provided to consumers in Beslan. To achieve those objectives, the company was to perform the following activities: (a) securing the electricity supply to the local population; (b) the construction, installation and reconstruction of electrical equipment; (c) the “improvement of financial and economic relations”, including, for instance, concluding and performing electricity supply agreements, undertaking cost-saving efforts and seeking a growth in profit; and (d) other activities not prohibited by law. In order to carry out those activities, the company had “a right of economic control” (правохозяйственноговедения) over assets allocated to it by the district administration (for further details on the right of economic control, see Liseytseva and Maslovv. Russia, nos. 39483/05 and 40527/10, §§ 55-75, 9 October 2014).
8. On 30 January 2007 the Assembly of Representatives of the Pravoberezhnyy District recommended that the district administration “approve a lease of the assets allocated to the debtor company”. No further details were contained in the copy of the recommendation supplied to the Court.
9. By Decree no. 64 of 16 February 2007 the district administration (a) approved the conclusion of a lease agreement between the debtor company and a limited liability company, O.-E. (“the OOO”); and (b) ordered the director of the debtor company to lease the assets under the company’s economic control to the OOO, for a period of forty-nine years.
10. On 1 October 2007 the debtor company and the OOO concluded the lease agreement. The debtor company undertook to transfer its fixed assets to the OOO, with the aim of providing an uninterrupted electricity supply to consumers in Beslan, and ensuring the modernisation and due maintenance of the networks. The OOO undertook to accept the assets, to use them solely in accordance with their designated purpose, to ensure they were maintained and to pay the rent.
11. Pursuant to a detailed transfer and acceptance instrument of 1 October 2007, compiled “in accordance with the decision of the district administration”, in October 2007 the assets under the debtor company’s economic control – namely vehicles, several electric transformers and dozens of overhead power lines – were transferred to the OOO.
12. The agreement and the transfer and acceptance instrument were approved by the head of the district administration. The agreement was stated to be subject to State registration (at clause 11.6). According to the applicant, the agreement had never been registered.
13. It appears that the OOO failed to pay the rent.
14. On 12 August 2010 the OOO advised the bailiffs sevice, in reply to its request within enforcement proceedings (see below), that the OOO did not consider itself bound by the debt towards the debtor company for the following reason. The founder of the debtor company, the district administration, was also the founder of two other municipal unitary enterprises which had accumulated considerable debts towards the OOO. However, those enterprises had evaded payment, as the founder had liquidated them despite the existing debts to the OOO.
15. It appears that no insolvency proceedings have been initiated in respect of the debtor company, and that it has continued to operate to date.
B. Judgments in the applicant’s favour
16. On 4 February 2009 the Pravoberezhnyy District Court of the Republic of North Ossetia-Alania (“the district court”) ordered the debtor company to pay the applicant 217,938 Russian roubles (RUB) in respect of unpaid legal fees and interest. The judgment became final on 16 February 2009.
17. On 17 April 2009 the district court ordered the debtor company to pay the applicant RUB 487,653 in respect of unpaid legal fees, interest and costs. No appeal was lodged against the judgment, which became final ten days later.
C. Enforcement proceedings
18. Enforcement proceedings were brought in respect of the two judgments on 7 April and 12 May 2009, respectively.
19. On 24 August 2009 the bailiffs service of the Pravoberezhnyy District informed the applicant that the debtor company had not conducted any economic activity, as the entirety of its assets had been leased to the OOO (see paragraph 9 above).
20. On 19 May 2010 the district bailiffs service joined all enforcement proceedings against the debtor company, including those arising from the judgments in the applicant’s favour, into a single, joint enforcement procedure. Among the company’s other creditors were pension and tax authorities and a private company.
21. In September 2010 the joint enforcement proceedings were assigned to the Inter-District Department on Special Enforcement Proceedings of the Bailiffs Service of North Ossetia-Alania.
22. According to the Government, on 13 May 2013 the district court granted the bailiffs’ request and ordered unspecified means of transportation owned by the district administration to be seized and allocated to the debtor company under the right of economic control.
23. On 14 March 2014 the bailiff discontinued the enforcement proceedings and returned the writs of execution to the applicant, as it was impossible to execute the awards (section 46(1)(4) of the Enforcement Act). The bailiff established that the debtor did not have any assets upon which execution could be levied, and all possible lawful measures taken by the bailiffs to identify any such assets had produced no results.
24. According to the Government’s latest submissions of 8 September 2016, on 1 October 2014 the bailiffs service opened a new set of enforcement proceedings in respect of the judgments in the applicant’s favour. The bailiffs could not identify any property or accounts registered to the debtor company. In October 2014 the bailiff issued the debtor company with an attachment order in respect of unspecified property, as well as a warning about criminal liability for the failure to comply with the domestic judgment. According to the Federal Bailiffs Service’s submissions to the Government, on 3 February 2015 a bailiff seized “property of the debtor organisation”, identified in the submissions as the “electricity supply to the refugee settlement of Tsalyk”, with an estimated market value of RUB 1,674,700.
25. In May 2015 the property in Tsalyk was referred for sale but in June 2015 the State Assets Authority of North Ossetia-Alania returned the accompanying documents “for modification”, as the debtor company’s title to the seized property had not been registered.
26. At a later stage the district administration informed the bailiffs that the above assets were unregistered. Therefore, on 15 August 2016 the bailiff filed an application for State registration of “a building” in the refugee settlement in Tsalyk.
27. The parties did not submit any updated information about any progress in the enforcement proceedings. In particular, they did not specify whether the applicant’s claims had been satisfied from any proceeds of the sale of any identified assets.
D. Adjustment and interest proceedings
28. In his observations and claims for just satisfaction of 10 June 2016, the applicant provided the following information about the developments in his case.
1. Index-linking of the judgment debt of 4 February 2009
29. On 21 July 2014 the district court adjusted the award of 4 February 2009 on account of inflation and ordered the debtor company to pay the applicant a further RUB 81,000.50 in addition to the initial unenforced award – that is, a total of RUB 298,938.50.
30. On 27 April 2016 the district court further index-linked both the initial judgment debt of 4 February 2009 and the further amount awarded on 21 July 2014, accordingly increasing the total amount the debtor company was to pay the applicant to RUB 363,695.
31. No appeals were lodged against the awards, nor have they been paid.
2. Index-linking of the judgment debt of 17 April 2009
32. On 21 July 2014 the district court, by a separate decision, index‑linked the award of 17 April 2009 in line with inflation and ordered the debtor company to pay the applicant RUB 181,243.50 in addition to the initial unenforced award – that is, a total of RUB 668,896.50.
33. On 27 April 2016 the district court, by a separate decision, further index-linked both the initial judgment debt of 4 February 2009 and the amount awarded on 21 July 2014 in line with inflation and accordingly increased the total amount owed by the debtor company to the applicant to RUB 813,794.
34. No appeals were lodged against the awards, nor have they been paid.
3. Default interest proceedings
35. On 8 December 2014 the district court awarded the applicant RUB 335,229 in default interest in respect of the judgments of 4 February and 17 April 2009 and the two index-linking decisions of 21 July 2014, for the period until 1 November 2014 (see paragraphs 29 and 32 above).
36. The court observed that a notification of the hearing had been sent to the debtor company’s only address, but the court had received “information that there [was] no such organisation”. However, the court also noted that both the State Register of Legal Entities and a letter of 20 November 2014 from the district administration confirmed that the debtor company’s address was correct and up to date.
37. On 27 April 2016 the district court index-linked the above award in line with inflation and increased it to RUB 384,396.
38. On 19 April 2016 the district court awarded the applicant RUB 147,652 in default interest for the period between 1 November 2014 and 1 March 2016 in respect of the judgments of 4 February and 17 April 2009, 8 December 2014 (see paragraph 35 above) and the two index-linking decisions of 21 July 2014 (see paragraphs 29 and 32 above).
39. No appeals were lodged against any of those awards by the debtor company, nor were the awards honoured.
E. Information submitted by the applicant concerning the power supply network in Tsalyk
40. On 30 January 2004 the Government of North Ossetia transferred the power supply network in Tsalyk to the district administration, in order to provide a power supply to a refugee camp. On 10 November 2005 the district administration accepted the above assets on its balance sheet.
41. On 9 April 2008 the North Ossetia Department of the Federal Service for Environmental and Technological Oversight (“the Rostekhnadzor”) conducted an inspection of the power network in response to numerous complaints by the inhabitants of the Tsalyk refugee camp about numerous power cuts. The Rostekhnadzor established that the relevant facilities were intended to be transferred from the district administration’s balance sheet to the debtor company’s. However, the transfer had not taken place.
42. According to a judgment of 18 May 2016 by the Commercial Court of the Republic of North Ossetia-Alaniya (case no. A61-4006/2015) given in unrelated proceedings involving the district administration, the latter was the factual owner of the relevant power supply network, and there was no evidence of any other person’s title to the assets.
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. Provisions of the Insolvency Act referred to by the applicant
43. The enforcement of court awards and more generally debt claims against insolvent or presumably insolvent debtor legal entities are regulated by the Insolvency Act of 26 October 2002 (Law no. 127-FZ). Section 3 of the Insolvency Act, as in force at the material time, defined the state of bankruptcy of a legal entity as follows:
“A legal entity is regarded as being unable to satisfy the claims of creditors in respect of pecuniary obligations and (or) to fulfil its obligations in respect of mandatory payments if the respective obligations and (or) obligation are not complied with within three months of the date on which compliance should have occurred.”
44. Insolvency proceedings in respect of a legal entity could only be instituted by a court if the overall amount of debt claims exceeded RUB 100,000 (section 6 of the Insolvency Act). Whilst the executive body of the debtor had the right to file for bankruptcy in circumstances where it was obvious that the debtor would have been unable to fulfil its obligation in due time (section 8 of the Insolvency Act), it had a legal duty to do so if the forced seizure of the debtor’s property in satisfaction of a claim would have made the debtor’s economic activity extremely difficult or impossible (section 9 of the Insolvency Act).
45. If any indicators of bankruptcy as established by section 3 of the Insolvency Act materialised, the head of the debtor company was required to inform the owner of the unitary enterprise’s assets thereof. The owner of the unitary enterprise’s assets had to take timely measures to prevent the insolvency of the legal entity (section 30 of the Insolvency Act).
B. Relevant provisions on municipal unitary enterprises
46. The owner of the property under the economic control of a unitary enterprise defines the purpose and aims of the company. The owner oversees the use of the property assigned to the company in conformity with its stipulated purpose and the maintenance of that property (Article 295 of the Civil Code).
47. The State or municipal unitary enterprise may dispose of assets only in a manner which does not prevent it from carrying out its activities in accordance with its statutory purpose and aims. Transactions made in violation of this requirement must be declared void (section 18(3) of the State Unitary Enterprises Act).
48. As clarified by paragraph 10 of Ruling no. 10/22 of the Plenary Session of the Supreme Court and the Supreme Commercial Court of Russia adopted at the Plenary session of 29 April 2010, transactions of the type mentioned above must be declared void irrespective of whether the owner consented to them.
49. By Ruling no. 6/8 of 1 July 1996 the Plenary Session of the Supreme Court and the Supreme Commercial Court of Russia reiterated that the owner’s rights in respect of the assets allocated to a state or municipal unitary company under the right of economic control were listed in Article 295 § 2 of the Civil Code and emphasised that the owner was not entitled to seize, lease or otherwise dispose of such assets. Acts of disposal by the State and local authorities of the assets allocated to the unitary enterprise under its economic control had to be declared invalid pursuant to a claim by the respective enterprise (paragraph 40 of the Ruling). According to Ruling no. 10/22 of 29 April 2010 (cited in paragraph 48 above), the owner cannot dispose of such assets irrespective of the consent of the enterprise (paragraph 5 of the Ruling).
50. The company’s financial documents are subject to a compulsory annual audit and must be forwarded to the competent State and municipal authorities (section 26 of the Unitary Enterprises Act). The owner sets the company’s economic performance targets and oversees its achievement of those targets (section 20 of the Act).
51. Other relevant domestic provisions and case-law governing unitary enterprises with the right of economic control are summarised in Liseytseva and Maslov(cited above, §§ 54-127), and Samsonov v. Russia ((dec.), no. 2880/10, 16 September 2014).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 ON ACCOUNT OF THE NON-ENFORCEMENT
52. The applicant complained of the non-enforcement of domestic decisions given in his favour. He relied on Article 6 § 1 of the Convention and on Article 1 of Protocol No. 1 to the Convention, which read as follows:
Article 6 § 1
“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.”
53. The Government argued that the decisions in the applicant’s favour had been issued against a commercial organisation, which was independent from the authorities and did not perform any public function. Furthermore, the debtor company had not been liquidated and was still in operation, so the debts were still recoverable. In particular, in 2015 the bailiffs had seized the power supply network in Tsalyk, and were taking measures to sell the assets, so that the debts could be recovered from the proceeds of the sale. The Government accordingly submitted that the company’s debts were not attributable to the State.
54. The applicant maintained that the State was responsible for the debtor company’s debts. He argued that the debtor company performed a public function, that the property initially allocated to it constituted socially important assets, and that the debtor company was placed under the authorities’ control. The owner had disposed of its assets as it had seen fit, as it had transferred them to the OOO. The lease agreement had not been properly registered, as it had deprived the company of the ability to perform its objectives as set out in its memorandum and articles, and therefore had clearly been in breach of the domestic law. As a result of the transfer, the company had become unable to perform its functions, let alone satisfy its creditors’ claims. For years, it had been de facto insolvent. However, despite all evidence of its insolvency, the owner had failed to take steps to improve its situation, and no authority had filed an insolvency petition, despite their obligation to do so. There had been no prospects of successful enforcement of the judgments in his favour. The Government’s reference to the company’s alleged title to the electricity supply facility in Tsalyk was unsubstantiated.
A. Admissibility
1. Compatibility ratione personae
55. The Court will first address the Government’s argument that the judgment debts could have been recovered directly from the debtor company, and that State responsibility could not be relied on as the debtor had not been liquidated and was in operation at the material time.
56. The Court reiterates its findings in Zhdanov and Others v. Russia where the debtor unitary enterprise was not insolvent or subject to liquidation at the time of the events, and it was not argued that it lacked sufficient funds or operational capacity to enforce the judgment in the applicant’s favour. In that case, the Court found that, as long as the company had sufficient assets on its balance sheet, the State could not be held responsible for the company’s failure to pay its debts (see, mutatis mutandis, Zhdanov and Others v. Russia (dec.), nos. 48028/07 and 15 others, §§ 63-64, 28 June 2016).
57. However, unlike in Zhdanov and Others, in the present case the applicant convincingly demonstrated – and it was not disputed by the Government – that, as early as in 2007, the unitary enterprise had been stripped of all its assets as a result of their transfer to the OOO (see paragraphs 9, 11 and 12 above). Since then, it has accumulated debts towards its creditors, including the applicant. As confirmed by the bailiffs, since 2007 it has not conducted any economic activity, including the performance of its objectives as set out in its articles of association (see paragraph 19 above). It appears, however, that the assets’ transfer has never been disputed at the domestic level, even though a unitary enterprise could only dispose of assets in a manner which did not prevent it from carrying out its activities in accordance with its purpose and aims (see paragraphs 47‑48 above). No measures have either been taken or are anticipated which would improve the debtor’s situation. Further, no insolvency proceedings have been formally set in motion in respect of the debtor company, despite clear indications to that effect in the domestic law (see paragraphs 43 and 44 above). Finally, no trace of the debtor company was found at its only known address in 2014, even though the authorities kept confirming that the address was valid and up to date (see paragraph 36).
58. The Court further notes that in 2009-2014 the bailiffs service informed the applicant that there were no prospects of successful enforcement, as the debtor company had no assets (see paragraph 23 above). The Court rejects the Government’s reference to the bailiffs’ attempt to enforce in 2015 – that is, seven years after the enforcement proceedings began – by seizing and selling the power supply network in the refugee camp, as there is nothing in the case materials to suggest that the network has ever been transferred to the debtor company. On the contrary, as established by the authorities, its sale was impossible and, moreover, by 2016 the assets had not been registered at all (see paragraphs 25-26 and 40‑42 above).
59. The Court notes that is not called upon to address either the validity of the above-mentioned transfer of assets, or the formal lawfulness of the authorities’ ensuing actions, including those of the debtor company’s owner, or the choice not to bring insolvency proceedings in respect of the debtor company, in terms of the domestic law (see Liseytseva and Maslov, cited above, § 212). However, in view of the elements outlined above, the Court finds it established that, by contrast to Zhdanov and Others, for more than ten years to date the debtor company has not performed its objectives under the terms of its articles of association or any other economic activity, has not shown any assets on its balance sheet, and has not been able to meet its creditors’ claims, including the applicant’s ones. There is nothing to suggest that by 2016, the date of the parties’ latest submissions, there had been any prospects of the successful enforcement of the judicial awards in the applicant’s favour.
60. Accordingly, in the present case there is no reason to depart from the Court’s settled approach to the State responsibility for the debts of unitary enterprises on the ground that the company was formally regarded as operating in terms of the domestic law.
61. Otherwise, the Court has already dealt with the remaining Government’s arguments in the case of Liseytseva and Maslov. The Court held that the existing legal framework in Russia did not provide unitary enterprises with the degree of institutional and operational independence that would absolve the State from any responsibility under the Convention for the debts of such companies (see Liseytseva and Maslov, cited above, §§ 193-204). In order to determine the issue of State responsibility for the debts of unitary enterprises, the Court must examine whether and how the extensive powers of control provided for in the domestic law were actually exercised by the authorities in a given case (ibid., §§ 204-06). The present case is similar to Liseytseva and Maslov (ibid., §§ 208-19) from the standpoint of the debtor company’s functions and the degree of actual control exercised by the authorities over its activities, as follows.
62. Firstly, the company was set up to provide services of vital importance to the local population, such as an electricity supply (see paragraph 7 above). The property allocated for those purposes enjoyed special treatment under the domestic law, constituting “socially important assets”. The tariffs for the electricity supply services were set by the authorities. Therefore, the company was, by virtue of its functions, placed under the strict control of the authorities (see, among many other cases, Liseytseva and Maslov, cited above, §§ 208-10; Lyatskaya v. Russia, no. 33548/04, § 14, 18 September 2008; and Yershova v. Russia, no. 1387/04, § 58, 8 April 2010).
63. Secondly, the owner disposed of the debtor company’s assets as it saw fit. In particular, it ordered that the entirety of the assets allocated to the debtor company be leased to the OOO, and it formally approved the respective transfer (see paragraphs 9 and 12 above). As a result, as established by the bailiffs, the debtor company was no longer able to perform any economic activity and was unable to satisfy its creditors’ claims given its lack of assets (see paragraphs 19 and 23 above). Further, it was not argued that the district administration, which had to oversee the use of the property assigned to the debtor company (see paragraph 46 above) as well as set the debtor company’s economic performance targets and oversee their achievement (see paragraph 50 above), was unaware of the company’s situation. However, it appears that for years the founder avoided taking any measures to remedy it.
64. In the Court’s view, these elements demonstrate that a strong degree of State control was actually exercised by the municipal authority over the debtor company. Accordingly, the Court finds that the debtor company did not enjoy sufficient institutional and operational independence from the authorities, and dismisses the Government’sratione personae objection.
65. Therefore, the State is to be held responsible under the Convention for the debt owed by the debtor company to the applicant in accordance with the final judgments in his favour.
2. Conclusion
66. The Court further notes that the non-enforcement complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
67. The Court notes that the judgments in the applicant’s favour have not been enforced to date. The Court has, on several occasions, found violations of Article 6 of the Convention and of Article 1 of Protocol No. 1 to the Convention in respect of issues similar to those in the present case (see, for instance, Liseytseva and Maslov, cited above, §§ 208-24). The Court sees no reason to reach a different conclusion in the present case. By failing to take the necessary measures to comply with the final judgments in the instant case for ten years to date, the authorities have deprived the provisions of Article 6 § 1 of all useful effect, and have also prevented the applicant from receiving the money he was entitled to receive, which amounted to a disproportionate interference with his peaceful enjoyment of possessions.
68. Therefore, there has been a violation of Article 6 § 1 of the Convention and of Article 1 of Protocol No. 1 to the Convention on account of the non-enforcement of the two final and binding judgments in the applicant’s favour.
II. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION
69. The applicant complained of the lack of an effective remedy in respect of the non-enforcement. He relied on Article 13 of the Convention which reads as follows:
“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.”
70. The Court considers that this complaint should be declared admissible. However, having regard to its findings relating to Article 6 and Article 1 of Protocol No. 1, the Court considers that it is not necessary to examine whether, in this case, there has been a violation of Article 13.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
71. 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
72. The applicant made the following claims in respect of pecuniary damage. First, he claimed 1,709,537 Russian roubles (RUB) representing the unpaid debts under the judgments of 4 February and 17 April 2009, as index-linked by the decisions of the district court of 21 July 2014 and 27 April 2016, plus the interest awarded by the district court on 8 December 2014 (as index-linked on 27 April 2016) and 19 April 2016.
73. He further claimed RUB 58,310 and RUB 3,150 in respect of a further increase of the above awards on account of the inflation rate up to 1 September 2016, and submitted details of his respective calculations. He also claimed RUB 8,878 in relation to a court fee, and RUB 206,906.14 and RUB 91,698.75 for the fees for two credit lines that he had opened with two private banks, allegedly as a result of the non-enforcement.
74. He further claimed EUR 19,555 in respect of non-pecuniary damage.
75. The Government considered that the claim in respect of RUB 1,709,537 was unsubstantiated as those amounts could still be recovered at the domestic level. They further submitted that the claims in respect of the amounts the applicant owed to the banks for making use of credit lines and for the court fee were irrelevant to the present application. Finally, they disputed the claim in respect of non-pecuniary damage as unreasonable and stressed that nothing was to be awarded under that head as the applicant’s rights had not been violated.
76. The Court has found a violation of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention in that the judgments in the applicant’s favour have not been enforced to date. The most appropriate form of redress in respect of a violation of Article 6 is to ensure that the applicant as far as possible is put in the position in which he would have been had the requirements of Article 6 not been disregarded (see Poznakhirina v. Russia, no. 25964/02, § 33, 24 February 2005). The Court finds that in the present case this principle also applies, having regard to the violation found, and considers that the Government should pay the applicant the equivalent in euros of the unpaid judgment debts under the initial judgments in his favour.
77. The Court further considers that the adequacy of the compensation would be diminished if it were to be paid without reference to various circumstances liable to reduce its value, such as an extended delay in enforcement (see, mutadis mutandis, Gizzatova v. Russia, no. 5124/03, § 28, 13 January 2005). The Court notes that the domestic courts in 2014 and 2016 granted the applicant’s claims for index-linking of the awards and also ordered the debtor to pay him default interest (see paragraphs 29, 30, 32, 33, 35, 37 and 38 above). None of those decisions, in their turn, have been enforced by the debtor unitary enterprise. While no additional complaint was raised by the applicant in respect of these judgments – and, indeed, any such complaint would fall outside the scope of the applicant’s initial application – the Court will refer to those domestic courts’ decisions as evidence substantiating the applicant’s calculation of the inflationary loss and the default interest. The Court further notes that the Government have not disputed either the amount claimed, the method of calculating the losses chosen by the applicant (an inflation adjustment plus default interest, as further adjusted to the inflation rate), the period in question, or the method of calculation used by the domestic courts. It accordingly sees no reason to disagree with those calculations.
78. In sum, the Court awards the applicant the equivalent in euros of RUB 1,709,537 – to cover the unpaid judgments in the applicant’s favour of 4 February and 17 April 2009, as increased by the two sets of index-linking proceedings of 27 April 2016, plus the amount awarded to the applicant as default interest, as subsequently index-linked (see paragraph 72 above) – that is 22,882 euros (EUR), plus any tax that may be chargeable, in respect of pecuniary damage. As regards the remainder of the claims, the Court does not discern a causal link between the violation found and the pecuniary damage alleged and it therefore rejects the remainder of the claims under this head.
79. Having regard to all relevant circumstances and to its case-law (seeVoronkov v. Russia, no. 39678/03, § 68, 30 July 2015, with further references), the Court further awards the applicant EUR 2,000 in respect of non-pecuniary damage, plus any tax that may be chargeable, and rejects the remainder of the claims under this head.
B. Costs and expenses
80. The applicant claimed RUB 53,733.61 for the costs and expenses incurred before the Court. That amount consisted of RUB 50,000 paid by the applicant under two legal services agreements and RUB 3,202.96 for postal expenses. He further contended that the cost of sending his correspondence to the Court on 14 July 2011 should be index-linked to the inflation rate, and provided a calculation respectively.
81. The Government agreed that the applicant had substantiated his claims in relation to the amount of RUB 53,202.96 with relevant documents and they submitted that that amount could be awarded to the applicant. However, they disputed the applicant’s method of calculation of the adjustment of the cost for the postal services as unsubstantiated and unreliable.
82. Regard being had to the documents in its possession and to its case‑law, and noting the Government’s position on the matter, the Court considers it reasonable to award the applicant the equivalent in euros of RUB 53,202.96, that is EUR 730, plus any tax that may be chargeable to the applicant. It rejects the remainder of the applicant’s claims in respect of costs and expenses.
C. Default interest
83. 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. Declaresthe application admissible;
2. Holdsthat there has been a violation of Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention on account of the non‑enforcement of the two final judgments in the applicant’s favour;
3. Holdsthat there is no need to examine the complaint under Article 13 of the Convention;
4. Holds
(a) that the respondent State is to pay the applicant, within three months, the following amounts,to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 22,882 (twenty-two thousand eight hundred and eighty‑two euros), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii) EUR 2,000 (two thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(iii) EUR 730 (seven hundred and thirty euros), plus any tax that may be chargeable to the applicant, 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;
5. Dismissesthe remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 15 October 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Stephen Phillips Alena Poláčková
Registrar President
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