Last Updated on November 20, 2019 by LawEuro
SECOND SECTION
DECISION
Application no. 38649/08
Alaattin ERDEM and Others
against Turkey
The European Court of Human Rights (Second Section), sitting on 8 October 2019 as a Committee composed of:
Valeriu Griţco, President,
Egidijus Kūris,
Darian Pavli, judges,
and Hasan Bakırcı, Deputy Section Registrar,
Having regard to the above application lodged on 23 July 2008,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,
Having deliberated, decides as follows:
THE FACTS
1. A list of the applicants is set out in the appendix.
2. The Turkish Government (“the Government”) were represented by their Agent.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
1. The background to the case
4. On an unspecified date the applicants opened accounts at Türkiye İmar Bankası T.A.Ş. (hereinafter “Imarbank”).
5. By a decision dated 3 July 2003 (no. 1085), the Banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu – hereinafter “the Board”) revoked Imarbank’s licence to conduct banking activities pursuant to section 14(3) of the Banking Activities Act (Law no. 4389). In its decision, the Board stated that Imarbank could not fulfil its liabilities and had failed to take the measures required, and that the continuation of its activities would threaten the rights of its depositors as well as the security and stability of the financial system. In line with that decision, the bank’s management and control were transferred to the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu – hereinafter “the Fund”) under section 16(1) of the same Act.
6. On 16 December 2003 Law no. 5021 on certain actions to be taken regarding Imarbank entered into force. By a decision of 3 January 2004 (no. 2003/6668), the Council of Ministers regulated the modalities of the reimbursement to be made to Imarbank’s depositors in line with Law no. 5021. Subsequently, the Fund started reimbursing the depositors by opening accounts in their names at Ziraat Bank, a State bank. The reimbursement was made on the condition that the depositors signed a document entitled “the certificate of relief and undertaking”. By signing such certificates, they relieved the State authorities of all debt and relinquished any claim to a surplus in respect of the savings deposited with the bank and the interests accrued.
2. The proceedings brought by the applicants
7. At the time of Imarbank’s transfer to the Fund, the applicants’ savings deposits at the bank amounted to approximately 288 billion former Turkish liras (TRL).
8. Following the State’s takeover of Imarbank, on 8 September 2003, the applicants applied to the Board and the Fund and requested the payment of the amounts deposited with their accounts. In the absence of a response from the authorities, on 31 December 2003 they initiated proceedings against the Fund and the Banking Regulation and Supervision Agency, requesting the annulment of the authorities’ implicit refusal to reimburse them their money. They also claimed their savings deposit, together with legal interest. Two of the applicants, Mr Erkan Erdem and Mr Mustafa Talat Erdem, brought a separate case with the same claims.
9. On 16 January 2004 a total of TRL 288,178 billion was deposited with time deposit accounts opened in the name of the applicants at Ziraat Bank. Interest calculated on the basis of the consumer price index was applied to that amount. The applicants refused to sign the certificate which would allow them to withdraw their money.
10. During the course of the proceedings, on 14 December 2007, a branch of Ziraat Bank informed the domestic court that, in the absence of any request from the applicants, the amounts deposited in their names remained in their accounts.
11. On 16 January 2008 the Istanbul Administrative Court stated that it did not need to deliver a judgment on the merits of the case as the matter had been resolved by the payment made to the accounts opened in the applicants’ names at Ziraat Bank. Referring to Law no. 5021 and the Council of Ministers’ decision no. 2003/6668, the Administrative Court found that the payment made to the applicants, together with interest calculated on the basis of the consumer price index so as to protect them from monetary depreciation, was in accordance with law. In that connection, it stated that the interests accrued previously in the accounts, on the basis of the rates determined by Imarbank, were not within the scope of the savings deposit insurance and could not be reimbursed. Moreover, no additional interest could be applied to the savings deposits in banks transferred to the Fund following the date of transfer.
12. On 20 March 2008 the Ankara Administrative Court ruled on the second set of proceedings initiated by two of the applicants. That court also held that the matter had been resolved and that it did not need to deliver a judgment on the merits of the case. In doing so, it repeated the reasoning provided by the Istanbul Administrative Court in the first set of proceedings.
13. On 21 March 2008 the applicants filed an appeal, stating that they could not withdraw the money deposited with Ziraat Bank as they did not accept the modalities of reimbursement and refused to sign the certificates.
14. By two decisions delivered on 2 July 2010 the Supreme Administrative Court upheld the first-instance courts’ judgments.
15. On 28 January 2016 Ziraat Bank informed the applicants that, in the absence of any transactions made until that date, their accounts ran the risk of being transferred to the Fund on account of the ten-year statutory time-limit, in line with section 62 of the Banking Activities Act (Law no. 5411). The bank invited the applicants to consult the branch where they had their accounts.
B. Relevant domestic law
16. Section 1 and provisional section 1 of Law no. 5021 on certain actions to be taken regarding Imarbank stipulated that the Fund would reimburse the depositors of the banks, which had been transferred to it, their savings deposits, in so far as those deposits were covered by the savings deposit insurance. The modalities of reimbursement, that is to say, the payments to be made in instalments depending on the amounts, the interest rates which would be applied to these payments, and the issues regarding the certificates which would be requested from the depositors for reimbursement would be regulated by the Board.
17. The Council of Ministers decision (no. 2003/6668) of 3 January 2004 determined the modalities of reimbursement in line with Law no. 5021. The decision set forth that the savings deposits in Imarbank would be paid to the depositors together with interest which would be calculated on the basis of the interest rates applied by the five largest banks and applied until 3 July 2003, the date the bank had been taken over by the State (Articles 6 and 9). The reimbursed amounts would be deposited with time deposit accounts opened in the names of the depositors and interest calculated on the basis of the consumer price index would be applied to these amounts until their maturity date (Articles 7 and 8). The payment would be made to the depositors on the condition that they signed a “certificate of relief and undertaking”, whereby they would declare that they were paid all their receivables without any restriction on their use of their deposits and waived any claim they might have regarding the payments made. The decision also set forth that claims regarding the amounts accrued until the date of the deposits’ transfer to Ziraat Bank and the payments made in line with the modalities described would be directed at Imarbank, and in case of its bankruptcy, at its bankruptcy estate.
18. A description of the domestic law and practice with respect to the Compensation Commission (see paragraph 23 below) may be found in Turgut and Others v. Turkey ((dec.), no. 4860/09, 26 March 2013).
COMPLAINTS
19. The applicants complained under Article 6 § 1 of the Convention about the length of the administrative proceedings.
20. Relying on Article 1 of Protocol No. 1 to the Convention, they alleged that their right to peaceful enjoyment of property had been violated on account of the modalities of the reimbursement made to them for their accounts at Imarbank.
THE LAW
A. Article 6 of the Convention
21. The applicants complained under Article 6 of the Convention that the administrative proceedings had lasted for an unreasonably long time.
22. The Government submitted that the complaint was inadmissible on account of non-exhaustion of domestic remedies as the applicants had not applied to the Compensation Commission established by Law no. 6384 of 19 January 2013.
23. The Court points out that in the case of Turgut and Others (cited above) it found that the Compensation Commission constituted a remedy which the applicants were required to exhaust for the purposes of Article 35 § 1 of the Convention. However, in the present case the applicants have not applied to that Commission.
24. Accordingly, the Court finds that this complaint is inadmissible on account of the applicants’ failure to exhaust domestic remedies, pursuant to Article 35 §§ 1 and 4 of the Convention.
B. Article 1 of Protocol No. 1 to the Convention
25. The Government argued that the complaint under Article 1 of Protocol No. 1 was inadmissible for non-exhaustion of domestic remedies as both sets of proceedings initiated by the applicants were still pending before the Supreme Administrative Court. They contended, in the alternative, that the application was manifestly ill-founded. In that connection, they noted that at the time of its transfer to the Fund, Imarbank’s assets had not covered its liabilities and that the State authorities had arranged the modalities of reimbursement in order to create financial resources which would enable the Fund to reimburse all depositors. The Fund had made the payments to time deposit accounts in instalments and applied interest rates on the basis of the consumer price index in order to avoid any loss that would result from monetary depreciation. As the Fund had only been liable to reimburse the amounts covered by the savings deposit insurance, it had not made any payment to the depositors for the interests on the basis of the rates they had agreed upon with Imarbank before the bank’s transfer. The Government concluded that the applicants had not been made to bear a disproportionate burden as they had been reimbursed their savings deposits in full.
26. The applicants claimed that their right to peaceful enjoyment of possessions had been violated as they had not been paid interest calculated on the basis of the rates determined previously by Imarbank. They further argued that although legal interest should have been applied to the amounts reimbursed to them, the State authorities solely applied interest on the basis of the consumer price index, which according to them, had not been sufficient. Lastly, they submitted that the payment made to them in instalments, with time deposit and on the condition that they signed a document restricting their rights to bring their claims before domestic courts had been unlawful.
27. The Court does not consider it necessary to reach a conclusion regarding the exhaustion of domestic remedies since the complaint under Article 1 of Protocol No. 1 to the Convention is in any event inadmissible for the following reasons (see Çulha and Others v. Turkey (dec.), no. 7023/07 and 22 others, 15 May 2018).
28. The Court refers to its established case-law with regard to the structure of Article 1 of Protocol No. 1 and the three rules contained therein (see, among other authorities, Lekić v. Slovenia [GC], no. 36480/07, § 91, 11 December 2018). In the present case, it observes that Imarbank, whose liabilities exceeded its assets and whose management had failed to take the required measures (see paragraph 5 above), was taken over by the State as a measure to control the country’s banking sector. As a result, the applicants’ accounts, together with all their deposits and accrued interests, were transferred to the Fund, which subsequently reimbursed them their savings deposits on the condition that they signed a certificate relieving State authorities of all debt. To that end, their savings deposits were blocked in accounts opened in their names in a State bank. The Court considers that that measure which limited the applicants’ right to dispose of their funds amounted to a control of the use of property. It is therefore the second paragraph of Article 1 of Protocol No. 1 which is applicable in the present case (see Erdem and Egin-Erdem v. Turkey (dec.), nos. 28431/06 and 4 others, 17 November 2009, regarding the property rights of depositors of Imarbank, who had signed the above-mentioned certificate).
29. It is well-established case-law that the second paragraph of Article 1 of Protocol No. 1 must be construed in the light of the principle laid down in the first sentence of the Article. Consequently, an interference must achieve a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. The search for this balance is reflected in the structure of Article 1 as a whole, and therefore also in the second paragraph thereof: there must be a reasonable relationship of proportionality between the means employed and the aim pursued. In determining whether this requirement is met, the Court recognises that the State enjoys a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (see, among other authorities, Chassagnou and Others v. France [GC], nos. 25088/94 and 2 others, § 75, ECHR 1999‑III).
30. In cases of wide margin of appreciation the Court will respect the State authorities’ judgment as to what is in the general interest unless that judgment is manifestly without reasonable foundation (see Benet Czech, spol. s r.o. v. the Czech Republic, no. 31555/05, § 36, 21 October 2010, and the cases cited therein).
31. The Court notes that the impugned interference, namely, the State authorities’ reimbursement of the applicants’ savings deposits on certain conditions and without having applied the interest rate they had previously agreed upon with Imarbank, was made on the basis of Law no. 5021 and the subsequent decision no. 2003/6668 of the Council of Ministers, and pursued the general interest of protecting financial stability.
32. As regards the proportionality of the interference, the Court considers that the modalities of the reimbursement made to Imarbank’s depositors by the Fund intended to ensure the fair management of the depositors’ claims (see Erdem and Egin-Erdem, cited above) as the bank lacked financial resources to cover all of its debts (see, mutatis mutandis, Saggio v. Italy, no. 41879/98, § 35, 25 October 2001). Within that context, Imarbank’s depositors, including the applicants, were reimbursed their savings through time deposit accounts opened in their names at Ziraat Bank. The consumer price index was applied to those deposits in order to offset the negative effects of inflation that might arise due to the passage of time until the accounts reached their maturity date. Although the applicants needed to waive their claims against the State authorities in order to obtain the reimbursement, according to the Council of Ministers’ decision on the matter (no. 2003/6668), any claims to a surplus could still be directed at Imarbank or its bankruptcy estate. The Court observes that the applicants did not initiate such an action either when they first learnt of the amount deposited with the accounts at Ziraat Bank or following the Administrative Courts’ decisions not to deliver a judgment in their cases.
33. In that connection, the Court reiterates that States cannot be held directly responsible for the debts of private companies or the faults committed by their managers (see Kotov v. Russia [GC], no. 54522/00, § 116, 3 April 2012). Moreover, by depositing their money with a private bank, the applicants assumed certain risks, including those related to mismanagement and even fraud (ibid.). It also considers that in the present case there were no additional factors requiring the State to bear any civil liability for Imarbank’s lack of resources (see Ališić and Others v. Bosnia and Herzegovina, Croatia, Serbia, Slovenia and the former Yugoslav Republic of Macedonia [GC], no. 60642/08, § 115, ECHR 2014; see also Anokhin v. Russia (dec.), no. 25867/02, 31 May 2007, for the factors to be taken into consideration in order to establish such liability).
34. The Court further notes that the applicants did not specify the total amount they would have had reimbursed had the State authorities applied the interest rates offered by Imarbank before its takeover, or give any other details regarding the alleged loss they had suffered as a result of the rates applied by the Fund. It appears that TRL 288 billion, that is, the total sum corresponding to their deposits at the bank at the date it had been transferred to the Fund, was deposited with accounts in their names at Ziraat Bank. The fact that the applicants could not have access to those accounts due to their refusal to sign the required certificates does not alter this finding. In that connection, the Court points out that while the applicants did not wish to waive their claims before the Istanbul and Ankara Administrative Courts, it was still open to them to sign the certificates and receive the amount deposited with their accounts following the final decision regarding their cases (see paragraph 15 above).
35. In view of the above and having regard to the need to strike a fair balance between the general interest of the community and the property rights of the applicants, and of all those in the same situation with them, the Court considers that the means chosen by the domestic authorities in reimbursing Imarbank’s depositors were suited to achieving the general interest pursued (see, mutatis mutandis, Trajkovski v. the former Yugoslav Republic of Macedonia (dec.), no. 53320/99, ECHR 2002‑IV, and Molnar Gabor v. Serbia, no. 22762/05, § 50, 8 December 2009). It finds accordingly that the applicants cannot be said to have suffered an individual and excessive burden.
36. It follows that the complaint regarding the applicants’ right to peaceful enjoyment of possessions is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 7 November 2019.
Hasan Bakırcı Valeriu Griţco
Deputy Registrar President
______________
Appendix
| No. | Name | Birth year | Nationality | Place of residence |
| 1 | Alaattin ERDEM | 1945 | Turkish | Ankara |
| 2 | Erkan ERDEM | 1970 | Turkish | Ankara |
| 3 | Mustafa Talat ERDEM | 1968 | Turkish | Ankara |
| 4 | Zübeyde ERDEM | 1947 | Turkish | Ankara |
| 5 | Fatma ERDEM (BIÇAK) | 1978 | Turkish | Ankara |
Leave a Reply