CEDH · CASELAW;REPORTS;ENG — 17 décembre 1987

.sDD6737AE { font-size:11pt } .s211D6B00 { margin-top:0pt; margin-bottom:0pt; line-height:normal; widows:0; orphans:0; font-size:8.5pt } .sBB9EE52A { font-family:Arial }  SCOTTS OF GREENOCK (ESTD. 1711) LTD. and LITHGOWS LTD   against   THE UNITED KINGDOM               Report of the Commission   (adopted on 17 December 1987)     - i -       CONTENTS                                                                 Page   I.       INTRODUCTION          (paras. 1-13).......................................     1           A. The application             (paras. 2-3).....................................     1           B. Proceedings before the Commission             (paras. 4-8).....................................     1           C. The present report             (paras. 9-13)....................................     2     II.      ESTABLISHMENT OF THE FACTS          (paras. 14-36)......................................     4           A.   The background to the Aircraft and Shipbuilding Industries Act 1977 and its legislative history              (paras. 16-19)..................................     4           1.   The nationalisation proposals (paras. 16-18)....     4           2.   The Parliamentary procedure (para 19)...........     4           B.   The 1977 Act (paras. 20-36).....................     5           1.   The general scheme of the 1977 Act(paras. 20-22)... 5           2.   Application of the 1977 Act to Scott Lithgow              (paras. 23-28)...................................    6           3.   Valuation of Scott Lithgow under the 1977 Act              (paras. 29-36)...................................    7   III.     SUBMISSIONS OF THE PARTIES          (paras. 37-73)......................................     9           A. The applicants             (paras. 37-59)...................................     9           1.   Article 1 of Protocol No. 1 to the Convention             (paras. 37-49)...................................    10           2.   Article 14 of the Convention in conjunction with             Article 1 of Protocol No. 1 (paras. 50-52........    11           3.   Article 6 of the Convention (paras. 53-58).......    12           4.   Article 13 of the Convention (para. 59)..........    13 - ii -           B. The Government             (paras. 60-73)...................................    13           1.   Article 1 of Protocol No. 1 to the Convention             (paras. 60-63)...................................    13           2.   Article 14 of the Convention in conjunction with             Article 1 of Protocol No. 1 (para. 64)...........    14           3.   Article 6 of the Convention (paras. 65-71).......    15           4.   Article 13 of the Convention (paras. 72-73)......    16   IV.      OPINION OF THE COMMISSION          (paras. 74-118).....................................    17   A.       Points at issue (para. 74)..........................    17   B.       Were the terms of the nationalisation of Scott          Lithgow in accordance with the applicants'          rights under Article 1 of Protocol No. 1?          (paras. 75-96)......................................    17           Conclusion (para. 97)...............................    22   C.       Was the method of valuation applied to Scott Lithgow discriminatory against the applicants, contrary to          Article 14 of the Convention read in conjunction with          Article 1 of Protocol No. 1? (paras. 98-100).........   23           Conclusion (para. 101)...............................   23   D.       Did the circumstances of the resale of Scott Lithgow          by the respondent Government in 1984 respect the          applicants' rights under Article 1 of Protocol No. 1?          (paras. 102-107).....................................   24           Conclusion (para. 108)...............................   25   E.       Did the second applicant's inability to refer          the matter of compensation to a tribunal or          court deprive it of access to court, contrary          to Article 6 para. 1 of the Convention ?          (paras. 109-110).....................................   25           Conclusion (para. 111)...............................   26   F.       Was the period taken to arbitrate the issue of the          £2 million loan a "reasonable time" within the meaning          of Article 6 para. 1 of the Convention.?          (paras. 112-114).....................................   26           Conclusion (para. 115)...............................   26   G.       Were the applicants deprived of an effective remedy          before a national authority in respect of          their complaints under the Convention within the          meaning of Article 13? (para. 116)..................    26      Conclusion (para. 117)..............................    26   H.       Recapitulation (para. 118)..........................    27   APPENDIX I:   History of the proceedings....................     28   APPENDIX II: Decision on admissibility ....................     30                             I. INTRODUCTION     1.       The following is an outline of the case as submitted to the European Commission of Human Rights, and of the procedure before the Commission.   A. The Application   2.       The first and second applicants, Scotts of Greenock (Estd. 1711) Limited and Lithgows Limited, are limited companies incorporated in Scotland with registered offices in Greenock.   The applicants have been represented by Mr.   D. Ross MacDonald, solicitor, of Messrs. Neill, Clerk & Plant Hill, solicitors of Greenock, and Mr.   Neville Maryan-Green, barrister-at-law and avocat at the Paris Court of Appeal.   The United Kingdom Government have been represented first by Mr.   M. R. Eaton and subsequently by Mr.   M. Wood, both of the Foreign and Commonwealth Office, London, as agent.   3.       The present application concerns the nationalisation of Scott Lithgow Limited ("Scott Lithgow"), which was owned by the first and second applicants. Scott Lithgow was nationalised pursuant to the Aircraft and Shipbuilding Industries Act 1977 ("the 1977 Act").   The applicants received £2.5 million in compensation which they claimed did not reflect the true value of the company at the time fixed by the 1977 Act for the assessment of compensation.   The applicants complain that they have not received prompt, adequate or effective compensation contrary to Article 1 of Protocol No. 1 to the Convention.   The second applicant also complains that they were unable to refer the matter of compensation to a court or tribunal and thus failed to receive the protection of the guarantees provided by Article 6 of the Convention. Both applicants also complain of a breach of Article 6 in that it took four years of arbitration to settle whether loans made to Scott Lithgow by the applicants were repayable. Both applicants further complain that the 1977 Act provides no remedy against its own terms, contrary to Article 13 of the Convention, and that the method of valuation of compensation which was appropriate for companies quoted on a Stock Exchange discriminated against Scott Lithgow, which was not so listed, contrary to Article 14 of the Convention.   B. The Proceedings   4.       The application was introduced by the first and second applicants, with a third applicant, (the Bank of Nova Scotia Trust Company (Bahamas) Limited), on 17 August 1981 and registered on 20 August 1981.   On 10 December 1981 the Commission decided, in accordance with Rule 42 para. 2 (b) of its Rules of Procedure, to give notice of the application to the respondent Government and to invite them to present before 12 March 1982 their observations in writing on the admissibility and merits.   5.       After an extension of the time-limit originally set, the respondent Government's observations were received on 30 June 1982. The applicants' observations were received on 24 November 1982 after an extension of the time-limit originally set.   A further submission in respect of Article 14 of the Convention was received from the applicants on 22 July 1983.   On the same date they also notified the Commission of the withdrawal of the application by the third applicant on the ground that this third applicant's claim was clearly inadmissible following the Commission's decision on admissibility in Lithgow and Others v. the United Kingdom (Applications Nos. 9006/80 and Others, Dec. 28.1.83).   6.       The Commission resumed its examination of the application on 12 July 1984 and decided to invite the parties to submit contemporaneously, before 19 October 1984, such further written observations on the admissibility only of the application as they considered necessary.   The respondent Government declined to submit any such further observations.   The applicants' further observations were received on 17 October 1984.   7.       The Commission examined the application again on 11 March 1985 and decided to declare it admissible.   The applicants were also invited to submit further submissions on fact and law arising out of the re-sale of Scott Lithgow in 1984.   These were received on 17 September 1985.   Following an extension of the time-limit, the respondent Government submitted observations in reply on 18 December 1985.   The applicants submitted further observations on 30 March 1986.   8.       The Commission decided on 9 May 1986 to adjourn its examination of the application pending the judgment of the European Court of Human Rights in the case of Lithgow and Others.   The Court gave its judgment on 2 July 1986 (Eur. Court H.R. Lithgow and Others judgment of 8 July 1986, Series A no. 102).   The Commission resumed its examination of the application on 10 October 1986 and decided to invite the parties to submit such further observations on the merits as they wished in light of the Court's judgment.   Submissions were filed by the respondent Government and by the applicants on 17 and 18 December 1986 respectively.   C. The Present Report   9.       The present report has been drawn up by the Commission in pursuance of Article 31 of the Convention and after deliberations and votes, the following members being present:                MM.   C.A. NØRGAARD, President                    J.A. FROWEIN             S. TRECHSEL                    G. SPERDUTI                    E. BUSUTTIL                    A.S. GÖZÜBÜYÜK                    A. WEITZEL          J.-C. SOYER                    H.G. SCHERMERS                    H. DANELIUS                    G. BATLINER                    J. CAMPINOS   Sir   Basil HALL               MM.   F. MARTINEZ                    C.L. ROZAKIS             Mrs.   J. LIDDY   10.      The text of this report was adopted on 17 December 1987 and is now transmitted to the Committee of Ministers of the Council of Europe, in accordance with Article 31 para. 2 of the Convention.   11.      The purpose of the Report, pursuant to Article 31 para. 1 of the Convention, is        i.    to establish the facts, and     ii.    to state an opinion as to whether the facts found disclose          a breach by the State concerned of its obligations under          the Convention.     12.      A schedule setting out the history of the proceedings before the Commission is attached hereto as Appendix I and the Commission's decision on the admissibility of the application as Appendix II.   13.      The full text of the parties' submissions, together with the documents lodged as exhibits, are held in the archives of the Commission.                         II. ESTABLISHMENT OF THE FACTS   14.      The facts as found by the Commission are set out below.   15.      The first and second applicants (together "the applicants") are long-established companies involved in shipbuilding, submarine construction and related trades.   They have been based in Greenock and Port Glasgow on the lower Clyde throughout their history.   In March 1966 the Shipbuilding Enquiry Committee, established by the Government, published its report.   This recommended that the 9 shipyards in the River Clyde be nationalised, preferably into not more than 2 group companies.   As a result of these recommendations the applicants discussed a merger, and in 1970 formed a new company, Scott Lithgow Limited ("Scott Lithgow") to carry on shipbuilding and engineering activities in Greenock and Port Glasgow.   The £2.5 million nominal share capital of Scott Lithgow was held by the first applicant as to 60% and by the second applicant as to 40%.     A.       The background to the Aircraft and Shipbuilding Industries          Act 1977 and its legislative history           1.   The nationalisation proposals   16.      Following the General Election held on 28 February 1974 the Labour Party gained office from the Conservatives and formed a Government.   They did not have an overall majority in the House of Commons but a further General Election was held on 10 October 1974, at which the Labour Party was returned with an overall majority. Nationalisation of the aircraft and shipbuilding industries formed part of the political programme set out in the Labour Party's election manifesto published on 8 February 1974 and had been Labour Party policy for some time previously.   17.      On 31 July 1974 the Secretary of State for Industry announced that the Government intended to pursue its election commitment to take the shipbuilding and shiprepair industries into public ownership and that provisions in the legislation for safeguarding the assets of the industries would be effective from that date.   A Discussion Paper was published on the same day giving details of the Government's proposals for nationalising these industries.   18.      This consultative document contained, inter alia, details of the grounds on which the Government considered nationalisation to be desirable. These were mainly that the Government believed that necesary changes could not come about while the industry was in fragmented private ownership, and that public ownership of the major companies offered the only effective prospect of enabling British shipbuilding to survive and prosper in highly competitive world markets.   The document also gave details of the companies which it was proposed to take into public ownership.   The document stated that "fair compensation" would be paid for interests nationalised, although details of the compensation terms were not specified at that time.           2.   The Parliamentary proceedings   19.      The Parliamentary proceedings which led to the enactment of the Aircraft and Shipbulding Industries Act 1977 ("the 1977 Act") were exceptionally long and complex.   There was protracted opposition to successive Bills introduced by the Government, this opposition being particularly concentrated on the compensation terms.   These were attacked as being fundamentally unfair, but were ultimately enacted without substantial change. Successive Bills were presented to the House of Commons and the House of Lords.   The third such Bill (the earlier two having failed) was introduced into the House of Commons on 26 November 1976 (in the 1976-77 Parliamentary session) and completed all procedural stages there by 7 December 1976.   In view of the opposition which the previous Bills had met, the third Bill was then introduced into the House of Lords under a procedure provided for by the Parliament Acts 1911 and 1949 under which it could pass into law without the assent of the House of Lords.   The Bill received the Royal Assent, and passed into law, on 17 March 1977.   The compensation terms enacted were essentially the same as those in the first Bill and there were no material changes between the Bill as enacted and the first Bill in relation to the interests whose nationalisation was provided for.   B.       The 1977 Act           1.       The general scheme of the 1977 Act   20.      The 1977 Act provided for the setting up of two public corporations, "British Aerospace" and "British Shipbuilders" (Section 1).   It provided (Section 19) that the shares of a number of specified companies engaged in the shipbuilding industry (Schedule 2), including those of Scott Lithgow, should vest in British Shipbuilders.   "Vesting day", when the companies concerned thus passed into public ownership, was specified by Statutory Instrument as 1 July 1977.   The 1977 Act contained provisions designed to safeguard the assets of acquired companies against disposal during the period from 28 February 1974 until vesting day.   Such provisions were aimed at the control of dividend and interest payments (Sections 23 - 25), prevention of the transfer of assets (Sections 26 - 29) and the avoidance of certain other transactions (Sections 30 - 33).   21.      Provision was made for compensation to be paid on the basis of the actual or hypothetical Stock Exchange valuation of the shares in the acquired companies during a six month "reference period" ending in February 1974 (Sections 35 - 38), subject to deductions relating to certain transactions or payments caught by the safeguarding provisions (Section 39).   An Arbitration Tribunal was established for the purpose of determining disputes arising under the 1977 Act, including disputes as to the valuation of the securities nationalised (Sections 42 - 44 and Schedule 7 to the 1977 Act).   22.       Under the 1977 Act, on 1 July 1977 the shares of Scott Lithgow vested in British Shipbuilders.   Compensation for the shares in the company was payable in accordance with the provisions of Part II of the 1977 Act.   The amount payable thereunder was the "base value" of the securities, subject to various deductions (Sections 35 and 39). The "base value" in the case of securities listed on the Stock Exchange was, broadly speaking, the average amount at which they were quoted over a six month period ("the reference period") running from 1 September 1973 to 28 February 1974 (Sections 37 and 56).   However, in the case of securities not listed on the Stock Exchange the "base value" was to be such as might be determined by agreement between the Secretary of State and a "Stockholders' Representative", or, in default of agreement, such as might be determined by the Arbitration Tribunal to be the base value which the securities would have had if they had been listed throughout the reference period (Section 38). The Scott Lithgow shares were not listed on the Stock Exchange and so fell to be valued on the basis of a hypothetical Stock Exchange listing.           2.   Application of the 1977 Act to Scott Lithgow   23.      Pursuant to the provisions of Section 38 of the 1977 Act, four methods of valuation of shares were actually used by the Government: an earnings-based valuation (used for profitable companies), an assets-based valuation (used for unprofitable companies, non-holding companies and non-profit-making companies), a parent-company related valuation (used where the vesting company carried on the main part of the total undertaking of a listed company) and a share capital related valuation method.   The share capital related valuation method was used only in relation to Scott Lithgow.   24.      A Stockholders' Representative was immediately appointed by the applicants pursuant to the terms of the 1977 Act.   Shortly thereafter a dispute arose as to whether loans totalling £2 million made in 1970 by the applicants to Scott Lithgow were loans repayable as such by Scott Lithgow (as the applicants contended), or alternatively capital of that company for which the applicants would be compensated under the terms of the 1977 Act.   Notices served on the applicants by the Department of Industry in November 1977 and March 1978 contended for the latter interpretation.   Provisional notice was given to the Arbitration Tribunal by the applicants that this question might become the subject of a reference to it, and a reference was ultimately made after the failure of protracted negotiations, in April 1979.   The Arbitration Tribunal found in the applicants' favour on 17 December 1980.   25.      Court proceedings were also begun by the applicants in August 1978 to challenge Scott Lithgow's refusal after vesting day to pay interest on the £2 million sum, following which interest was paid from January 1979.   26.      Negotiations took place between the Stockholders' Representative acting on behalf of the applicants and the Secretary of State as to the amount of compensation to be paid.   The Secretary of State made an initial offer of £2.4 million prior to the decision of the Arbitration Tribunal concerning the £2 million loan.   This offer consisted of £1 million compensation to settle the question of the loan and £1.4 million by way of compensation under the 1977 Act. Following the decision of the Arbitration Tribunal the Stockholders' Representative received a verbal indication that the maximum sum the Secretary of State would pay for the whole capital of Scott Lithgow was £1.65 million. However, following further meetings, the Stockholders' Representative obtained on 18 March 1981 an offer from the Secretary of State of £2.5 million as compensation for the whole capital of Scott Lithgow.   27.      After unsuccessful attempts to persuade the Government to raise this offer by way of meetings and correspondence with Government Ministers, the Stockholders' Representative recommended that the offer be accepted.   The first applicant adopted this recommendation but the second applicant instructed the Stockholders' Representative not to accept the offer.   On 12 August 1981, having received these instructions, the Stockholders' Representative accepted the offer.   28.      Pursuant to Section 36 (6) of the 1977 Act two payments on account of compensation were made on 6 December 1978 and 21 December 1980 by the issue of Government stock to a value of £300,000 and £400,000 respectively.   The balance of £1.8 million was paid on 17 August 1981.           3.   Valuation of Scott Lithgow under the 1977 Act   29.      The Government's advisers, Whinney Murray & Co., in their Report of 12 April 1978 (the Whinney Murray Report) approached the valuation of Scott Lithgow by using a share capital related valuation method, a fact of which the applicants only became aware in the course of the proceedings before the Commission.   This valuation method had two principal elements:   first the establishing of a comparable, in this case Harland & Wolff Limited ("Harland"), and secondly the calculation of the appropriate value to be ascribed to Scott Lithgow inter alia by reference to the level of its nominal share capital (i.e. the number of shares issued in the company), as compared with the nominal share capital of the comparable.   30.      Harland was a shipbuilding company based in Northern Ireland which was not nationalised under the 1977 Act.   It was quoted on the Stock Exchange, which enabled a basis for calculating a hypothetical Stock Exchange listing to be established by comparing the value of its shares in relation to its nominal share capital.   31.      The Whinney Murray Report contained a financial assessment of Scott Lithgow and its prospects in the period leading up to the reference period. This referred to the company's substantial capital expenditure programme, but also to an erratic pattern of trading results for the three years ending on 31 December 1972, which were influenced notably by certain fixed price contracts on which provision had been made for losses amounting to £7.25 million. Nevertheless, the results showed an improvement from the loss of £5 million in 1970. Trading in 1972 had been badly affected by a 17-week strike of certain workers, but Government shipbuilding construction grants (of £1.5 million) were received for the first time, and applied towards the anticipated losses on the fixed price contracts.   The Government's announcement in July 1973 that all UK warship contracts would in future be placed with three specified companies excluding Scott Lithgow was assessed as having a serious impact on the company.   32.      The short-term prospects for the company were poor in view of the fixed price contracts which still awaited completion, but, in view of the provisions made for these loss-making contracts "at best a breakeven result might be expected for the year ended in 31 December 1973.   The longer term prospects depended upon Scott Lithgow's ability to clear the loss-making contracts as quickly as possible and to obtain the funds necessary to finance these losses. As a result, the prospects of earnings must be viewed with caution."   33.      The Whinney Murray Report continued by stating that the stock market's view of a loss-making merchant shipbuilding similar to Scott Lithgow was best reflected by a consideration of the market capitalisation of Harland.   An assessment of that company showed that, despite the fact that it had not earned a profit for nearly a decade its market capitalisation averaged approximately £35 million during the reference period, which represented 31.8% of the nominal value of Harland's share capital and a premium of 326% to the value of Harland's net assets as of 31 December 1972.   Harland had received a total of some £57 million in State aid in order to maintain its viability.   34.     The Whinney Murray Report then compared these figures with those applicable to Scott Lithgow.   It stated that the £2 million inter company loan should be treated as capital and that accordingly the aggregate nominal value of Scott Lithgow's share capital and inter-company debt to be treated as security was £4.5 million.   On the assumption that the stock market would have regarded Scott Lithgow as similar to Harland, its average market capitalisation during the reference period "might have approximated to 31.8% of £4.5 million; i.e. £1.431 million".   This section of the Whinney Murray Report concludes with the words "in our view this represents the highest figure which could be placed on the market capitalisation of Scott Lithgow".   35.      The Whinney Murray Report then continued to make a comparison with the net asset values of the two companies.   The net tangible assets as disclosed by Scott Lithgow's balance sheet at 31 December 1972 amounted to £280,000.   The suggested valuation of £1.431 million represented a premium to net assets of 411% which compared to the equivalent premium of 326% in the case of Harland. It was noted that a revaluation of Scott Lithgow's fixed assets on an existing use basis, assuming an adequate level of profitability, was carried out retrospectively in 1974 after the end of the reference period and produced a revaluation surplus of £12.5 million.   However, since the revaluation did not take place until after the reference period and there was no "adequate level of profitability" to support it, the Whinney Murray Report concluded that "no account of (the revaluation) should be taken in the valuation".   36.      In October 1980 British Shipbuilders announced that its operations were to be reorganised into five divisions.   Scott Lithgow was to be the nucleus of the new division concerned with offshore oil work.   The property and business which was nationalised under the 1977 Act as Scott Lithgow was subsequently sold by the Government in 1984 to another company.   The applicants allege that the resale price considerably exceeded the compensation which they had received on nationalisation.   The Department of Trade had announced in 1984 that the price paid for these assets was £12 million.   The Government however submit that the cost of sale to the Government was considerably more, since under the terms of the sale, the Government restructured the balance sheet of Scott Lithgow at a cost of £71 million of public funds and various substantial contingent liabilities have since crystallised or remained outstanding.                     III. SUBMISSIONS OF THE PARTIES   A.   The applicants           1. Article 1 of Protocol No. 1 to the Convention   37.      The applicants invite the Commission to consider particularly, since there has been no determination by a tribunal or court of that compensation claim, whether the applicants have been treated "subject to the conditions provided for by law".   The applicants claim on the basis of the information provided by the Government as to the implementation of the 1977 Act, which is now available to them for the first time, that the 1977 Act was not applied by the Secretary of State in accordance with its express terms or the avowed intention of Parliament.   The Minister interpreted the Act as empowering him to begin a process of negotiation at a starting point below the value his advisers had put on the company.   This amounted to an attempt to take the companies for less than they were worth.   It was unjustifiable under the 1977 Act, outrageous in its effect, and not in conformity with law for the purposes of Article 1 of Protocol No. 1.   38.     In the light of the judgment of the European Court of Human Rights in the James case (Eur.   Court H.R., James and Others judgment of 21 February 1986, Series A no. 98) the applicants no longer base their claim on the general principles of international law.   39.      The applicants do claim however that under Article 1 of Protocol No. 1 they are entitled to compensation reasonably related to the value of the property taken.   The Government took the shares in Scott Lithgow and thus all the assets of the company - land, buildings, plant, stock, goodwill and cash. The value of these assets at the reference period was at least £18 million which represent £37 million at values current on the vesting date.   The compensation of £2.5 million paid by the Government was grossly disproportionate to the value of the property which the Government took.   40.      This disproportion is partly explained by the method of valuation applied by the Government under the 1977 Act, which disregarded the facts and was based on a hypothetical valuation.   41.      The Court in Lithgow and Others (Eur.   Court H.R., Lithgow and Others judgment of 8 July 1986, Series A no. 102) held that governments enjoy a wide discretion in settling the terms of a nationalisation.   The present applicants submit the Government have exceeded this margin of appreciation, since the method of valuation used by the Government was without reasonable foundation. In Lithgow and Others, the Court found that compensation based on share values and a hypothetical stock market valuation was not in principle unacceptable. The Court also found that it was not unreasonable to make no allowance for developments in the companies' fortunes between 1974 and 1977, nor to disregard the special value of large or controlling shareholdings.   It was in these findings that the Court demonstrated the wide margin of appreciation enjoyed by governments. The present case is however distinguishable from the previous cases in which the applicants primarily depended on showing a difference between 1974 and 1977 values to establish disproportion.   In the present case, the applicants complain that the Government's basis of valuation at the time of the reference period itself was basically flawed.   42.      Prior to nationalisation, Scott Lithgow's yards were modern, well-equipped and expanding.   A substantial new yard had been built, there was an experienced workforce, design team and management and at the start of the reference period the order work stood at £152 million.   The company was securing its long term future by investing in oil-related work and there was a real demand for its services.   The Government, however, assessed compensation for this company by reference to its nominal share capital - a method not applied to any other nationalised company.   This was inappropriate and cannot be justified.   The Whinney Murray Report produced on behalf of the Government is prejudiced, inaccurate and flawed.   The approach taken with reference to nominal share capital is without justification in law or in fact.   The nominal share capital is the amount of money which the promoters wish to be regarded as retained in the accounts of the company in the name of share capital to allow suitable division of ownership.   It has no relationship to the value of the company; the Whinney Murray Report nevertheless used the nominal share capital as a reference point for valuing Scott Lithgow.   The inappropriateness of this approach may be illustrated by examples;   for example, the nominal share capital of Marks and Spencer Plc is £660 million, whereas its stock exchange value is £4,750 million.   43.      Harland was an inappropriate comparable.   It had received massive Government aid exceeding £57 million, whereas Scott Lithgow had received only £1.5 million.   It was consistently unprofitable and had not developed any specialist or profitable diversification which could be compared with Scott Lithgow's development of expertise in the offshore oil sector, which was regarded as a major opportunity which the company was pursuing and developing as a matter of priority.   44.      In the absence of a history of relevant earnings or dividends, but with a prospect of profitability, or at the very least no profit/no loss near the relevant time, the Stock Exchange would have regard to net asset value as a basis of valuing a company's shares. The Whinney Murray Report also relies on the Government's policy announcement that in future all United Kingdom warship contracts would be placed with specified shipbuilders, excluding Scott Lithgow. However, the applicants deny this had any bearing on the profitability of the company, which had already withdrawn from surface warshipbuilding and concentrated on other areas, notably the offshore oil sector.   Nor does the Whinney Murray Report take any sufficient account of the fact that Scott Lithgow, as a private company, was not managed in the same way as a quoted company would have been.   Whereas quoted companies are in practice obliged to maintain short term profitability or lose shareholders' confidence, Scott Lithgow was able to plan for long term development, as illustrated by its capital expenditure, highly specialised workforce and development of specialist skills, such as those for building offshore oil equipment.   45.      In conclusion, there was a manifest disproportion between the compensation and the company's true value for which no reasonable justification has been offered and the case differs from the previous nationalisation cases in that the Government applied a method of valuation applied to no other company.   46.      The applicants also seek compensation for the effects of inflation.   In the light of the Court's judgment, this claim should be met by payment of interest at 10% from the date when compensation should have been paid.   47.     The applicants also submit that the sale of Scott Lithgow back to the private sector and the manner in which this was carried out further compounded the imbalance of public and private interest created by the nationalisation. The resale calls into doubt whether the nationalisation of Scott Lithgow met the public interest requirements recognised by the Court.   Nationalisation was aimed at supporting and renewing conventional shipbuilding.   However, Scott Lithgow had in fact been increasing its output, had re-equipped and modernised its facilities, had not been dependent on Government money and its planned future was in the offshore oil sector.   The Government excluded another company, Marathon, from nationalisation, which was engaged in the construction of drilling rigs.   If it was not in the public interest for that company to be nationalised, the applicants doubt whether it could be said to be so in the case of Scott Lithgow.   48.      Scott Lithgow had to be sold by the Government because of the failure of the State to operate the company properly.   Delays in performance had led to prolonged contracts to such an extent that Scott Lithgow would have run out of work.   The company was nevertheless sold at a substantially higher price than had been given to the applicants in compensation: the applicants contend that from Government statements it can be deduced that the price was at least £19.1 million.   49.      The applicants also complain that no approach was made to them as former owners when the Government began to consider resale. The company was sold to a third party without taking any of the concerns or interests of the former owners into account.   The applicants complain that this course failed to respect their rights and privileges as dispossessed owners, rights which should be enforceable when the State decides to dispose of expropriated property. They refer to the Crichel Down Rules which guide the Government's policy relating to the resale of surplus land which was compulsorily acquired.           2. Article 14 of the Convention in conjunction with             Article 1 of Protocol No. 1   50.      The applicants submit that there has been discrimination i) in favour of quoted companies as against unquoted companies, and ii) against Scott Lithgow compared with all other companies nationalised under the 1977 Act.   51.      As to i), a single system applying to both quoted and unquoted companies was not appropriate.   It ignored profound differences between them and the Government acted as if such differences did not exist.   To treat unquoted companies as if they were quoted was unreasonable, unjustified and discriminatory.   Since the basis of computation of compensation was only appropriate for companies quoted on the Stock Exchange, the respondent Government discriminated against companies which were not so listed.   Moreover, the fact that 9842/81   compensation was promptly paid to the quoted companies, while the unquoted companies were only paid much later, was also discriminatory.   52.      As to ii), there were two main aspects of the discriminatory treatment of Scott Lithgow.   First, the use of the nominal share capital of Scott Lithgow as an indicator of the compensation payable, in the application of the "share capital related" valuation method to the company.   Secondly, Scott Lithgow was the only one among the supposedly unprofitable companies to which this valuation method was applied.   Discrimination arose from the calculation of the compensation due according to an unjustifiable method, which was applied to this company alone among all those concerns nationalised.           3. Article 6 of the Convention   53.      The second applicant complains that, despite its instructions, the final compensation offer was not referred to the Arbitration Tribunal by the Stockholders' Representative.   The terms of the 1977 Act empowered the Stockholders' Representative to refuse such an instruction where a majority of shareholders opposed it.   Hence the second applicant had no opportunity to refer the matters complained of to the Arbitration Tribunal.   There was no way of referring this question to another tribunal or court, and the second applicant has thus failed to receive the protection of the guarantees provided by Article 6.   While it was no doubt more practical for the shareholders to appoint one person to negotiate for them, there was no reason why (after agreement had been reached) dissatisfied shareholders should not have been entitled to initiate proceedings in relation to their own shareholdings.   In any event, reasons of administrative convenience cannot be invoked to excuse a failure to respect Convention rights.   54.      The Stockholders' Representative was not, in the last analysis, a representative at all, but a person with independent rights under the 1977 Act.   He did not require the consent of the former shareholders before agreeing compensation, deciding to refer to arbitration etc.   He, not the shareholders, was a party to any arbitration.   Not only was he not required to obtain the approval of the applicants, he in fact failed to act in accordance with the applicants' wishes in matters vital to the determination of compensation. There was no machinery of any kind by which the applicants themselves could obtain a fair and public hearing.   In view of these facts the provision of the Arbitration Tribunal under the 1977 Act did not satisfy the applicants' rights under Article 6 para. 1.   Nor was there any sufficient reason for this restriction on direct access.   Of the 27 private companies nationalised, only one had more than three shareholders.   The remaining 26 companies had 32 shareholders between them and the overall total number of shareholders was 103.   It should have been within the capability of the Government to provide a proper system for shareholders in these circumstances.   55.      No justification can be found in the Golder case (Eur. Court H.R., Golder judgment of 21 February 1975, Series A no. 18) for the limitation on access to court at issue here.   The legitimate restrictions conceived of by the Court in that case were limitations inherent in the nature of the right and the capability of the beneficiaries of that right to exercise it.   The State cannot use   9842/81   minor reasons of administrative convenience to justify actual denial, not mere limitation, of a fundamental right.   56.       The applicants complain together that in order to protect their interests they were obliged to refer the question of the alleged £2 million loan to arbitration, and to institute court proceedings to achieve the payment of interest on this loan.   Their claim to compensation could only be quantified after such steps, which took four years, had been taken.   Such a four