CEDH · CASELAW;JUDGMENTS;GRANDCHAMBER;ENG — 3 avril 2012

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clear:both } .s7BE5FA7D { margin-top:0pt; margin-bottom:0pt; text-indent:14.2pt; text-align:center; font-size:14pt }     GRAND CHAMBER                   CASE OF KOTOV v. RUSSIA   (Application no. 54522/00)               JUDGMENT         STRASBOURG   3 April 2012     This judgment is final but may be subject to editorial revision. In the case of Kotov v. Russia, The European Court of Human Rights, sitting as a Grand Chamber composed of: Nicolas Bratza, President , Jean-Paul Costa, Josep Casadevall, Corneliu Bîrsan, Peer Lorenzen, Karel Jungwiert, Elisabet Fura, Alvina Gyulumyan, Egbert Myjer, Danutė Jočienė, Dragoljub Popović, Giorgio Malinverni, George Nicolaou, Ann Power-Forde, Kristina Pardalos, Guido Raimondi, judges , Andrei Bushev, ad hoc judge , and Johan Callewaert, Deputy Grand Chamber Registrar, Having deliberated in private on 12 January and 23 July 2011 and on 22   February 2012, Delivers the following judgment, which was adopted on the last ‑ mentioned date: PROCEDURE 1.     The case originated in an application (no. 54522/00) against the Russian Federation lodged with the European Court of Human Rights under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr   Vladimir Mikhaylovich Kotov (“the applicant”), on 17 November 1999. 2.     In the proceedings before the Chamber the applicant was granted leave for self-representation. In the proceedings before the Grand Chamber the applicant was granted legal aid. He was represented by Ms Evans and Mr Bowring, lawyers practising in the United Kingdom, and Mr Khasanov, a lawyer practising in Russia. 3.     The Russian Government (“the Government”) were initially represented by Mr P. Laptev, the former representative of the Russian Federation at the European Court of Human Rights, and subsequently by their Representative, Mr G. Matyushkin. 4.     The applicant alleged, in particular, that it had been impossible for him to obtain the effective repayment of money owed to him in the context of the liquidation of a private bank. 5.     The application was allocated to the First Section of the Court (Rule   52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (former Article 27 § 1 of the Convention, now Article 26) was constituted as provided in Rule 26 § 1. 6.     On 4 May 2006 the application was declared partly admissible by the Chamber. The Government, but not the applicant, filed further written observations (Rule 59 § 1). 7.     On 14 January 2010 a Chamber of the first Section, composed of the following judges: Christos Rozakis, Nina Vajić, Anatoly Kovler, Elisabeth Steiner, Khanlar Hajiyev, Dean Spielmann and Sverre Erik Jebens, assisted by Søren Nielsen, Section Registrar, delivered its judgment. The Chamber held unanimously that there had been a violation of Article 1 of Protocol No. 1 in that the applicant, on account of unlawful actions by the bank’s liquidator, had not obtained effective payment of the money owed to him by the bank in accordance with the statutory principle of proportional distribution of assets amongst creditors with the same priority ranking. It made no award under Article 41 of the Convention, since the applicant had failed to submit claims in this respect. 8.     On 9 April 2010 the Government requested, in accordance with Article   43 of the Convention and Rule 73, that the case be referred to the Grand Chamber of the Court, and the Panel of the Grand Chamber accepted that request on 28 June 2010. 9.     The composition of the Grand Chamber was determined according to the provisions of former Article 27 §§ 2 and 3 (now Article 26 §§ 4 and 5) of the Convention and Rule 24. 10.     The applicant and the Government each filed written observations on the merits. 11.     A hearing took place in public in the Human Rights Building, Strasbourg, on 12 January 2011 (Rule 59 § 3). There appeared before the Court: (a)     for the Government Mr   G. Matyushkin ,   the Representative of the Russian Federation,   Agent , Ms   O. Sirotkina , M s   E. Kudelich, Mr   D. Shishkin   Advisers; (b)     for the applicant Ms   J. Evans ,   Counsel, Mr   B. Bowring, Mr   M . Khasanov ,   Advisers.   The Court heard addresses by Ms Evans, Mr Bowring, Mr   Khasanov, and Mr Matyushkin. THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 12.     The applicant was born in 1948 and lives in Krasnodar. A.     Proceedings against the bank for recovery of assets 13.     On 15 April 1994 the applicant made a deposit in a savings account with the commercial bank Yurak (“the bank”). After the bank announced that it was changing the interest rate, the applicant requested the closure of his account in August 1994, but the bank informed him that it was unable to repay his capital plus interest as its funds were insufficient. The applicant sued the bank, seeking repayment of the capital he had deposited, together with interest, a penalty payment and compensation for pecuniary and non-pecuniary damage. 14.     On 20 February 1995 the Oktyabrskiy District Court of the town of Krasnodar partly upheld the applicant’s claims and ordered the bank to pay him a total of 10,156 Russian roubles (RUB) (which included the capital of the deposit, interest accrued, compensation for non-pecuniary damage and penalties). That decision was upheld and became final on 21 March 1995. In a judgment of the Oktyabrskiy District Court of 5 April 1996 the above-mentioned award was recalculated in line with the inflation rate. The award was thus raised to RUB 17,983. 15.     In the meantime, on 16 June 1995, at the request of the Central Bank and the Russian Savings Bank, the Commercial Court of the Krasnodar Region declared the bank insolvent. On 19 July 1995 the insolvency procedure was opened by that court and a liquidator was appointed by the court to oversee the bank’s administration in that connection. B.     Distribution of the bank’s assets 16.     On 11 January 1996 the Commercial Court approved the provisional statement of affairs based on the bank’s financial situation at 28 December 1995. As a result of the sale of the bank’s assets, RUB 2,305,000 had been accumulated on the bank’s account. According to the Government, the bank had incurred debts against 7,567 first-class creditors, whose claims amounted to RUB 24,875,000. 17.     Under the law which defined the order of distribution of assets of insolvent entities, the applicant belonged to the first class of creditors, whose claims were to be satisfied before others. However, on 18 January and 13 March 1996 the creditors’ body of the bank created a special group of “privileged” creditors within the first class. That privileged group included disabled persons, war veterans, persons in need and persons who had actively assisted the liquidator within the insolvency proceedings. Those categories of creditors were to receive full satisfaction of their claims before other creditors belonging to the same class (the first). As a result, almost all of the funds collected during the liquidation process were used for repayment to those “privileged” creditors: they were reimbursed by the liquidator at 100% of the amounts due to them. On 6 April 1998 the applicant received the sum of RUB 140 (i.e. less than 1% of the amount of RUB 17,983 owed to him by the bank under the 1996 judgment). C.     First set of proceedings against the liquidator 18.     On 22 April 1998 the applicant challenged, before the Commercial Court, the fact that other creditors had received repayment at 100%, whereas he had received less than 1% of the amount due to him. Relying on sections 15 and 30 of the Corporate Insolvency Act 1992 (“the 1992 Act”), he claimed that he belonged to the same class as the “privileged” creditors, and that the bank’s assets should have been distributed evenly. He sought repayment of the remainder of the sum owed to him, in accordance with the principle of proportional distribution of the assets of the bank amongst creditors of the same class. 19.     On 6 July 1998 the applicant’s action was dismissed at first instance. On 26 August 1998 the Commercial Court of the Krasnodar Region reversed the judgment of the first-instance court and held that, in deciding to repay certain categories of creditors at 100%, the creditors’ body had overstepped the limits of its powers under section 23 of the 1992 Act. By enforcing that decision and distributing the assets at 100% to the “privileged” creditors, the liquidator had, in turn, disregarded the requirements of sections 15 and 30 of the Act. Pointing out that section 30 of the Act was not open to broad interpretation, the Commercial Court of the Krasnodar Region ordered the liquidator to redress the violations thus observed within one month and to inform it of the measures taken in that connection. 20.     The liquidator appealed on points of law to the Federal Commercial Court for the North Caucasus, arguing that he had distributed the assets pursuant to a decision of the creditors’ body, that the distribution had complied with Article 64 of the Civil Code and that it had not therefore been in breach of the requirements of section 30 of the 1992 Act. On 12   November 1998 his appeal on points of law was dismissed. Upholding the decision of 26 August 1998, the court stated that the liquidator should not have enforced a decision by the creditors’ body that was in breach of the law. 21.     It appears that the enforcement of the decision of 26 August 1998 (upheld at last instance on 12 November 1998) and, in particular, the redressing of the applicant’s financial situation, were not possible on account of the bank’s lack of assets. D.     Second set of proceedings against the liquidator 22.     In view of the failure to enforce the decision of 26 August 1998, on 2   September 1998 the applicant filed a complaint with the Commercial Court (supplemented by him on 27 January 1999). He requested that the liquidator in person repay him the remainder of his 1995 award of RUB   17,983, with interest, plus compensation for non-pecuniary damage and loss of time, representing a total of RUB 22,844. 23.     By a ruling of 4 February 1999 the Commercial Court rejected the applicant’s request. The complaints in question were examined in the context of the insolvency procedure opened against the bank; within the same procedure the court examined the bank’s balance sheet, as submitted by the liquidator. A representative of the Central Bank of Russia was present at the hearing. The Commercial Court found that on 20 February 1995 and 5 April 1996 the Oktyabrskiy District Court had already awarded the applicant the sum of RUB 17,983 to cover his deposit, plus penalties and damages, and that it was not possible to rule on the same request for a second time. The Commercial Court further established that the applicant appeared in the list of creditors as number 519 and that, in respect of the actual capital originally deposited, the bank owed him a residual amount of RUB   8,813. The court pointed out that this sum could be paid to him under the conditions laid down in Article 64 of the Civil Code. The court also rejected the claims for loss of time, as the relevant legislation did not provide for such compensation. Furthermore, the applicant [had] “failed to prove that the losses were caused by the liquidator’s actions”. 24.     On 31 March 1999 the Commercial Court of the Krasnodar Region, hearing the case on appeal, upheld the decision of 4 February 1999. The court of appeal held, firstly, that the applicant’s claims against the liquidator were “stand-alone claims, examined by the court of first instance and ... rightly rejected”. The court of appeal’s reasoning read as follows: “The law in force does not envisage satisfaction of claims which did not arise during the period of the bank’s operations but only during the period of the insolvency procedure ... On a bank’s insolvency, its debt obligations are declared due, but the insolvency procedure is initiated with a view to amassing liquidation assets which must be allocated among the debts owed to creditors and arising prior to the insolvency. Furthermore, [the applicant’s] right to recover [the original court award] from the bank already exists; therefore, satisfaction of his claims [against the liquidator] would lead to repeated recovery of the same amount, but this time in the form of damages, which is unfounded. [In the original court award the applicant] was also awarded a sum for non-pecuniary damage, and in light of the above such damages cannot be awarded for a further period. The existing provisions of civil legislation make no provision for compensation for loss of time. The court of appeal also takes into account the fact that the failure to pay the amounts [due to the applicant] is a result of the absence [of funds], since, following the court of appeal’s judgment of 26   August 1998 ... the assets of the bank in liquidation did not increase ..., as is evident from the report provided by the liquidator on the work of the liquidation committee and the documents appended to the report”. 25.     The applicant lodged a cassation appeal against that judgment. On 9   June 1999 the Federal Commercial Court for the North Caucasus dismissed the applicant’s appeal on points of law on the following grounds: “The decision of the creditors’ body and the liquidator’s action ... admittedly breached the principle of proportional payment to creditors at the same level of priority, but did not cause [the applicant] the damage he alleged, because the 100% satisfaction of all first-level creditors was not possible on account of the lack of assets available for distribution. The sum repaid to [the applicant] was thus calculated in proportion to the amount of his claim and to the assets realised in the course of the liquidation. Taking into account the fact that the insolvency procedure was ongoing when the dispute was examined, the courts of first and appellate instance rightly referred to the possibility of [the applicant’s] receiving the outstanding debt owed to him under Article 64 of the Civil Code of the Russian Federation. The claims for non-pecuniary damage and compensation for loss of time were rightly refused by the court as unjustified on the grounds set out in the earlier judicial decisions. In view of the above [the court of cassation] finds that the refusals by the courts of first and appellate instance to grant [the applicant’s] claims were justified. There are no grounds for overruling or modifying the judicial decisions taken.” 26.     On 17 June 1999 the Regional Commercial Court confirmed the statement of affairs as presented by the liquidator and approved by the creditors’ body, and closed the insolvency procedure on grounds of insufficient assets. The applicant did not attempt to bring any new claims against the liquidator. E.     Supervisory review proceedings 27.     After the Government had been given notice of the application, the President of the Supreme Commercial Court of the Russian Federation lodged, on 31 January 2001, an application for supervisory review ( protest ) against the judgments of 4   February, 31 March and 9 June 1999, on the ground that they had been given in breach of Article 22 of the Code of Commercial Procedure, which determined the jurisdiction of the commercial courts. Among other things, he stated that examination of the applicant’s complaints against the liquidator within the context of the insolvency procedure opened against the bank had been contrary to the 1992 Act governing such procedures. Since those complaints had concerned a dispute between the applicant and the liquidator, they were not related to the insolvency procedure as such and the applicant should have submitted them to the courts of general jurisdiction. On those grounds the President sought the annulment of the decisions at issue and discontinuance of the proceedings concerning the above-mentioned complaints. 28.     On 17 April 2001 the Presidium of the Supreme Commercial Court of the Russian Federation granted those requests in full, endorsing the arguments raised in the application for supervisory review. The Presidium concluded that the commercial courts had not had jurisdiction to hear the case against the liquidator in person, annulled the decision rendered in 1999 and closed the proceedings. 29.     On 1 June 2001 the applicant submitted a request for supervisory review of the 17 April 2001 decision to the same Presidium. On 4 July 2001 his request was dismissed as ill-founded by the Vice-President of the Supreme Commercial Court. II.     RELEVANT INTERNATIONAL AND DOMESTIC LAW AND PRACTICE A.     Attribution of international responsibility to States 30.     The Draft Articles on Responsibility of States for Internationally Wrongful Acts adopted by the International Law Commission (ILC) in 2001 ( Yearbook of the International Law Commission , 2001, vol. II, Part Two), and their commentary, codified principles developed in modern international law in respect of the State’s responsibility for internationally wrongful acts. In that commentary the ILC stated, inter alia , as follows (see paragraph (6) of the commentary to Chapter II): “In determining what constitutes an organ of a State for the purposes of responsibility, the internal law and practice of each State are of prime importance. The structure of the State and the functions of its organs are not, in general, governed by international law. It is a matter for each State to decide how its administration is to be structured and which functions are to be assumed by government. But while the State remains free to determine its internal structure and functions through its own law and practice, international law has a distinct role. For example, the conduct of certain institutions performing public functions and exercising public powers (e.g. the police) is attributed to the State even if those institutions are regarded in internal law as autonomous and independent of the executive government.” 31.     The ILC, in its commentary, described the phenomenon of “parastatal entities”. It noted as follows (see paragraph (3) to the commentary to Article 5): “The fact that an entity can be classified as public or private according to the criteria of a given legal system, the existence of a greater or lesser State participation in its capital, or, more generally, in the ownership of its assets, the fact that it is not subject to executive control – these are not decisive criteria for the purpose of attribution of the entity’s conduct to the State. Instead, article 5 [of the Articles] refers to the true common feature, namely that these entities are empowered, if only to a limited extent or in a specific context, to exercise specified elements of governmental authority.” 32.     As the ILC also recognised:   “Beyond a certain limit, what is regarded as ‘governmental’ depends on the particular society, its history and traditions. Of particular importance will be not just the content of the powers, but the way they are conferred on an entity, the purposes for which they are to be exercised and the extent to which the entity is accountable to government for their exercise” (see paragraph (6) of the commentary to Article   5). B.     Insolvency procedures in Russia 1.     Civil Code of 1994 33.     Under Article 63 of the Civil Code, after expiry of the period within which creditors must file their claims, the liquidation committee draws up a provisional statement of affairs containing information on the bankrupt company’s estate, the claims filed by the creditors and the results of the examination of those claims. The statement must be approved by the body that has taken the decision to wind up the company. If the company’s monetary assets are insufficient to satisfy the creditors’ claims, the liquidation committee will sell off the estate by auction. The distribution of assets to the creditors may begin in accordance with the interim statement once it has been approved, except in respect of fifth-level creditors who will be unable to receive any money owed to them for one month following that approval. Once all the payments have been made, the final statement of affairs is drawn up and approved in the same manner. Should the assets prove insufficient, unsatisfied creditors may request the courts to order the owner of the company to honour their claims out of his own personal funds. 34.     Article 64 of the Civil Code, as in force prior to 20 February 1996, made a distinction between five categories of creditors, providing that payment could be made to a given class only when the creditors at the previous level had been satisfied. According to this classification the applicant belonged to the fifth class of “other creditors”. Article 64 made no mention of a category of creditors who were pensioners, war veterans, persons in need or persons assisting the liquidator in the insolvency proceedings. 35.     Under a new provision, inserted into this Article on 20 February 1996, when a bank or other lending institution is wound up, private persons having made deposits with it are to be repaid as a first priority. 36.     Article 64 further provides that where a company in liquidation has insufficient assets, they must be distributed among creditors at the same level in proportion to their respective claims. 2.     Law of 19 November 1992 (“the 1992 Act”) on corporate insolvency (bankruptcy) (applicable to insolvency procedures opened prior to 1   March 1998) 37.     Under section 3(1) and (2) of the 1992 Act, insolvency cases fall within the jurisdiction of the commercial courts, which examine them in accordance with the rules laid down in the Act or, where no such rule exists, in accordance with the Code of Commercial Procedure of the Russian Federation. 38.     Under section 15 of the Act, insolvency procedures are opened in order to satisfy the creditors’ claims on a pari passu basis, to declare the bankrupt company released from his obligations and to protect the parties from unlawful actions against each other. 39.     Section 18(2) provides that, after a company has been declared insolvent and an insolvency procedure has been opened against it, any claims against the company’s assets may be submitted only in the context of such procedure. 40.     Section 20 lists the various participants in insolvency proceedings as the liquidator, the general meeting of creditors, the creditors’ committee, the creditors, etc. The general meeting of creditors may form a creditor’s committee and define its functions (Section 23 (2)). The Court will use the term “the creditors’ body” as referring to either of these bodies, as the case may be. 41.     The creditors’ body nominates a candidate to act as the liquidator before the commercial court for approval (Section 23(2) of the Act) which then appoints the liquidator (Section 19). Under section 21(1) the liquidator takes over the administration of the insolvent company, convenes a general meeting of creditors, takes control of the insolvent company’s property, analyses the financial situation, examines the merits of the creditors’ claims, accepts or rejects them, oversees the liquidation process to realise the assets, sets up and heads the liquidation committee. 42.     In accordance with section 21(2), taken together with section 12(4), candidates for the office of liquidator must be economists or lawyers, or have experience of company management. They must not have a criminal record. No one holding a position of responsibility in a company that is a debtor or creditor may be appointed. Candidates for the office of liquidator must declare their income and assets. 43.     In the situations referred to under the Act, the commercial court examines the lawfulness of all actions by the participants involved in the insolvency procedure (Section 19). Under section 21(3) the liquidator may challenge before the court any decisions of the creditor’s body when those decisions fall outside its remit. 44.     Under section 27(1), after the expiry of a two-month period within which the creditors must submit their claims against the insolvent company, the liquidator will draw up a list of the claims that have been accepted and rejected, indicating the amounts for those that have been accepted and the level of priority for each. The list must be sent to the creditors within a period of two months. 45.     Section 30 establishes the various levels of priority for the distribution of the proceeds of the liquidation. Payment of the sums due to creditors at a given level is made once those at the previous level have been satisfied (paragraph 3). If insufficient assets are realised to pay in full the creditors at a given level, the money that is available will be paid to them pari passu in proportion to the amounts of their respective claims (paragraph 4). Section 30 makes no mention of a category of creditors who are disabled, war veterans, persons in need, or persons assisting the liquidator. Paragraph 1 provides that any expenses arising from the liquidation, the liquidator’s fees and the expenses of the debtor company’s ongoing operations must take priority over the claims of first-level creditors. 46 .     Section 31 provides that a creditor may challenge before the commercial courts any decision of the liquidator which, in his view, breaches his rights and legitimate interests. 47.     Under section 35(3), any claims that cannot be satisfied because the proceeds of the liquidation are insufficient will be regarded as extinguished. 48.     Section 38 provides that the bankrupt company will be regarded as wound up from the time of its exclusion from the corresponding national register, pursuant to the decision of the commercial court closing the insolvency procedure. 3.     Federal Laws on insolvency of 8 January 1998 (“the 1998 Act”), and of 26 October 2002 (“the 2002 Act”). 49.     On 8 January 1998 a new Insolvency Act was adopted (“the 1998 Act”). It replaced the 1992 Act and was applicable to insolvency procedures opened after 1 March 1998. Section 21(3) of the 1998 Act provided that creditors were entitled to seek compensation from the liquidator in respect of any damage that the latter might have caused to them by an action or omission in breach of the law. Section 114 provided for the same principles of distribution and pari passu repayment as section 30 of the 1992 Act. 50.     In accordance with section 98(1), sub-paragraph 7, of this Act, claims against the bankrupt company may be submitted only in the context of the insolvency procedure (see also section 18(2) of the 1992 Act). 51.     On 26 October 2002 the new Insolvency Act was adopted. It replaced the 1998 Act, and, in the following years, the 2002 Act underwent a number of changes. Section 20-4 (4) of the 2002 Act establishes liability of the liquidator for damage caused to the creditors by his failure to comply with his duties, if that failure was established by a final court decision. The 2002 Act provides that a liquidator should be covered by a professional liability insurance to cover his liability to the creditors (Section 20 of the Act). Sections 32 and 33 stipulate that bankruptcy cases are within the jurisdiction of the commercial court, irrespectively of the status of the creditors. Section 20 (12) stipulates that “disputes related to the professional activities of the [liquidators] ... are within the competence of commercial courts”. Pursuant to Section 60 of the Act creditors of a bankrupt company are entitled to complain to a commercial court about the liquidator’s acts or omissions within the bankruptcy proceedings. C.     Examination of disputes within insolvency procedures 1.     Insolvency Acts of 1992, 1998 and the Banks Insolvency Act of 1999; the Code of Commercial Procedure of 1995; the Code of Civil Procedure of 1964 52 .     Since the 1990s the Russian judicial system has been comprised of three elements – courts of general jurisdiction, commercial courts and constitutional courts. Under Article 25 § 1 of the Code of Civil Procedure of 1964 (in force at the material time), courts of general jurisdiction were competent to hear civil cases in which at least one party was a natural person (as distinct from a legal person, such as a company). 53 .     The Code of Commercial Procedure of 1995 (No. 70-FZ of 5 May 1995, in force at the material time) stated that the commercial courts could determine “economic disputes arising from civil, administrative and other legal relationships ... between legal persons ... and individual entrepreneurs...” (Article 22 § 1 of the Code). Article 22 § 3 stipulated that commercial courts were competent to hear other cases, namely “insolvency (bankruptcy) cases concerning legal entities and natural persons”. Article 22 § 4 stipulated that commercial courts were competent to hear cases involving natural persons (not having individual entrepreneur status) where this was provided for by the Code itself or by another federal law. 54.     Article 31 of the Code of Commercial Procedure stipulated: “... A creditor who considers that his rights and legitimate interests are breached by a decision of the liquidator can bring an application ( zayavlenie ) before the commercial court. Following the examination of such an application the commercial court should take an appropriate decision.” 55.     Article 143 of the Code provided that insolvency cases were to be examined by commercial courts in accordance with the Code and with the specific provisions of the insolvency legislation. 56.     Section 3 of the 1992 Insolvency Act stipulated that commercial courts had jurisdiction to hear insolvency cases. 57.     The 1998 Insolvency Act contained similar provisions. Sections 5 and 29 of that Act provided that insolvency cases where the debtor was a company (as opposed to a natural person) fell under the jurisdiction of the commercial courts. Section 55 of the 1998 Act provided that the commercial courts were competent to hear creditors’ applications concerning a breach of their rights or legitimate interests by the liquidator. 58.     Sections 5, 34 and 50 of the 1999 Banks Insolvency Act provided for the jurisdiction of commercial courts in the insolvency procedures concerning banks and also contained references to the Code of Commercial Procedure. 2.     Position of the Constitutional Court 59.     A judgment of 12 March 2001 by the Constitutional Court concerned, inter alia , questions of access to a court in insolvency procedures. Paragraph 4, concerning the constitutionality of section 18(2) of the 1992 Act (section 98(1) in conjunction with sections 15(4) and 55(1) of the 1998 Act), reads: “... when examining the claims of creditors who are natural persons ..., the commercial courts do not have jurisdiction to issue binding directions of a pecuniary nature to the liquidator, acknowledging the existence of a claim or right in favour of creditors ... This limitation ... must not be interpreted as preventing the courts of general jurisdiction from examining on the merits the pecuniary claims ... of those creditors ..., in accordance with the legislation on insolvency. Nor do the provisions at issue contain any clause that would prevent commercial courts from giving decisions that enable the persons concerned to secure in full their right to judicial protection in the context of insolvency procedures, especially as other provisions of the Federal Law on insolvency (bankruptcy) precisely provide for the settlement of disputes through the courts (sections 41, 44, 57, 107, 108 et seq.). The refusal by a commercial court to examine a complaint on the grounds that it does not have jurisdiction ... does not prevent the creditor from applying to the courts of general jurisdiction in order to secure protection of his rights ... The right to judicial protection, as enshrined in the Constitution, must be upheld even in the absence of legislative norms establishing a division of jurisdiction between the commercial courts and the courts of general jurisdiction. It follows from this interpretation that [the provisions at issue] do not prevent the courts of general jurisdiction from examining claims filed by non-corporate creditors against the liquidator and seeking ... compensation for damage, nor do they prevent the commercial courts from securing the enforcement, in accordance with the above-mentioned Federal Law, of the decisions taken by the courts of general jurisdiction ...” THE LAW 60.     The applicant complained about his inability to obtain the effective payment of the 1995 court award on account of an unlawful distribution of assets by the liquidator. He referred to Article 1 of Protocol No. 1, which provides: “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.” I.     THE GOVERNMENT’S PRELIMINARY OBJECTION 61 .     As before the Chamber, the Government claimed before the Grand Chamber that the applicant had failed to exhaust domestic remedies. In particular, they took the view that the applicant should have sued the liquidator personally in separate proceedings before the courts of general jurisdiction, in accordance with Chapter 59 of the Civil Code (“Obligations in respect of damage caused”), to complain about the unlawful distribution of the bank’s assets. The Court considers that the question of exhaustion of domestic remedies is closely linked to the merits of the applicant’s complaint under Article 1 of Protocol No. 1 to the Convention, in so far as the applicant can be understood as complaining about his inability to claim compensation for damage caused by the liquidator’s actions. This objection must therefore be joined to the merits and will be analysed below. II.     TEMPORAL JURISDICTION 62.     On 12 January 2011, following the hearing and deliberations, the Grand Chamber put to the parties additional questions, concerning, in particular, the Court’s jurisdiction ratione temporis in the present case. A.     The parties’ submissions 63.     In their written reply the Government argued that the impugned distribution of the insolvent bank’s funds took place in 1996, that is, before the date of the entry into force of the Convention in respect of Russia (5   May 1998). The fact that this deprivation had enduring effects did not produce a continuing situation. The Government distinguished the present case from that of Sovtransavto Holding v. Ukraine (no. 48553/99, §§ 54 et seq., ECHR 2002 ‑ VII), where the Court established that the loss of control of a company was a protracted process, creating a continuing situation. In the present case the applicant’s complaint concerned a single act of distribution of the bank’s assets on 13   March 1996. No new bank assets were discovered after that date. The subsequent decisions of the commercial courts (taken after 5 May 1998) did not violate the applicant’s rights. When the Russian courts ordered that the violation of the applicant’s rights be redressed, it was too late, since by that time the debtor no longer had any assets. Thus there were objective reasons for the failure to enforce the 1998 judgment. In support of this argument the Government referred to the cases of Blečić v. Croatia ([GC], no. 59532/00, § 79, ECHR 2006 ‑ III) and Kopecký v. Slovakia ([GC], no. 44912/98, § 38, ECHR 2004-IX). They concluded that the Court did not have jurisdiction to examine the case. 64.     The applicant maintained, first of all, that the exact date of the distribution of assets was unclear. The creditors’ body’s decision ordering distribution of assets was taken on 13 March 1996. However, it was not until 6 April 1998 that the applicant received RUB 140 of the RUB   17,983 owed to him. If this date was correct, then a period of more than two years elapsed between the decision ordering distribution of funds and its implementation. In the absence of any clear evidence as to the time scale of the distribution process, it was impossible to exclude the possibility that the distribution process was concluded after 5 May 1998, when the Convention entered into force in respect of Russia. 65.     Secondly, at the time when the decision by the creditors’ body was taken, the total amount of money available for distribution was not known. There was no evidential basis for the Government’s assertion that from 12   November 1998 onwards the bank had no assets. There was no information on developments in the insolvency procedure from August 1998 until its closure in June 1999. Therefore, prior to the formal closure of the liquidation procedure on 17   June 1999 it remained theoretically possible for the applicant to receive the monies due to him. That being the case, the Government’s assertion that the distribution of funds represented the final interference with the applicant’s rights was unsustainable. 66.     The applicant considered that the failure of the State to enforce a binding legal judgment of 26 August 1998 formed part of the multi-stage “continuing situation” of interference with his rights. Although the domestic court did not specify the means by which the liquidator should have provided the applicant with redress, it had been open to the liquidator to either recover the money from those to whom it had been unlawfully distributed or to employ any other means within his discretion. Those possibilities were not in any way precluded by the debtor’s lack of funds. In fact, the continued absence of assets was caused precisely by the liquidator’s unlawful actions and his failure to comply with the terms of the court order to rectify the situation (assuming that the bank indeed had no assets). 67.     Finally, in the applicant’s opinion, the domestic judgments of 1999 should be regarded as yet another stage in that “continuing situation”, despite the fact that they were annulled by way of supervisory review in 2001. The interference with the applicant’s possessions took the form of a four-stage incremental process which was comprised of (a) the liquidator’s unlawful distribution; (b) the failure of the domestic authorities to enforce the judgment of 26 August 1998; (c) the refusal of the commercial courts (in the light of this failure to enforce) to hear the applicant’s claim against the liquidator personally; and (d) the decision by the Regional Commercial Court to close the insolvency procedure. B.     The Court’s analysis 68.     The Court observes that the distribution of the bank’s assets by the liquidator to the “privileged” creditors took place, most probably, in 1996, and in any event before 6 April 1998, when the applicant received his share of the remaining assets of the bank. The Convention entered into force in respect of Russia on 5 May 1998. The Court agrees with the Government that the distribution of the bank’s assets was an instantaneous act, and, as such, falls outside the Court’s jurisdiction ratione temporis . That being said, the Court observes that after 5 May 1998 the applicant was involved in two sets of judicial proceedings concerning wrongful distribution of the bank’s assets and the liquidator’s personal liability. The question is whether the Court has jurisdiction to examine facts related to those proceedings. 69.     The Government, referring to Blečić and Kopecký , both cited above, argued that the proceedings of 1998 and 1999 should not be dissociated from the original act of interference, namely the wrongful distribution of the banks’ assets. However, in the Court’s opinion, the present case must be distinguished from Blečić and Kopecký , for the following reasons. As acknowledged by the Government, under Russian law the applicant was entitled to claim damages from the liquidator for the latter’s wrongful acts. Legally speaking, the applicant had a valid tort claim at the time when the Convention entered into force in respect of Russia. It became sufficiently established even later, with the final judgment of 12 November 1998,