CEDH · CASELAW;JUDGMENTS;COMMITTEE;ENG — 19 juillet 2016

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In the case of Yudin and Others v. Russia, The European Court of Human Rights (Third Section), sitting as a Committee composed of:   Branko Lubarda, President,   Pere Pastor Vilanova,   Georgios A. Serghides, judges, and Fatoş Aracı, Deputy Section Registrar, Having deliberated in private on 28 June 2016, Delivers the following judgment, which was adopted on that date: PROCEDURE 1.     The case originated in four applications (nos.   19065/08, 29609/08, 35850/08 and 10742/09) against the Russian Federation lodged with the Court under Article   34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by four Russian nationals whose personal details are summarised in the Appendix below. 2.     The Russian Government (“the Government”) were represented by Mr G. Matyushkin, the Representative of the Russian Federation to the European Court of Human Rights. 3.     On 8   June 2011 the applications were communicated to the Government. In accordance with Protocol   No.   14 to the Convention, the applications were allocated to a Committee. THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 4.     The applicants, whose years of birth are summarised in the Appendix, live in Troitsko-Pechorsk of the Komi Republic. 5.     They were municipal unitary enterprise employees working for “Troitsko-Pechorskoye ZhKKh” (« МУП «Троицко-Печерское ЖКХ», “the company”) in the Komi Republic. A.     Available information on the company and management of its assets 6.     The company was set up in 2003 in accordance with a decision of Head of the Troitsko-Pechorskiy District (“the district administration”) as a commercial organisation performing the following activities, among others: renovation and maintenance of the municipal housing stock; heating and water supply to the district population and enterprises; maintenance of the sewage systems; maintenance services in respect of municipal housing and adjacent territories; and providing real estate registration services in the Troitsko-Pechorskiy District. In order to carry out its statutory activities, the company had “the right of economic control” ( право хозяйственного ведения ) over the assets allocated to it by the town administration (see Liseytseva and Maslov v.   Russia , nos.   39483/05 and 40527/10, §§   55-75, 9   October 2014 for further details on the company’s status). 7.     In 2004-2006 the district administration withdrew the company’s several assets, including “housing and objects of the engineering infrastructure” and transferred them to the municipal district treasury. B.     Domestic judgments in the applicants’ favour 8.     On the dates tabulated in the Appendix below the Justice of the Peace of the Troitsko ‑ Pechorskiy Court Circuit of the Komi Republic by separate judgments and court writs ordered the company to pay the applicants salary arrears. On the dates listed in the Appendix the awards became enforceable. 9.     It appears from the parties’ observations of 2011 that Ms Lyubas (application no.   10742/09) obtained at least two other judgments in her favour which had been issued on 22   June and 2   November 2007 against the debtor enterprise. 10.     Between April 2007 and September 2008 some applicants received the amounts specified in the “enforcement status” column of the Appendix. The Government submitted, without further details, that Ms Lyubas was paid 56,021   Russian roubles pursuant to unspecified domestic judicial decisions in her favour. Ms Lyubas, interviewed in the domestic proceedings, maintained that the award of 21   December 2006 had not been paid to her. C.     The company’s insolvency and accessory proceedings 1.     Insolvency proceedings and the prosecutor’s inquiries 11.     On 11   December 2006 the supervision procedure was put in place in respect of the company. On 14   May 2007 the Commercial Court of the Komi Republic declared the company insolvent and the liquidation proceedings commenc ed. 12.     At some point before 9   November 2007 the prosecutor’s office conducted an inquiry and, having analysed the manner of the assets’ withdrawal and transfer by the owner, concluded that the owner’s actions contained elements of deliberate bankruptcy. It appears that at some point the prosecutor’s office refused to open criminal proceedings on account of the alleged deliberate bankruptcy of the company. In November 2007 the prosecutor’s office also held an inquiry into the liquidator’s actions, found that she had acted in compliance with the domestic law and refused to bring administrative proceedings against her. 2.     Subsidiary liability and other proceedings brought by the liquidator 13.     During the insolvency proceedings the liquidator lodged numerous actions on the company’s behalf claiming, inter alia, unpaid communal charges from local population. The amount recovered proved insufficient to settle all creditors’ claims. 14.     At some point the liquidator lodged an action on the company’s behalf against the district administration under Article   56   §   3 (subsidiary liability) of the Civil Code of the Russian Federation. He argued that the insolvency of the company had been caused by the administration. He submitted that, as a result of a series of the asset transfers in 2004-2006, the company had become unable to meet the creditors’ claims and to continue to carry out its statutory goals. 15.     On 3   March 2010 the Federal Commercial Court of the Volgo ‑ Vyatskiy Circuit rejected the claim in the cassation instance, and on 12   July 2010 the Supreme Commercial Court refused to accept for examination a request for supervisory review of that judgment. The domestic courts at all instances accepted that the assets had indeed been transferred from the company’s economic control to the district treasury. However, they found no evidence that the insolvency had been caused by the owner’s actions. In particular, after the withdrawal of assets the company still had been able to meet the creditors’ claims. The housing and objects of the engineering infrastructure on 30   January 2006 had been withdrawn “in order to apply the housing policy” and to “reduce the company’s expenses for the maintenance of the infrastructure objects”. In particular, the Ministry of Architecture and Communal Services of the Komi Republic had recommended the municipalities to withdraw objects of housing and engineering infrastructure from unitary enterprises in order to optimise taxes of housing and communal services providers. Finally, even though at the insolvency stage the company proved unable to meet the creditors’ claims, the claimant had failed to demonstrate that the owner “knew or ought to have known that [the transfer of the assets] would have led to the company’s insolvency”. 3.     Decision to liquidate the company 16.     On 28   December 2011 the Commercial Court of the Komi Republic ordered the respondent company’s liquidation. Creditors’ claims which had not been satisfied during the liquidation procedure due to the debtor’s shortage of funds, including the applicant’s claims, were considered as settled. On the same date the liquidation was recorded in the Register of Legal Entities, and the company ceased to exist. The judgments in the applicants’ favour have remained unenforced either in full or in part, as indicated in a relevant part of the Appendix below. II.     RELEVANT DOMESTIC LAW AND PRACTICE 17.     The relevant domestic provisions on legal status of State and municipal unitary enterprises with the right of economic control are summarised in Liseytseva and Maslov, cited above, §§   55-127. THE LAW I.     JOINDER OF THE APPLICATIONS 18.     Given that the four present applications raise similar issues under the Convention, the Court decides join them pursuant to Rule   42   §   1 of the Rules of Court. II.     ALLEGED VIOLATION OF ARTICLES   6 AND 13 OF THE CONVENTION AND ARTICLE   1 OF PROTOCOL   No.   1 19.     The applicants complained under Article   6 of the Convention and Article   1 of Protocol   No.   1 about the non-enforcement of the judgments in their favour. These provisions, in so far as relevant, read as follows: Article   6 “In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” Article   1 of Protocol No.   1 “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.” 20.     The applicants further complained that they did not have effective domestic remedies at their disposal in respect of the non-enforcement of the judgments in their favour. Article   13 of the Convention reads as follows: “Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.” 21.     The Government argued that the applicants’ complaint was premature as it was lodged before the company’s liquidation. They further contested the complaint on the same grounds as those set out in Samsonov ((dec.), no.   2880/10, §§   51-57, 16   September 2014), and Liseytseva and Maslov (cited above, §§   137-41). In particular, they submitted that the applicants had failed to exhaust a number of domestic remedies, such as a claim against the liquidator, a damage claim under Chapter   59 of the Civil Code and an application to a court under section   142(1) of the Insolvency Act. They further argued that the debts of a municipal unitary enterprise – a separate legal entity under domestic law – could not be attributed to the State, for exactly the same reasons as those summarised in Liseytseva and Maslov (cited above, §§   136-42). The company had not performed any public functions and its activities were purely commercial. The local administration’s subsidiary liability could not be engaged since the owner had not caused the company’s insolvency. It had not given any binding instructions or otherwise defined the company’s actions. The authorities had provided requisite assistance to the applicants in their efforts to have the court awards enforced. 22.     The applicants maintained their claims. They argued that the State was responsible for the company’s debts since local authorities by their actions –in particular, by transferring the company’s assets to two newly created legal entities – had deliberately caused the company’s insolvency in order to avoid payment of the salary arrears to the company’s numerous employees. A.     Admissibility 1.     Premature complaint 23.     The Government argued, in the initial set of observations, that the liquidation proceedings in respect of the company had been under way at the material time and the complaint was therefore premature. The Court notes from their further submissions that the company was liquidated on 28   December 2011 and the judgments in question remained unenforced. However, the Government have not provided any explanation as to whether and in which way the mere fact of the termination of the insolvency proceedings affected the applicants’ ability to obtain enforcement of the judgments in their favour. The Court accordingly rejects the objection. 2.     Exhaustion 24.     In Liseytseva and Maslov the Court dismissed similar objections raised by the Government (cited above, §§   163-65), and there is nothing in the present case to depart from its conclusions. In view of the above, the Court rejects the Government’s non ‑ exhaustion arguments in the present four cases. 3.     Compatibility ratione personae 25.     The Court has already dealt with the Government’s argument concerning the company’s legal status in domestic law in the above ‑ mentioned Liseytseva and Maslov . Having examined the Government’s respective objection in detail, the Court held that the existing legal framework in Russia did not provide unitary enterprises with the degree of institutional and operational independence that would absolve the State from any responsibility under the Convention for any such companies’ debts (see Liseytseva and Maslov , cited above, §§   193-204). In order to determine the issue of State responsibility for the debts of unitary enterprises, the Court must examine whether and how the extensive powers of control provided for in the domestic law were actually exercised by the authorities in a given case (ibid., §§   204-06). 26.     The Court does not find any reason to depart from the above approach in the present four cases. First, the company provided services of vital importance to the district population, such as heating and water supply, as well as maintenance of the municipal housing stock (see paragraph   6 above). The property allocated for those purposes enjoyed special treatment under the domestic law, constituting “socially important assets”; the tariffs of the housing and communal services, as well as the heating and water supply services, were set by the district administration. The company’s core activities constituted “public duties performed under the control of the authorities” (see Liseytseva and Maslov, cited above, §§   208-10; Lyatskaya v.   Russia , no.   33548/04, §   14, 18   September 2008; and Yershova v.   Russia , no.   1387/04, §   58, 8   April 2010). Second, the Court observes that the administration disposed of the debtor’s assets as it saw fit, having withdrawn, in 2004-2006, the company’s several assets, including various items of “housing and engineering infrastructure”, for further transfer to the municipal district treasury (see paragraphs   7, 12-14 above). In the Court’s view, these facts demonstrate that a strong degree of State control was actually exercised by the municipal authority over the company. 27.     The Court concludes that the company did not enjoy sufficient institutional and operational independence from the municipal authority and rejects the Government’s ratione personae objection. Accordingly, the municipality, and hence the State, is to be held responsible under the Convention for the judgment debts in the applicants’ favour (see Liseytseva and Maslov, cited above , §   214). 4.     Conclusion 28.     The Court further notes that the applications are not manifestly ill ‑ founded within the meaning of Article   35   §   3   (a) of the Convention and that they are not inadmissible on any other grounds. They must therefore be declared admissible. B.     Merits 1.     Article   6 of the Convention and Article   1 of Protocol   No.   1 29.     The Court notes that the judgments given in the applicants’ favour have remained fully or partially unenforced to date. In particular, in the case of Ms Lyubas the Court finds no evidence that the payment referred to by the Government (see paragraph   9 above) was made pursuant to the judgment of 21   December 2006, and accordingly accepts that the domestic award made in the applicant’s favour on that date has not been executed. 30.     While liquidation proceedings which ended on in December   2011 may objectively justify some limited delays in enforcement, the facts of the present case would rather suggest that the municipal authority did not consider itself bound by the obligation to honour the judgment debt towards the employee related to her salary after it had decided to liquidate the debtor company (see, mutatis mutandis, Yershova , cited above, §   72). Such an attitude is difficult to reconcile with the State’s obligations under the Convention to comply with domestic judicial decisions within a reasonable time. 31.     By failing for a considerable period of time to take the necessary measures to comply with the final judgments in the instant case, the authorities deprived the provisions of Article   6   §   1 of all useful effect and also prevented the applicants from receiving the money to which they were entitled, which amounted to a disproportionate interference with their peaceful enjoyment of possessions (see, among others, Khachatryan v.   Armenia , no. 31761/04, §   69, 1   December 2009). Therefore, there has been a violation of Article   6   §   1 of the Convention and Article   1 of Protocol   No.   1 thereto on account of the non ‑ enforcement of the final and binding judgments in the applicants’ favour in the present four cases. 2.     Article   13 of the Convention With reference to its above findings (see paragraph   24 above), and for the same reasons as those stated in Liseytseva and Maslov (cited above, §§   156-82), the Court concludes that none of the remedial avenues put forward by the Government constituted an effective remedy in the present case. Accordingly, it finds, in respect of these four cases, that there has been a breach of Article   13 of the Convention, in conjunction with Article   6 of the Convention and Article   1 of Protocol   No.   1 to the Convention. III.     OTHER COMPLAINTS 32.     Ms Shevelyuk (case no.   29609/08) complained under Article   8 of the Convention that the local authorities’ management of the company assets amounted to a deliberate creation of the insolvency of the debtor company. 33.     Having regard to all the material in its possession and in so far as this complaint falls within the Court’s competence, it finds that it does not disclose any appearance of a violation of the rights and freedoms set out in the Convention or its Protocols. It follows that this part of the application must be rejected as manifestly ill-founded, pursuant to Article   35   §§   3   (a) and 4 of the Convention. IV.     APPLICATION OF ARTICLE   41 OF THE CONVENTION 34.     Article   41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” A.     Damage 35.     All applicants insisted that the judgments in their favour had not been fully enforced to date and claimed the following amounts in respect of both pecuniary and non-pecuniary damage: Mr Yudin claimed 5,000,000   Russian roubles ((RUB); that is, approximately 119,850   euros (EUR)), as converted into euros at the rate applicable on the dates of the submission of the claims); Ms   Shevelyuk claimed RUB   10,000,000 (approximately EUR   235,526), Ms Yerofeyeva and Ms Lybas each claimed RUB   500,000 (EUR   11,776). Ms Shevelyuk and Ms Lyubas further claimed medical expenses for treatment of their several illnesses they had allegedly developed as a result of a violation of their rights. 36.     The Government contested their claims arguing that there had been no violation of the applicants’ Convention rights and, in any event, the amounts claimed were excessive, unfounded and not itemised. 37.     As regards the claim for medical expenses submitted by two applicants, the Court notes that there is no causal link between the violations found and the amounts claimed, and rejects the claims in this part. 38.     The Court notes that the judgments in the applicants’ favour have remained fully or partially unenforced, as indicated in the Appendix. In the circumstances of the present case, the Court finds it appropriate to award the applicants the equivalent in euros of the unpaid judgment debts. It accordingly awards the applicants the amounts specified in the Appendix in respect of pecuniary damage, plus any tax that may be chargeable, and rejects the remainder of the claims under this head, as not itemised. 39.     As regards the non-pecuniary damage, the Court considers it reasonable and equitable to award EUR   2,000, plus any tax that may be chargeable, to each of the applicants under this head (see Voronkov v.   Russia , no.   39678/03, §§   68 ‑ 69, 30   July 2015).The Court further rejects the remainder of the applicants’ claims in respect of non-pecuniary damage. B.     Costs and expenses 40 .     Mr   Yudin did not claim any costs and expenses. Accordingly, the Court does not make any award under this head. 41.     Mmes   Shevelyuk, Yerofeyeva and Lyubas submitted that they had spent substantial amounts in postal and legal expenses. Ms   Shevelyuk submitted a receipt for sending correspondence to the Court for the amount of RUB   122 (approximately EUR   4). Otherwise, the three applicants submitted that they had not kept the relevant receipts. The Government contested their claims as unfounded. 42.     According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. Regard being had to the documents in its possession and the above criteria, the Court awards Ms   Shevelyuk EUR   4 under this head, plus any tax that may be chargeable to the applicant. It further notes that the remainder of the claims for costs and expenses submitted by that applicant, as well as the claim for costs and expenses by Mmes Yerofeyeva and Lyubas, are neither itemised nor substantiated with any evidence. Their claims in this part are accordingly to be rejected. C.     Default interest 43.     The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1.     Decides to join the applications;   2.     Declares the non ‑ enforcement complaints under Article   6 of the Convention and Article   1 of Protocol   No.   1 to the Convention and the complaint under Article   13 of the Convention admissible and the remainder of the applications inadmissible;   3.     Holds, in respect of all applications, that there has been a violation of Article   6 of the Convention and Article   1 of Protocol   No.   1 to the Convention in respect of the non-enforcement of the domestic judgments in the applicants’ favour;   4.     Holds , in respect of all applications, that there has been a violation of Article   13 of the Convention on account of the lack of an effective remedy in respect of the non ‑ enforcement of the final domestic judgments in the applicants’ favour;   5.     Holds (a)     that the respondent State is to pay the applicants, within three months the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement: (i)     in respect of pecuniary damage, EUR   2,808 (two thousand eight hundred and eight euros) plus any tax that may be chargeable, to Mr Yudin, EUR   2,176 (two thousand one hundred and seventy-six euros) plus any tax that may be chargeable, to Ms Shevelyuk, EUR   2,068 (two thousand sixty-eight euros) plus any tax that may be chargeable, to Ms Yerofeyeva, EUR   2,614 (two thousand six hundred and fourteen euros) plus any tax that may be chargeable, to Ms Lyubas; (ii)     EUR   2,000 (two thousand euros) to each applicant, plus any tax that may be chargeable, in respect of non-pecuniary damage; (iii)     EUR   4 (four euros) to Ms   Shevelyuk, plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b)     that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;   6.     Dismisses the remainder of the applicants’ claim for just satisfaction. Done in English, and notified in writing on 19 July 2016, pursuant to Rule   77   §§   2 and 3 of the Rules of Court.   Fatoş Aracı   Branko Lubarda   Deputy Registrar   President APPENDIX No. Application no. Lodged on Applicant’s name and date of birth Dates of the judgments or court writs Dates of entry into force Amount awarded (RUB) Enforcement status The Court’s award in respect of pecuniary damage (EUR)   19065/08 20/02/2008 Viktor Vitalyeivich YUDIN (1968)   30/03/2007 18/05/2007 13,654.30 A total of RUB   17.961 paid by September 2008; Remainder unenforced 2,808 23/05/2007 09/06/2007 22,694.86 31/07/2007 21/08/2007 79,301   29609/08 14/04/2008 Galina Nikolayevna SHEVELYUK (1952) 21/12/2006 09/01/2007 62,962.98 A total of RUB   66,123.75, including the entire amount awarded on 22/06/07, paid by September 2008; Remainder unenforced   2,176 12/03/2007 30/03/2007 5,255.91 30/03/2007 18/05/2007 11,300.84 22/06/2007 04/08/2007 36,342.86 02/11/2007 20/11/2007 25,699.08   35850/08 13/05/2008 Tatyana Antonovna YEROFEYEVA (1953) 30/03/2007 04/05/2007 72,394.47 Not enforced 2,068   10742/09 28/01/2009 Galina Nikolayevna LYUBAS (1950) 21/12/2006 09/01/2007 89,895.05 No information on enforcement; see also paragraphs   8-9 above. 2,614